If you’ve been trading a significant amount of cryptocurrency through the coin giant Kraken’s platform but haven’t properly reported that activity on your federal income tax returns, the government may already be on your case. The best answer available to you is to voluntarily disclose the information that you previously withheld. There are several ways to get involved in this process and the right choice will depend on your individual facts and circumstances.
Coordinating with the IRS can be a daunting task. You shouldn’t have to do it alone. The California double-licensed tax lawyers and auditors with the tax authorities of David W. Klasing have decades of experience assisting individuals and businesses with modified returns and voluntary disclosures to the IRS. It should be noted that modified tax returns can be viewed by the tax authorities as criminal approval and voluntary disclosure is accompanied by an almost guaranteed disclosure of the criminal prosecution of taxes. Call us at (800) 681-1295 for advice on your case.
The court allows IRS to pull user records from Kraken Cryptocurrency Exchange
A federal district court in the northern district of California has granted the IRS a “John Doe conjures“for the purpose of obtaining records from Kraken, a very popular platform for exchanging cryptocurrencies. A. John Doe conjures used by the IRS when the agency wants to uncover information about a broad class of taxpayers that might fit a particular description. In this case, the IRS directed Kraken and its parent company Payward Ventures Inc. to keep records of U.S. taxpayers who at least used Kraken for the conduct $ 20,000 of cryptocurrency transactions in the past four years.
This isn’t the first time the IRS has used this tactic to detect cryptocurrency non-compliance. The government previously issued a similar one John Doe conjures In late 2016, to cryptocurrency trading giant Coinbase, who fought the order in court for almost a year before finally partially surrendering and providing at least some information on around 14,000 users. John Doe conjures’ The first entry into the financial industry came in 2008 when the IRS requested information on account holders at UBS.
In March of this year, the IRS announced in a press release the establishment of “Operation Hidden Treasure”, a new kind of task force that deals in particular with cryptocurrency transactions. According to the IRS, there are a significant number of cryptocurrency transactions that are not recognized by the agency. If this were the case, the uncovering of the hidden transactions could lead to a considerable monetary realization on the part of the federal government.
Kraken is preparing to go public next year and could be in the $ 70-80 billion reach. But the weight of the IRS can force even the strongest financial institutions to evade the pressure. The best preparation in any circumstance is to make sure that your records are well maintained and meet state standards. If you need any help, don’t hesitate. Call the Criminal Tax Defense Attorneys and CPAs at the Tax Law Offices of David W. Klasing today.
What should I do if I traded Kraken and owe unpaid federal taxes?
Still, if you’ve identified areas of previous tax returns that may not be entirely accurate, there are important steps you can take to prevent civil or criminal prosecution. One of the most commonly used strategies is voluntary disclosure.
The IRS has introduced the Voluntary Disclosure Program for those U.S. taxpayers who acknowledge having made material misstatement or omission in one or more of their previous government tax returns that could potentially be deemed deliberate. To make voluntary disclosure, the taxpayer must submit amended federal tax returns to the IRS that contain timely and factual tax information for a period of six years, regardless of the number of tax years the taxpayer deems non-compliant.
Voluntary disclosure also includes imposing a single civil fraud penalty of 75% for the tax year that generates the largest amount of additional federal income tax during the six year period. In almost all cases, the taxpayer’s decision to voluntarily disclose to the federal government protects the taxpayer from criminal charges and usually results in a reduction in the civil penalties that would likely have been imposed outside the program. The IRS Criminal Investigations Office (IRS-CI) often appreciates your use of the voluntary disclosure process. Coming to them willingly, even if you may already be on their radar screen, is much easier for them and cheaper for you than the alternative.
Voluntary Disclosure Versus Changed Returns For Kraken Trades
Some non-compliant taxpayers may choose an alternative form of voluntary disclosure that changes previous tax returns. The advantage of this “silent” voluntary disclosure is that it occurs over time and leaves the taxpayer with a degree of privacy. However, if the overall monetary discrepancy and repetitive years of non-compliance are significant enough, silent voluntary disclosure can be considered criminal approval by the IRS.
Our philosophy in the tax authorities of David W. Klasing is that full voluntary disclosure should be used when the amount owed in federal tax exceeds $ 30,000 for a period of six years, which is one year in prison under federal condemnation guidelines. While this may seem like a black and white figure, federal tax legislation is nuanced, and the only way to be sure that the right path has been found is with an experienced and professional assessment by a Cryptocurrency Tax Attorney & CPA. Do not attempt to engage in voluntary disclosure without the legal assistance of a competent criminal defense attorney. Call ours before you do anything California Offices to set up a consultation.
Get our help with voluntary disclosure today
If you believe you are the subject of action by the IRS against cryptocurrency tax evaders, contact The Tax Law Offices of David W. Klasing Today you can arrange a consultation on (800) 681-1295 or make an appointment online HERE.
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Public contact: Dave Klasing Esq. MS-Tax CPA, [email protected]
SOURCE Tax Law Offices of David W. Klasing, PC