Pandemic Creates Small Time Window for Taxpayers to Clean Up Tax Fraud

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Pandemic Creates Small Time Window for Taxpayers to Clean Up Tax Fraud

Updated IRS Voluntary Disclosure Procedures Replace OVDP, But Creates Increased Risks and Expense for Taxpayers

The COVID-19 pandemic has caused a dramatic change in how Americans conduct their daily lives. From getting groceries to going to work, the new normal involves staying away from others to the greatest extent possible. These government and self-imposed guidelines have also affected the IRS and state tax authorities. With an inevitable enforcement wave to follow this lull of relative inactivity, taxpayers who are out of compliance with domestic or international tax laws should consider speaking with an experienced tax defense lawyer to get right with the government before it’s too late.

The IRS Is Forgoing Most New Audits Now, But Large Wave Expected Post-COVID-19

Through various means, including its initiatives announced on its website, the IRS has announced that it will be scaling back much of its enforcement efforts during the Coronavirus crisis. For instance, the People First Initiative indicates that the IRS does not plan on opening new examinations during the Coronavirus pandemic. There are a few exceptions to the IRS suspension of new audits, including instances where the taxpayer initiates the action (such as a refund claim) or the statute of limitations is expiring.

The IRS has also announced its intention to digitize some of the examination and appellate functions for open examinations. For instance, current examinations will continue, even though in-person meetings will not be possible. This generally does not affect LB&I or other specialty groups as their audits are generally conducted on a remote basis, anyway. Additionally, IRS Appeals officers were given the green light to receive and send documentation via email.

Working with an Experienced Tax Defense Attorney to Clean Up Your Tax Profile

All in all, the message being sent by the IRS initiatives limiting in-person contact is simple: although the IRS is open for business, they will not open new examinations until the pandemic is over. We expect a large wave of enforcement once things get back to relative normalcy for the following reasons.

  • The Treasury has indicated that many businesses that took out a PPL loan will face an audit.
  • It only makes sense that after the Treasury extends out 2 Trillion in forgivable Covid – 19 aid that it will be looking to recoup the funds through the tax system.
  • IRS personnel are going to have less time to conduct audits and will most likely go for the low hanging fruit.
  • Criminal prosecution for tax fraud goes a long way to create compliance in everyone else.
  • The federal deficit is projected to 8 Trillion by the end of 2020.

There is effectively a small window of time available to those who have engaged in domestic or international tax fraud (e.g., failing to file an FBAR, failing to file informational returns for controlled foreign corporations, foreign partnerships, foreign trusts etc., coupled with failing to include taxable income from foreign sources) to clean up their tax accounts through voluntary disclosure or other means.

Generally, those who have willfully failed to comply with federal or state tax laws can avoid criminal prosecution through strategies such as domestic or offshore voluntary disclosures. You will work with your experienced tax defense attorney to determine whether a voluntary disclosure is right for you.  Our office has extensive experiences with every conceivable method of getting you back into compliance including the streamlined and delinquent foreign information reporting programs.  Our office is a one-stop-shop for these types of problems and since we also staff CPAs, your compliance solution is coordinated all under one roof which makes us very efficient.   Your tax attorney will work with you to complete all necessary steps in the process and will represent you in any meetings or other interactions with the IRS.

Contact an Experienced Tax Attorney Today

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle-market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax examination or are in need of tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.

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Note:  As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed returns coupled with affirmative evasion of payment) 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 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!

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Regardless of your particular business 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. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.

Our office technology allows clients to meet virtually via GoToMeeting. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced-rate initial consultation via GoToMeeting follow this link.   Call our office and request a GoToMeeting if you are an existing client.