Today's Tax Talk with Attorney Steven Leahy

There is a current  aphorism "COVID changed Everything!"  That saying even goes to the IRS.  Initially, in March 2020, the IRS shut down all operations: enforcement, collections, mail, phone, and print.  These interruptions  caused delays and backlogs in IRS’s enforcement caseloads even after operations resumed.  The IRS even significantly reduced its efforts to enforce taxpayer compliance.

After the initial shut down, the IRS tried to move to telework - but most IRS operations were not set up for that.  The IRS was tied to paper processing  - 

COVID has caused the IRS to reevaluate its operations. Even looking for ways to expand acceptance of digital signatures on electronic documents.

The long awaited "President's Working Group on Financial Markets: Report on Stablecoins" was released today.  The new report of these U.S. financial authorities has predicable conclusions:  REGULATE.

For those who don't know, Stablecoin is a class of cryptocurrencies that use a "stable" reserve asset, like the US Dollar or Gold, to peg their market value. 

Today, stablecoins are primarily used in the United States to facilitate trading, lending, or borrowing of other digital assets, predominantly on or through digital asset trading platforms. Proponents believe stablecoins could become widely used by households and businesses as a means of payment. If well-designed and appropriately regulated, stablecoins could support faster, more efficient, and more inclusive payments options. Moreover, the transition to broader use of stablecoins as a means of payment could occur rapidly due to network effects or relationships between stablecoins and existing user bases or platforms.

With the demise of the bank statement reporting regime sought by the Administration, they have turned their attention to funding.  Although, increased funding has been on the agenda from day one.  The current ask is for $80 Billion over the next 10 years, a nearly 70% increase from current funding. 

The goal, says the administration, is to target wealthy taxpayers with stricter IRS enforcement. "When you are focusing on audits and people see that audits are happening - especially amongst people who are situated similar to them - you have better compliance," said Deputy Treasury Secretary Wally Adeyemo..

"When they see more cops on the beat looking at tax returns, what people will decide is that it's better to pay than to pay the penalty in the end."

In the meantime, a former IRS commissioner is on record as saying "“I think this funding is dramatically in excess of what the IRS needs and could probably effectively use,”

IRS Bank Reporting has been a hot issue all summer long.  Today's Tax Talk has been bringing this issue to the forefront since May 2021, knowing if the public knew of these plans there would be a ground swell of opposition.  

In September 2021, because of bank and constituent complaints the Congressional Committee pulled the provision for the Bill, only to have it reinserted days later with a promise to increase the threshold from $600.  In mid October Congressional Leaders announced the threshold change to $10,000.00.  But it wasn't enough.

At least 100 Banks and other interested parties published opposition and criticism of the entire concept as an invasion of privacy.  Senator Joe Manchin voiced his opposition to the provision.  Now, 21 Democratic Members of Congress have come out against it.  

That should be the end of it.  But, is it?  Attorney Steven A. Leahy reviews the news stories or this issue.  Where do we go from here?

The Administration looks to upend the Constitution in order to obtain the money necessary to "reshape" America.  The Bank Reporting provision may have been defeated.  So, the Wealth tax has been introduced as an alternative. 

The Constitution appears to stand in the way.  The 4th Amendment proclaims "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated."  This amendment, I believe, prohibits the administration's Bank Reporting proposal. 

The 16th Amendment allows Congress the "power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."  The 16th Amendment does not allow the taxation of unrealized value - as that isn't "Income."

Attorney Steven A. Leahy interprets the Constitution in a way the protects American Citizen's privacy, property and dignity.

The emerging Eth2 virtual currency is making news with its coming upgrades that improve the scalability, security, and sustainability of Ethereum. Those upgrades include moving the consensus mechanism from proof-of-work (PoW). to proof-of-stake (PoS).  PoS will drastically reduce the amount of energy necessary for mining blocks.  

Ethereum's smart contract capabilities combined with the ease of validation and reduced energy requirements make it the prime candidate to take the role of World Reserve Currency.

The IRS handed out Child Tax Credits, Stimulus Money, Unemployment refunds and tax refunds to millions of Americans.  Now, the IRS has sent out millions of Math Error Letters alerting some taxpayers that the money they received may have to be repaid.  If the taxpayer can't pay it right away, they may owe thousands in penalties and interest on top of the repayment amount. 

Attorney Steven A. Leahy reports on this new IRS development.

We reviewed The United States Department of Treasury Fact Sheet yesterday.  Today, United States Senator Mike Crapo (R-Idaho) requested details about the "new approach" outlined in that Fact Sheet.  According to him - this new approach has never been presented to Congress.  

However, "critics" still oppose this new approach.  Attorney Steven A. Leahy reviews the ongoing debate about IRS Spying.

The right to privacy is a fundamental human right in any democratic country.

The United States Treasury Department published a "fact" sheet yesterday titled "Tax Compliance Proposals Will Improve Tax Fairness While Protecting Taxpayer Privacy" in response to the strong opposition to the Biden Bank Reporting Proposal.  The "fact: sheet doubles down on the inaccruies and half truths perpetuated by the proposals supporters.  

Attorney Steven A. Leahy breaks down the fact sheet into truths we can all understand.  Protect our privacy!

Natasha Sarin, Deputy Assistant Secretary for Economic Policy, published an article last Thursday titled "How Financial Reporting Helps American Workers and Ensures that Top Earners Pay Their Fair Share."  The article attempts to justify spying on every single American to "help the IRS determine whether taxpayers with opaque sources of income are meeting their tax obligations."

No where in her article does she explain how this spying would help American Workers, unless we assume the taxes used to "support critical initiatives in the Build Back Better agenda" will ultimately get to the workers.  And there is zero evidence that any of these programs will help workers in the long run.