If you dealt in virtual currency in recent years, you may soon receive a letter from the IRS regarding a potential failure to report income and pay related taxes, according to a recent IRS announcement. The federal tax agency is beginning to reach out to taxpayers as part of the virtual currency compliance campaign it announced last year.
The California Franchise Tax Board (FTB) recently issued a news blast that many payments sent by mail to the state tax agency in June were delayed significantly due to post office issues. When the mail finally caught up on June 9th, the FTB received some 115,000 payments for estimated taxes and other purposes. The agency is working to process all the backlogged payments now and will post them with a timely date of June 15, 2019. However, this should serve as a reminder to try to issue online payments to tax agencies whenever possible!
The Internal Revenue Service (IRS) Large Business and International division (LB&I) recently announced three new compliance campaigns focused on offshore private banking, captive services providers, and information returns filed by individuals concerning foreign corporations (Forms 5471), with plans to first use audits and letters to address these compliance issues. According to its press release, the IRS has records that identify taxpayers with transactions or accounts at foreign private banks, which it will use to address compliance issues within that campaign.
The Treasury Inspector General for Tax Administration (TIGTA) recently reported on self-employment tax compliance in light of the growth of the gig economy. The IRS last estimated that self-employment taxes accounted for $69 billion of the annual tax gap. TIGTA reviewed Forms 1099-K for tax years 2012 through 2015 issued by the top nine payer companies participating in the gig economy. Over 260,000 instances of potentially underreported payments were identified, and the number of discrepancies increased 237 percent from 2012 to 2015. Due to the large volume of discrepancies identified, the IRS' Automated Underreporter (AUR) program declined to work on 59 percent of total cases, including over 2,800 taxpayer cases in which there was potential underreporting for all four years of Forms 1099-K reviewed. The total potential payments related to those taxpayers was $2.7 billion.
The Treasury Inspector General for Tax Administration (TIGTA) recently released its biannual independent assessment of the Internal Revenue Service's (IRS') private debt collection program, which became a requirement under the 2015 FAST Act. According to TIGTA, the private collection agencies are performing well with respect to procedural accuracy and professionalism. Customer satisfaction scores are generally in the low- to mid-90 percent range. As of September 2018, the private collectors had been assigned more than 700,000 taxpayer accounts and collected approximately $88.8 million from the balances owed.
The Franchise Tax Board (FTB) recently published its updated list of California's top 500 tax debtors, comprising both individuals and businesses that now collectively owe the state more than $646 million in income tax. Since October 2007, this list is updated twice annually. Taxpayers who receive notice of the FTB's intent to include them on the list and then make arrangements to pay their tax debt are removed from the publication.
The Internal Revenue Service's (IRS's) 2014 Offshore Voluntary Disclosure Program (OVDP) officially ends on Friday, September 28, 2018. This program was offered to help taxpayers get into compliance with their foreign account reporting requirements. The end of the OVDP does not mean the IRS is less interested in offshore compliance --- to the contrary, "The IRS remains actively engaged in ferreting out the identities of those with undisclosed foreign accounts with the use of information resources and increased data analytics," said Don Fort, Chief, IRS Criminal Investigation, in the IRS' initial announcement about the program's end. "Stopping offshore tax noncompliance remains a top priority of the IRS."
The Internal Revenue Service (IRS) recently launched a new compliance campaign focused on S corporations and shareholder distributions. The three areas of concern include failure to report gain upon the distribution of appreciated property, failure to correctly determine the taxability of a dividend, and the failure to report non-dividend distributions in excess of their stock basis subject to taxation. The IRS will be conducting issue-based examinations and reaching out to stakeholders on this topic. For more information, click here.
The Internal Revenue Service (IRS) is going to be taking a closer look at virtual currency transactions in a new compliance campaign focusing on education and guidance efforts about reporting requirements for convertible transactions involving digital currency such as Bitcoin. "Taxpayers with unreported virtual currency transactions are urged to correct their returns as soon as practical," the IRS said in its press release. For more information, click here.
What do a U.S. Senator, the owner of an Albanian brokerage firm, an attorney who is a dual citizen of America and Israel, and a group of current and former U.S. citizen now living in Canada, Switzerland, and the Czech Republic all have in common? They have been denied review by the U.S. Supreme Court in their jointly failed attempt to enjoin the enforcement of the Foreign Account Tax Compliance Act (FATCA), certain intergovernmental agreements (IGAs), and the foreign bank account reporting (FBAR) penalty.