Today's Tax Talk with Attorney Steven Leahy

The IRS has made cryptocurrency (or virtual currency as the IRS calls it) a priority.  The IRS specifically asked, for the first time, about "virtual currency" on Schedule 1 of the 2019 1040 tax form.  In 2020 - that question was moved to page one of the 1040 return.  

The early draft of 2021 IRS Tax Form 1040 includes the language "At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial of any financial interest in any virtual currency?" directly under your name and address information.  So there is no getting around reporting cryptocurrency to the IRS.  Remember, IRS Form 1040 is submitted under penalty of perjury! 

Attorney Steven A. Leahy - the Crypto Lawyer - reviews what you need to know about cryptocurrency and your taxes.

The Biden Administration's Build Back Better Plan (BBB) includes a massive increase in the size and scope of the IRS.  The plan provides an additional $80 Billion Dollars and 80,000 more "tax cops.."  The IRS will use these additional resources to expand IRS Audits on "small businesses and households of modest means."

The Bank Statement Reporting was not included in the house version of the Bill, but is expected to be added on the Senate side. Many Democrats in Congress have come out against that scheme, but there really is no other way to pay for BBB without increasing tax collection from American Taxpayers.

Attorney Steven A. Leahy goes though the latest news on Build Back Better to inform the public on exactly what Congress has in mind.  And it isn't good.

It's Crypto-Tuesday and there a number of big stories in Cryptocurrency News.  First, El Salvador is continuing their push to move to the front of Bitcoin economy.  You may remember that in September 2021 El Salvador became the first country to declare Bitcoin as it's national currency.  Since then they have taken measures to lead the world in assisting Crypto investors.  

The latest move is an announcement that El Salvador is building a Bitcoin City.  The City will be built at the foot of Conchagua Volcano.  The volcano will help El Salvador Mine Bitcoin with green geothermal energy. Overcoming a common complaint that Bitcoin mining uses too much carbon based energy.  

The IRS Criminal Investigations unit has seized $3.5 Billion in Cryptocurrency this year and expects to seize a similar sum next year.  What is driving those seizures?

Finally, Hillary Clinton fears Cryptocurrency will destabilize country's and the American Dollar as the reserve currency.  Everyone is interested in Hillary's Crypto Opinion!

Attorney Steven A. Leahy discussed these important stories on this week's Crypto-Tuesday episode.

The Build Back Better Act (BBB) sets aside $80 Billion For the IRS.  With that increase, the IRS plans on hiring 87.000 new IRS workers to target "wealthy" taxpayers.  

However, as Elon Musk points out, there are only 614 billionaires in America.  And, “[t]he IRS already has dedicated audit teams for high net worth individuals. The doubling of staff is for everyone else,” Musk warned,

The Administration has already told us not to pay attention to the warned Congressional Budget Office's analysis - "The CBO has previously underestimated the revenues that increased enforcement would raise."  

Attorney Steven A. Leahy opines on these important issues on Today's Tax Talk.

The IRS announced new policies for the Offer In Compromise program.  on a recent blog post titled "IRS Initiates New Favorable Offer In Compromise Policies" The National Taxpayer Advocate announced that the offer in compromise refund recoupment process will no longer be applicable for tax periods included on the Form 656. 

And second, while refunds may still be offset during the time an OIC is pending, the IRS agrees that taxpayers may seek an OBR during this period.

What does this mean to the average taxpayer in collection?  Absolutely nothing.  The cold hard facts are - almost no taxpayer gets an Offer in Compromise as a way to settle their IRS Collection Case.

In 2020, the last year statistics are available, the IRS settled 7.4 million IRS Collection Cases.  Of those settled cases, only 14,288 offers were accepted.  That's right - less than 1/4 of 1% are settled with an Offer in Compromise.  And the second change - the offset bypass refund for pending offers - is only available to those "qualifying taxpayers experiencing financial hardship."

The promise of Cryptocurrency is in the use - or is it in the value.  That is the conflict.  It is hard to buy something with Crypto that may grow in value the next day.  Still the real promise in Crypto, in my mind, has to do with the elimination of the middleman and the efficient transfer of value.

I spoke with Dave Guttman, Chief Growth Officer of CoinFlip about his view on Crypto.  You might find that discussion interesting - here is the link to that interview - https://vimeo.com/645310789.

Attorney Steven A. Leahy has an idea where we are going - but nothing is set in stone.

After all the hand-wringing about the Tax Gap, wealthy tax evaders and Crpto cheats the US Treasury collected a record $283,927,000,000 in total taxes in October, which was the first month of fiscal 2022.  However, Federal spending hit $448,983,000,000 in October, which was the second highest ever for the first month of a fiscal year.

Do these numbers demonstrate a need form more money, or a need to cut spending?  That is ALWAYS the battel question.  

Attorney Steven A. Leahy reviews the latest tax numbers.

The 2,100-page Infrastructure Bill is full of payoffs for special interests.  One of the most egregious examples is the change in the tax law granting trial  attorneys to deduct legal fees as they incur them - even though these fees may be reimbursed by their clients at a later date.  

The up front fees have never been deductible.  These fees have been treated like non-deductible loans to clients since they may eventually get reimbursed at the end of the case when the client settles or wins.  

Attorney Steven A. Leahy reveals the new generous for Trial Attorneys hidden in the new law.

The new infrastructure bill expands the definition of cash to include “digital assets” and includes tax reporting provisions that capture Miners, stakers, lenders, decentralized application and marketplace users, traders, businesses, and individuals into these reporting requirements

The Crypto Industry and many in Government want to :"fix" the legislation by narrowing the definition of “broker” so the Internal Revenue Service can not target crypto miners, developers and others, who don’t have any customers or have access to information needed to comply with tax reporting requirements.  

Attorney Steven A. Leahy reviews the new Bill and the impact on the Crypto industry and growth.

Congress has proposed yet another version of a Tax Bill Today.  Although, as Senator Manchin points out, no one really knows what provisions are in any of the versions.  Different elements are suggested as a trial balloon and quickly removed - then reinserted.  

For example, the Bank Reporting provision has been floated, removed, floated again, then changed, then struck down and now it may be part of the new bill.  Like wise, the family leave provisions.  Initially, 12 Weeks was proposed, and then quickly eliminated.  Only to be family leave reintroduced for 4 weeks.  

What's really in the Bill?  No one knows.   Attorney Steven A. Leahy goes over the latest news to try to bring light to this dark subject.