According to a Department of Justice press release, an Austin, Texas, man pleaded guilty to filing a tax return that falsely underreported the capital gains he earned from selling $3.7 million worth of bitcoin. This case highlights the potentially serious consequences of failing to accurately report cryptocurrency transactions to federal and state tax authorities. If you have filed a tax return that was not truthful (specifically with regard to cryptocurrency ownership or transactions) or have failed to file a tax return for one or more years, it is critical to discuss your situation with an experienced tax defense attorney.
Defendant Failed to Report Significant Bitcoin Sales to the IRS
Ahlgren was an early investor in bitcoin, purchasing approximately 1,366 bitcoin in 2015 when they were valued at less than $500 each. In October 2017, he sold approximately 640 bitcoin for about $5,807.53 per bitcoin, totaling $3.7 million. He used the proceeds from this sale to purchase a house in Park City, Utah. However, Ahlgren filed a false tax return for 2017, substantially inflating the cost basis of the bitcoin, resulting in him intentionally underreporting his capital gain that resulted from the sale.
In addition, in 2018 and 2019, Ahlgren sold more than $650,000 worth of bitcoin but did not report these sales on his tax returns for that period. His actions caused an estimated tax loss to the IRS of more than $550,000. Ahlgren faces a maximum penalty of three years in prison, as well as supervised release. Additionally, Ahlgren will likely be required to pay restitution to the federal government, representing the tax loss that he caused.
The Importance of Accurate Cryptocurrency Reporting
The case of Frank Ahlgren above underscores the serious legal repercussions of intentionally understating the income from your cryptocurrency transactions, as required by federal and state tax law. If you have failed to file a tax return as required by law, consistently failed to report income related to cryptocurrency, or have filed a false tax return, it is in your best interest to consult with a seasoned tax attorney. Together, you can determine the pertinent facts of your situation and develop a plan to bring you back into compliance with the federal and state tax laws without facing criminal tax prosecution.
If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially intentionally including non-reported or falsely reported crypto currency transactions) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
