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Monthly Archives: November 2021

IRS Seized $3.5B In Crypto In Fiscal 2021 and May Seize Billions More In 2022

 According to Law360The Internal Revenue Service's Criminal Investigation division identified nearly $10.3 billion in financial wrongdoing in the agency's 2021 fiscal year and seized around $3.5 billion in cryptocurrency connected to crime, according to a report released on November 18, 2021.

The Internal Revenue Service's Criminal Investigation division seized around $3.5 billion in cryptocurrency connected to crime for fiscal year 2021. (iStock)

The agency's criminal investigators identified nearly $2.2 billion in tax fraud and almost $8.2 billion in other financial crimes for the 2021 fiscal year, according to the annual report from the IRS Criminal Investigation division. Around 93% of CI's seizures in the fiscal year were cryptocurrency, which some agency officials have said facilitates asset and income concealment, according to the report. 

CI agents "are the only federal law enforcement officers with the authority to investigate criminal violations of the U.S. tax code," IRS Commissioner Chuck Rettig said in prepared remarks. "Their work reinforces the backbone of our voluntary compliance tax system — a system that funds services and benefits for our nation, including defense, infrastructure and education."

The report covered October 2020 through September 2021, during which time the division also continued working cases connected with abuse of various coronavirus relief provisions, such as the Paycheck Protection Program, according to the report. These cases involved a Florida man's admission that he secured around $4 million of those funds — authorized by the Coronavirus Aid, Relief and Economic Security Act  and used some of the cash to purchase a Lamborghini.

Other investigations conducted by CI included tax cases involving public corruption, cyber crimes and corporate fraud, as well as nontax cases involving money laundering, according to the report. It highlighted $1 billion in bitcoin seized that had been stolen from the now-defunct online drug bazaar Silk Road. Its creator, Ross Ulbricht, is serving a life sentence in prison for money laundering, according to the report.

CI has seen a slight uptick in its number of special agents, with 2,046 working in the division in the 2021 fiscal year compared with 2,030 in 2020, according to the report. More funding for the IRS could be on the horizon as legislators continue weighing the reconciliation bill, which has included a proposal for about $80 billion in funding for the agency.

In a conference call Thursday, CI chief Jim Lee said potential reconciliation money would be used to boost those staffing figures, which he called his "No. 1 priority" as the agency loses around 150 agents per year amid a general attrition issue

"It would help CI tremendously," Lee said. The funds also would let the IRS continue its focus on cyber, data analytics and technology, he added.

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Read more at: Tax Times blog

IRS Criminal Investigation Releases Annual Report Highlighting 2,500+ Investigations and Law Enforcement

Over 2,500 criminal investigations, the identification of more than $10 billion from tax fraud and financial crimes, and a nearly 90% conviction rate are just a few highlights from the IRS-Criminal Investigation (IRS-CI) Fiscal Year 2021 Annual Report. The report, released Thursday, details statistics, important partnerships and significant criminal enforcement actions from IRS-CI, the criminal investigative arm of the IRS, for the past fiscal year, which began Oct. 1, 2020 and ended Sept. 30, 2021.

“IRS-CI agents are the only federal law enforcement officers with the authority to investigate criminal violations of the U.S. tax code. Their work reinforces the backbone of our voluntary compliance tax system -- a system that funds services and benefits for our nation, including defense, infrastructure and education,” said IRS Commissioner Chuck Rettig.

In fiscal year 2021, IRS-CI built upon its existing network of U.S. field offices and international attachés to combat financial crimes across the globe. The agency’s alliance with the Joint Chiefs of Global Tax Enforcement (J5) helped strengthen public-private partnerships with financial institutions and the Fin-Tech industry to deter and identify criminal activity. Additionally, IRS-CI established its first cyber attaché in The Hague, Netherlands, to proactively support cyber investigative needs in coordination with Europol.

“IRS-CI continues to lead tax and financial investigations here in the U.S. and across the globe,” said IRS-CI Chief Jim Lee. “In fiscal year 2021, as we faced the second year of a global pandemic, our team of agents continued to overcome personal and professional challenges to target criminals who exploited the U.S. tax and financial systems for personal gain.” 

While IRS-CI Agents Spent Most Of Their Investigative
Man-Hours, About 72%, Investigating Tax-related Crimes
Like Tax Evasion And Tax Fraud During Fiscal Year 2021, They Also Made Significant Contributions To Money Laundering, Narcotics Trafficking, Public Corruption, Terrorism
And COVID-19 Fraud Investigations.

Case examples include:

In April 2021, a dual Russian-Swedish national was arrested in Los Angeles on criminal charges related to his alleged operation of the longest-running bitcoin money laundering service on the darknet dubbed Bitcoin Fog. The bulk of cryptocurrency laundered through Bitcoin Fog came from darknet marketplaces and was tied to illegal narcotics, computer fraud and identity theft. This case marked the second U.S. prosecution of a cryptocurrency mixing service; both were investigated by IRS-CI.

