Investing in cryptocurrency can be risky. The values of these currencies can change quickly, and investors are highly susceptible to fraud. It is crucial for people to be careful and educate themselves about cryptocurrency before putting their money into it.
A Denver pastor, Eli Regalado, faces allegations of misusing church funds to launch a cryptocurrency venture called “INDXcoin” that is now essentially worthless. Regalado and his wife are facing fraud charges after allegedly pocketing over $1.3 million from investors. As legal proceedings unfold, these investors are left to grapple with the ethical implications of mixing religious beliefs with financial ventures.
Before engaging in a serious financial venture, seek guidance from our Dual-Licensed Tax Lawyers & CPAs at the Tax Law Offices of David W. Klasing by calling (800) 681-1295. Note: Our expertise is in the tax ramifications of financial decisions, and we do not have experience surrounding the regulatory framework regarding cryptocurrency.
The Case Against Eli Regalado
Denver Pastor Eli Regalado is facing accusations of misappropriating over $1.3 million from his congregation by launching a cryptocurrency venture. Regalado, along with his wife, Kaitlyn Regalado, reportedly introduced the INDXcoin cryptocurrency to their church members and other Christian communities as a means of investment. The pastor claimed he had divine inspiration and foresaw the future collapse of banks. He promised wealth and blessings to his investors.
Allegations of Fraud and Misuse
Instead of delivering on their promises, the Regalados used a significant portion of the investment funds for personal luxuries. For example, these used these funds to purchase a Range Rover, jewelry, cosmetic dentistry, vacations, and home renovations.
The state further accuses them of employing religious rhetoric to manipulate investors. Essentially, the pastors leveraged the trust within their Christian community to peddle what turned out to be a risky and valueless currency.
Response and Legal Ramifications
In an online statement, Eli Regalado acknowledged the accusations and admitted to pocketing the said amount. He justified some of his expenses by saying he was directed by God.
Despite Regalado’s claims of divine intervention, state authorities have filed civil fraud charges against the pastor and his wife. Regalado has stated that he is waiting for a miracle to resolve his situation. Meanwhile, his congregation is left to deal with the financial stress caused by their failed investments.
Awaiting Legal Proceedings
As of January 2024, the Regalado’s legal proceedings are still unfolding. The case has drawn attention to the ethical implications of mixing religious convictions with financial ventures.
Further, the case involving Denver pastor Eli Regalado highlights the importance of hiring our Dual-Licensed Tax Lawyers & CPAs when navigating complex financial ventures. Our support can be invaluable when considering sizable investments and entrepreneurial endeavors. We will help ensure compliance with tax regulations. Further, we can help navigate potential legal pitfalls and eliminate the risk of criminal tax allegations.
Do You Need to Report Cryptocurrency Earnings on Your Tax Returns?
Yes, you typically need to report cryptocurrency earnings on your tax returns.
The Internal Revenue Service (IRS) treats cryptocurrency as property for tax purposes. This means that any gains from buying, selling, or trading cryptocurrencies are subject to taxation. This includes capital gains taxes on profits made from selling or exchanging cryptocurrencies. Potential taxes may also be assessed for mining or staking rewards.
Failure to report cryptocurrency earnings can result in serious civil and criminal tax penalties. Accordingly, it is essential to keep accurate records of cryptocurrency transactions.
Potential Penalties for Failing to Report Cryptocurrency on Your Tax Returns
There are multiple potential penalties that may be faced by those who fail to report cryptocurrency earnings on their tax returns. If you suspect that you may have failed to satisfy your tax obligations, then our legal team can help defend against any of the following:
Civil Penalties
First, failing to report cryptocurrency earnings on tax returns can result in costly civil penalties. These penalties may include fines, interest charges, and additional taxes owed on the unreported income. Many taxpayers who face such penalties will undergo a significant amount of financial stress.
Potential for Criminal Tax Charges
In extreme cases of deliberate tax evasion regarding cryptocurrency earnings, taxpayers may face criminal charges. While civil penalties primarily focus on monetary fines and penalties, criminal charges can lead to more severe consequences such as prison time.
Loss of Personal Property
Further, the failure to report cryptocurrency earnings can result in the loss of personal property through asset seizure. Items that may be seized include vehicles, real estate, jewelry, and other valuable assets owned by those who failed to fulfill their tax obligations.
Damage to Reputation
Additionally, failure to report cryptocurrency earnings on your tax returns may result in serious damage to your reputation. While it may not seem serious to some, reputational damage can have long-lasting effects on peoples’ relationships and social standing.
Professional Consequences
Lastly, failing to report cryptocurrency earnings can lead to severe professional consequences. For instance, perpetrators of such misconduct may face the loss of professional licenses and the termination of their employment.
How to Correct a History of Intentionally not Reporting Cryptocurrency 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 including intentionally not reporting taxable cryptocurrency transactions coupled with affirmative evasion of U.S. income tax on offshore income) 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!
Prevalence of Cryptocurrency Fraud Schemes
Unfortunately, with the rise of cryptocurrency has come the rise of cryptocurrency fraud schemes. Many different types of schemes may be perpetrated. For instance, some scammers may steal people’s money by creating websites that impersonate legitimate cryptocurrency exchanges. Furthermore, some people may be taken advantage of by fraudulent “initial coin offerings” (ICOs) and pump-and-dump schemes. In these schemes, cryptocurrency values are artificially inflated before swindlers sell off their assets at a profit and leave unsuspecting investors with worthless digital coins.
Importance of Tax Planning for Cryptocurrency Investments
Cryptocurrency earnings are subject to unique tax regulations. By engaging in strategic tax planning, investors can proactively manage their tax liabilities, maximize tax efficiency, and ensure compliance with applicable tax laws.
Fortunately, the team at our firm is prepared to help our clients understand the treatment of various cryptocurrency transactions under tax laws. Our support will allow potential investors to anticipate and mitigate the potential tax risks arising from cryptocurrency transactions.
Contact Our Attorneys Today for Help with Your Tax Issues
Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.
In addition to our fully staffed main office in downtown Irvine California, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) California based satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad, Sacramento. We also have unstaffed (conference room only) satellite offices in Las Vegas Nevada, Salt Lake City Utah, Phoenix Arizona & Albuquerque New Mexico, Austin Texas, Washington DC, Miami Florida and New York New York that solely handle Federal & California Tax issues.
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