Taxpayers with Crypto-Assets Face Daunting New IRS Challenges
SMIB Management recently reported that the Internal Revenue Service has begun a sizeable increase in new personnel. The agency's hiring of thousands of new auditors is the next step in achieving a large-scale, tax-enforcement initiative, with the chief focus on U.S. taxpayers' digital assets, both foreign and domestic.
SAN DIEGO, July 9, 2021 /PRNewswire-PRWeb/ -- SMIB Management recently reported that the Internal Revenue Service has begun a sizeable increase in new personnel. The agency's hiring of thousands of new auditors is the next step in achieving a large-scale, tax-enforcement initiative, with the chief focus on U.S. taxpayers' digital assets, both foreign and domestic. With these initiatives in place SMIB Management has begun adding tax resolution and crypto-asset tax complaince programs specifically catering to those taxpayers with digital asset exposure.
James Harnsberger, spokesman for SMIB Management, commented, "With the advent of 'decentralized' platforms, in which Bitcoin and other Alt Coins are held, many U.S. taxpayers have come to believe that the IRS will not be able to identify their digital asset ownership, their transactional uses, and any associated capital gains. These misinformed taxpayers risk being swept up in IRS audits or worse."
Online decentralized platforms, unlike banks or other financial institutions, do not require any identifying information about the owner. The IRS, starting several years ago and continuing today, has devoted significant amounts of time, money, and resources into building the technological sophistication needed to solve this problem, with the express goal of collecting hundreds of billions in net new tax dollars over the next decade.
Mr. Harnsberger continued, "Taxpayers have no understanding of how sophisticated the IRS is and how detailed these new examinations will be. Frankly, a significant number of people believe that digital assets are not subject to reporting. Not true. Mere ownership of digital assets is a required disclosure obligation with a 'check-the-box' space on every tax return a taxpayer files and signs under penalty of perjury with the IRS."
Another aspect of the initiative is that the IRS will be stepping up enforcement for foreign disclosure and foreign reporting obligations. Mr. Harnsberger added, "Penalties for non-disclosure and non-reporting can be significant. However, the IRS has a safe-harbor against penalties for non-disclosure and non-reporting of foreign activity, so long as a taxpayer comes forward to take corrective action BEFORE the IRS begins an audit or investigation."
In closing, Mr. Harnsberger said, "If I could add anything to this issue it would be to advise every taxpayer and tax professional to become knowledgeable with reporting, disclosure, and filing requirements world-wide for U.S. taxpayers when it comes to crypto assets. Taxpayers who own crypto currency are going to face daunting new IRS challenges, and the cost for representation in these types of enforcement activities can be significant and the penalties astronomic, even for a modest problem."
SMIB Management, a tax consulting firm, is located in San Diego, CA. The firm specializes in audits, examinations, and appeals focused on the crypto currency market space. Mr. Harnsberger is an Enrolled Agent admitted to practice before the IRS and holds an NTPI Fellowship and Paralegal Credential. He has specialized in Audit/Examination Appeals for over twenty years in his 30-plus year career.
FOR MORE INFORMATION CONTACT:
James Harnsberger, Enrolled Agent
(619) 592-2708
[email protected]
http://www.SMIBManagement.com
Media Contact
James Harnsberger, SMIB Management, Inc., +1 (619) 592-2708, [email protected]
SOURCE SMIB Management, Inc.
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