The ringleader of a transnational criminal organization, with ties to the Sinaloa Cartel, operating in California and along the East Coast was sentenced to 33 years in prison in July 2021 for narcotics trafficking-related charges. The sentencing followed a multiagency operation dubbed Operation Cookout that netted 65 kilograms of illegal drugs, 24 firearms, more than $700,000 in cash and guilty pleas from 45 defendants.

Numerous IRS-CI investigations resulted in individuals being sentenced for fraudulently obtaining small business relief loans under the CARES Act. One of those cases involved a Texas businessman who was sentenced in September 2021 to 31 months confinement and 36 months of supervised release after he created a scheme to fraudulently obtain more than $3.3 million in Paycheck Protection Program loans for personal use.

The report includes additional case examples for each U.S. field office, an overview of IRS-CI’s international footprint, details about the specialized services provided by IRS-CI and investigative statistics, broken down by discipline, for fiscal year 2021.

Have a Criminal Tax Problem?

 Contact the Tax Lawyers at 
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Read more at: Tax Times blog

Voluntary Disclosures Can Be Updated For Overlooked Foreign Accounts

According to Law360, the IRS' voluntary disclosure practice for offshore bank accounts will allow participants to supplement their noncompliance narratives, which are required to be complete when applying to the program, if they discover mistakenly omitted information, an agency official said Thursday.

Mistakes may happen during the submission process for the voluntary disclosure practice, or VDP, including in complex cases where certain entities or bank accounts may have been omitted, according to Daniel Price, a senior attorney with the Internal Revenue Service's Office of Chief Counsel. In these cases, participants can write to the IRS' Criminal Investigation division, or CI, and explain the nature of the omission or mistake, he said, speaking during a virtual conference hosted by Freeman Law PLLC.

Specifically, the supplemental disclosure letter must include relevant information from the original disclosure and provide a timeline for when the practitioner discovered the mistake, according to Price. The letter must also include a request for CI to evaluate the supplement to allow the individual to stay in VDP, he said. 

"Benign mistakes have occurred," Price said. "CI will allow the taxpayers in those types of situations to remain in VDP."

For individuals who face possible criminal investigations from the IRS, including for failing to disclose offshore bank accounts, the agency's long-standing VDP provides a process to come into compliance while potentially avoiding prosecution.

Participation in the program requires applicants to tell "the complete story" of their noncompliance with a narrative that includes personal and professional background information, according to the Internal Revenue Manual, which said those with incomplete narratives won't get an opportunity to supplement their submissions.

The inability to update submissions appeared "unduly strict" to members of the American Bar Association's tax section, who raised concerns about the narrative requirement in a September letter to the IRS.

The members said this IRM section struck them as "failing to take into account the common occurrence of innocuous, minor errors ... particularly for voluntary disclosures with conduct that might span decades and factual situations where other actors were involved (e.g., estates)."

The IRS announced updates to its disclosure practice in November 2018 following the termination of the agency's Offshore Voluntary Disclosure Program. First offered in 2009, the OVDP had allowed those who willfully failed to file foreign bank and financial account, or FBAR, forms to get lower penalties and protection from criminal liability if they came forward.

Specialists have noted that although the disclosure practice isn't as lenient as the OVDP, it still offers a way to avoid criminal referral.

The importance of the narrative component on Form 14457, which is needed for entering the disclosure practice, can not be overstated.

Want to Know if the VDP Program is Right for You? 
Contact the Tax Lawyers at 
Marini & Associates, P.A.   
for a FREE Tax Consultation contact us at:
Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

IRS Delays in Processing Amended Tax Returns Are Impacting TAS’s Ability to Assist Taxpayers

In a blog post, the National Taxpayer Advocate (NTA) has discussed the IRS’s backlog of unprocessed amended returns and how that situation is negatively impacting the Taxpayer Advocate Service’s (TAS) ability to help taxpayers get refunds they are waiting for.

According to the NTA, on October 30, 2021, the IRS had a backlog of over 2.7 million unprocessed amended returns. The IRS claims the current processing time for these returns is about 20 weeks. The NTA, however, says that TAS cases indicate it is taking the IRS “considerably longer than 20 weeks” to process these returns. Updated information on IRS operations and backlogs, can be found here

Generally, TAS doesn’t accept cases in which it can’t meaningfully expedite or improve case resolution for taxpayers. And, TAS can’t expedite or improve case resolution for taxpayers whose amended returns haven’t been processed. Therefore: 

  • TAS will no longer accept new cases where the only issue is the processing of an individual or business amended return.  

  • TAS will accept new cases when the primary issue meets the case acceptance criteria in Internal Revenue Manual 13.1.7, TAS Case Criteria, even if the secondary issue includes processing an individual or business amended return.

The NTA recommends that taxpayers use Where’s My Amended Return to track the status of their amended return. According to the NTA, it takes about three weeks after an amended return is filed for it to appear in the tool.

Where’s My Amended Return can provide the status of amended returns for the current tax year and up to three prior tax years. One caveat, the tool cannot provide the status of amended returns with a foreign address, business tax amended returns, carryback applications, and amended returns processed by a specialized unit. 

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog

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