Despite the added responsibilities that have accompanied the COVID-19 pandemic, the IRS still demands compliance with respect to taxpayers filing and paying according to the law. As always, we can expect the agency to aggressively target and investigate potential tax evaders and fraudulent individuals and businesses filers.
The IRS is expected to target several specific issues in the upcoming year. These focuses will include developing areas with little oversight such as gambling and cryptocurrency, schemes utilizing the federal government’s COVID-19 relief packages, and bad-faith tax preparers engaged in schemes without the knowledge of their clients.
The professionals at The Tax Law Offices of David W. Klasing are here to provide you with information about the latest trends in IRS enforcement activity. To set up a reduced rate initial consultation with one of our dually licensed Tax Attorneys and CPAs, call us today at (800) 681-1295 or schedule online.
Biggest IRS Targets of 2021
The IRS always sets out with enforcement goals in mind. Knowing who might be subject to more rigorous scrutiny can help you prepare for an intrusive criminal tax investigation or audit. With that in mind, here are some of the most likely categories that the IRS will focus on in the coming year:
COVID-19 Relief Tax Schemes
The federal government is shelling out massive amounts of tax relief to businesses impacted by the pandemic. As a result, the IRS as a watchdog of the national treasury will be watching business deduction claims paid with PPP funds closely. The IRS only allows deductions for payments of certain eligible expenses. If your business has already or will plan to claim deductions for expenses paid with funds from the PPP, you should know that the IRS will most likely examine these claims closely. To make sure that you are protected, contact the California criminal tax defense attorneys and CPAs at The Tax Law Office of David W. Klasing today. Schedule a consultation by calling our offices at (800) 681-1295 or scheduling online here.
Gambling
As a result of a sequence of legalization actions across the country in the recent past, online gambling has swelled in popularity nationwide. With popularity comes IRS scrutiny. The agency has identified tax compliance related to online gambling as a priority for audit and criminal tax investigation.
Healthcare
The IRS will be looking for healthcare tax fraud from multiple angles this year. Providers may be investigated on issues such as fraudulent billing statements for the sake of deductions, pharmaceutical diversion, and fraud in nursing homes and chiropractors’ offices. The year naturally brings more national intrigue into the function of the medical system. Expect the focus of the IRS to mirror that of the general public.
Foreign Assets
Evaded taxes and purposely omitted offshore foreign information reporting related to funds and investments hidden away in offshore jurisdictions is one of the largest banes of the IRS’s existence. It is estimated that billions of dollars escape the tax grasp of the U.S. government every year due to complex financial plots involving entities created outside of the United States. But now that the agency is honing its ability to detect even the most sophisticated of offshore evasion schemes, they have made no secret that they hope to right that wrong. Pay close attention to the FBAR and other offshore foreign information filing requirements and realize that the U.S. taxes the worldwide income of its tax residents even if the offshore income is taxes by a foreign government.
The “Dirty Dozen” Common Tax Schemes
The Criminal Investigations Division of the IRS publishes the “Dirty Dozen,” a list of a dozen different types of specific tax schemes and other criminal activities that will be investigative priorities over the coming calendar year. This year’s list contains the following:
- Fraudulent charities
- Fake payments with repayment demands.
- Bad-faith tax preparers
- Targeting of unreported foreign income and omitted foreign information returns.
- Offer in Compromise Mills
- Human Resources scams
- Ransomware
- Phishing
- IRS impersonation
- Senior fraud
- Nursing home fraud
- Social media s
Cryptocurrency
You might be seeing a trend developing: when an activity becomes more popular, so too does IRS scrutiny. Even though the cryptocurrency market is flooded with innovation and complexity, the government maintains its determination to ensure compliance across all spheres.
All cryptocurrency transactions must be carefully tracked and recorded by the taxpayer to veritably report income on federal returns. If you are invested in cryptocurrency and are unsure how to report your holdings to the federal government, contact the Tax Law Offices of David W. Klasing at (800) 681-1295.
Small Businesses
Think your small business is safe? The IRS established a brand-new division in 2020 specifically to concentrate efforts on investigating small businesses. The division is specifically mandated to investigate suspicious returns from businesses with assets valued at no more than $10 million as well as independent contractors. The key issues of the division will be underreporting and nonpayment. Expect this new division to try to prove itself early.
Bad-Faith Tax Preparers
This category was mentioned in the “Dirty Dozen,” but deserves specific mention, because all signs point to a significant government crackdown soon. The IRS aggressively pursues abusive preparers by way of the Return Preparer Program, established for this exact purpose. Remember, even if your tax preparer is found to be criminally liable, your name is on the return, and you are ultimately responsible for any unpaid tax. The IRS views bad-faith preparers as an opportunity to investigate both the preparer and the taxpayer. If you believe you have been employing the services of a tax return preparer who may be criminally liable, it is in your best interest to contact the Tax Law Offices of David W. Klasing so that we can shore up your defenses against the IRS. It’s never too early. Call us at (800) 681-1295.
Call The Tax Law Offices of David W. Klasing Today
If you are worried about an IRS investigation in 2021, you should enlist the assistance of the professionals at The Tax Law Offices of David W. Klasing. We will work hard to ensure you are compliant. Call our offices today at (800) 681-1295 to set up a consultation.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns 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!
More Commonly Asked Tax Audit Questions
- How should Tax Audits be Handled by Criminal Tax Counsel?
- How to survive audit when I cheated on return being audited
- What is an eggshell audit?
- What is a reverse egg shell audit?
- Why is a reverse egg shell audit dangerous for a taxpayer?
- Warning signs of a criminal referral from an IRS audit
- Effective tax defense counsels goals in an egg shell audit?
- How are the 4 goals and outcomes 1 and 2 best obtained?
- What are the possible outcomes of an egg shell audit?
- Is it my right to know why I was selected for examination?
- What can I do to prepare for an audit?
- What is an IRS civil examination?
- How IRS decides which tax returns are audited
- What are my appeal options if I disagree with IRS?
- What are my basic taxpayer rights if the IRS audits me?
- Options if I am unable to pay at the conclusion of audit
- What a 30 or 90-Day Letter from the IRS means
- What is involved with appealing disagreements?
- Rights to disagree with IRS tax auditor’s findings
- Can I stop the IRS from repeatedly auditing me?
- Can I have the examination transferred to another area?
- Can I record my IRS interview and is it a good idea?
- How many years of returns are at risk during an audit?
- Common reasons for the IRS to conduct a tax audit
- How to avoid negative consequences from an IRS interview
- Have to agree to interview by taxing authority directly?
- Are all audits the same?
- What should I do if the IRS is investigating me?
- What if I don’t respond to a taxing authority audit notice
- Your rights during an IRS tax audit
- Risks of attending an IRS audit without a tax lawyer
- Most common audit technique used by taxing authorities
- Don’t go into an IRS audit without representation
- Why hire an attorney to represent me in an audit?
- Why hire David W. Klasing to represent me in an audit
We Are Here for You
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 main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento.
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