After the announcement that G7 leaders would support a Biden administration push for global tax reform initiatives such as the implementation of a minimum corporate tax rate, you may be wondering whether the international support would extend to Biden’s other financial regulation proposals. Since Biden has indicated that he will be looking to expand the net of the IRS to better investigate cryptocurrency tax evasion schemes, crypto investors should be particularly interested.
Several countries, including some members of the G7, are already in the process of cooperating with the United States and the IRS’s enforcers on collecting and utilizing the data of cryptocurrency investors. Their goal is to minimize the ability of both U.S. citizens and foreign individuals who are active in U.S. markets to cheat the tax system through cryptocurrency holdings. It appears to us that international support for Biden’s crackdown on crypto gains not only exists presently but also will continue to grow as more crypto tax evasion schemes are uncovered.
If you are concerned about the increasing global incentive to come after cryptocurrency gains, you should speak to a cryptocurrency tax expert. The dual-certified International Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing stay on top of all domestic and international developments in tax law and cryptocurrency policing so that you can continue enjoying your rightful gains. To schedule your first consultation at a reduced rate, call our offices at (800) 681-1295.
G7 Finance Chiefs Back Biden’s Plan for Global Tax Overhaul
In early June, a gathering of key finance heads of some of the leading nations in the world signaled their agreement on certain proposals that would affect the world’s financial atmosphere. Finance ministers from the Group of Seven came to agreement in London that they would agree to support a global minimum tax of at least 15% on multinational companies, amongst other proposed policies.
The Group of Seven, composed of Canada, the United States, the United Kingdom, France, Germany, Italy, and Japan, came to the agreement in advance of the formal summit featuring all seven countries in Cornwall later in the month.
The proposed 15% minimum global corporate tax rate has been spearheaded primarily by President Biden’s administration. The U.S. has been resolute in its support of the proposal, primarily because the tax hike would be a crucial element in paying for Biden’s infrastructure package. Treasury Secretary Janet Yellen, who was present at the G7 meeting, has sought to implement the new minimum tax rate to discourage American-based corporations from shifting their profits abroad.
Biden Administration Efforts to Regulate Crypto Internationally
Part of the Biden administration’s attempt to overhaul the financial regulatory systems both at home and abroad is a concerted effort to solve tax enforcement issues in the cryptocurrency markets.
Specifically, the White House has proposed measures that would be conducive to a global data sharing initiative. President Biden’s proposal, called the Greenbook, requests the help of foreign regulatory bodies in collecting and sharing information on foreign cryptocurrency investors that are active in the United States.
If implemented, the Greenbook would have cryptocurrency market makers, brokers, exchanges, and digital wallet providers provide information on their users directly to the IRS. The information requested would supposedly only pertain to foreign users or individuals who were account holders with corporate entities such as those listed above.
The Greenbook would merely be a continuation of information exchanges that the U.S. already conducts with foreign governments to uncover U.S. citizens hiding assets offshore in undisclosed foreign bank accounts.
Administration officials blame cryptocurrencies for a significant portion of the rapidly increasing tax gap. The tax gap is the term for the difference between the taxes owed and taxes collected by the IRS every year. IRS Commissioner Charles Rettig has suggested that the total tax gap, though not known for sure, could reach upwards of $1 trillion annually.
Likely Cooperation from Foreign Countries on Biden Crypto Initiative
In light of such a resounding signal that the most powerful nations in the world are on board with Biden’s tax evasion crackdown measures, it should be expected that the other leaders will remain in lock step when it comes to cryptocurrency policing. As cryptocurrencies are unbacked, it truly takes a universal effort to implement effective regulatory measures. Without global consensus, such measures would be ineffective against tax evaders in the cryptocurrency sphere.
Biden and the IRS have already signaled their intention to target cryptocurrency tax evasion schemes in the upcoming cycles. In fact, they have baked this initiative in with those that have already received explicit, public support from international powers. Therefore, it is likely that the trend of cooperation between financial ministries of these countries will extend to touch the global cryptocurrency market.
The IRS’s Criminal Investigation division (IRS-CI) has already developed working relationships with similar agencies at several other global powers, including Australia, the Netherlands, Canada, and the United Kingdom. These relationships cover common goals to pursue international tax evasion schemes, including those that make use of cryptocurrencies.
How Can a Tax Lawyer Help You Avoid an IRS Crackdown on Crypto Gains?
If you are a crypto investor who has reaped rewards from shrewd investing strategies, you don’t deserve to be the target of unjust government overreach by the IRS or other foreign governments. You can take steps today to protect yourself against the seemingly inevitable onslaught of audits and criminal tax investigations.
Your best (and first) step should be to seek the counsel of a seasoned dually licensed Cryptocurrency Tax Attorney who can review your records and filings to help you determine if you ever fell out of compliance. We can also make suggestions for how to keep diligent records of future investments so that you can stay in compliance with the rapidly shifting tax codes on cryptocurrency gains. Further, if you intentionally have stayed out of compliance regarding your crypto investments and have multiple years of unreported cryptocurrency income, our staff can walk you through the process of voluntary disclosure, which will minimize the potential penalties for noncompliance and bring you back into good standing with the federal government while simultaneously removing the risk of criminal tax prosecution.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including multiple years of non reported 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 disclosurebefore 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, KovelCPAs 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!
Let Us Help You Protect Your Domestic and International Crypto Assets from Increased IRS Enforcement Activity
Our dual-licensed International Tax Attorneys and CPAs are ready and willing to assist you with any of your cryptocurrency tax reporting needs. For more information about our services, schedule a reduced rate consultation today by calling (800) 681-1295.
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