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The Internal Revenue Service (IRS) is cracking down on cryptocurrency investors, and it appears likely that the IRS will have new enforcement tools at its disposal once President Biden signs the pending infrastructure bill into law. As a result, investors will need to be more careful than ever when preparing their tax returns next year. To ensure that they are ready, investors should begin preparing now—and they should make sure they have the documentation they will need to accurately prepare their returns in 2022. Here are some tips from US International Tax Advisors.

Since the early days of the pandemic, the Internal Revenue Service’s Criminal Investigation Division (IRS CI) has been targeting individuals and companies suspected of COVID-related tax fraud. Now, more than a year and a half later, IRS CI is continuing to pursue a large number of investigations focused on violations of the CARES Act and other pandemic relief statutes. Taxpayers targeted in these investigations must defend themselves by all means available, and this starts with hiring an experienced Maryland criminal tax attorney.  

The Internal Revenue Service (IRS) recently published an online resource titled, “How to Report Foreign Bank and Financial Accounts”. Importantly, while this resource provides some useful guidance, taxpayers must be careful to make their own decisions independent of the IRS’ recommendations—as US International Tax Advisors, explains below:

On July 1, 2021, a federal jury convicted a Maryland tax preparer of preparing false returns for three clients resulting in more than $1.1 million in fraudulent refunds. She is scheduled to be sentenced in September and faces up to three years in prison for each count. Notably, this is just one of several recent cases targeting tax preparers on the East Coast. With this in mind, local tax preparers who are concerned about facing scrutiny from the Internal Revenue Service (IRS) should consult with a Maryland criminal tax attorney promptly.

Under Section 1030 of the Internal Revenue Code, transactions that qualify as like-kind exchanges are eligible for tax deferral. As summarized by Internal Revenue Service (IRS), Section 1030, “allows you to postpone paying tax on the gain [from a sale] if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange.” While cryptocurrency trades might seem like like-kind exchanges, a recent Memorandum from the IRS Office of Chief Counsel indicates that this isn’t necessarily the case. US International Tax Advisors, explains: