Find out how the IRS has trapped 40-50% of the Millennial generation in fraudulent tax returns that fail to report all crypto income and why they need a crypto tax amnesty program.
If you are a millennial crypto investor and unfamiliar with how a crypto tax amnesty program could keep you in good standing with the IRS, then this article is for you.
By providing scant directions on tax cryptocurrencies, the IRS has trapped 40-50% of the Millennial generation in fraudulent tax returns that fail to report all crypto income.
In effect, the IRS has criminalized 40-50% of all Millennials.
We need a crypto tax amnesty program to help these young investors get back into compliance with their crypto taxes.
2021 Wish For A Crypto Tax Amnesty Program
My 2021 wish is for all US cryptocurrency owners: is the IRS will come out with a crypto tax amnesty program. So that crypto owners who failed to report their crypto income in prior years can come forward, get compliant, get clean, and not suffer harsh penalties.
In this article, I want to layout the urgency of that and what you can do if the IRS fails to come out with a crypto tax amnesty program.
Jason Morton over at Cointelegraph came out with a very compelling argument about the need for a crypto tax amnesty program. Still, I'd like to add my perspective on that without boring you with statistics.
We can see that roughly 40 to 50 % of the entire millennial generation is non-compliant in reporting cryptocurrency.
We also know this is the generation that has the most ownership of cryptocurrency, and millennials are the ones that were the least financially educated and inexperienced in investing to know that they had tax liabilities.
Why Do Millennials Need A Crypto Tax Amnesty Program?
So, why do millennials need a Crypto Tax Amnesty Program?
Here is how this downward slope happens:
In your first year of reporting your cryptocurrency, you didn't know you were supposed to do it.
Your accountant didn't ask you, TurboTax didn't ask you any questions, and People at H&R Block seemed oblivious.
You did not know you even had to report your cryptocurrency gains and didn't know how to calculate them.
So you just didn't.
A year passes.
The second-year now.
You know that you should report those cryptocurrency gains and losses, but you don't know how to fix the prior year.
You may not have the money to pay the taxes for the prior year that you didn't report.
And you're afraid if I report this year, then the IRS is going to figure out that I didn't report last year.
This is very common. And so the taxpayer does not file the second year.
Now, rather than being unintentional, it's intentional.
This enters into the fraud area because you knowingly are filing a false tax return.
As each subsequent year passes, that fraud progresses into full-blown tax evasion.
And now there are more & more things about your life that you're trying to hide.
I have talked to many clients like this. One comes to my mind right now.
A Client Case For Crypto Tax Amnesty
In 2015, a crypto owner had a lot of gains with cryptocurrency and some problems reporting statistics of it.
And he didn't file his tax that year. He didn't file the taxes at all.
Then came the year: 2016, 2017, 2018, 2019.
He never filed his taxes ever again.
The problem is that he would like to be current.
This crypto owner doesn't want to be a tax evader, but he feels that they'll ask questions about all the years if he reports one year.
It would crush him financially in such a way that he would never recover.
This is someone who has a legitimate fear, and there is somebody the tax system has left behind and is doing an injustice to them.
They want to be compliant, but the price is too high.
This is why we need a crypto tax amnesty program.
Donnelly Tax Law Has Had A 100% Success Rate With Tax Amnesty
My company, Donnelly Tax Law, has had a very successful tax amnesty program for people living outside the United States who haven't reported.
These are non-criminal criminal cases. They simply didn't know they had to report their income.
It's called the streamline foreign offshore program.
And my company, Donnelly Tax Law, has done over 850 streamlined foreign offshore programs, and we have had a 100% success rate.
We have had tremendous success with this.
Clients love the program because all you have to do is file your last three years (or amend and file your last three years of tax returns), along with filing the last six years of your FBAR financial bank filings, and provide a reasonable cause explanation.
This is where you are explaining how you got into the pickle that you're in.
And the IRS wants to accept this. They want you to get current.
Under this program, you paid any taxes owed in prior years.
There are no penalties, which can be significant, and there are no interest penalties.
Penalties have been a tremendous source of people getting hurt, so this is a wonderful program.
It Would Be Exciting If The IRS Would Announce A Crypto Tax Amnesty Program
If the IRS announced a crypto amnesty program just for this case, I think it would also be quite exciting.
If they could also extend like-kind exchange rules for people taking advantage of a crypto tax amnesty package, that would be equally exciting.
Like-kind exchanges are a legitimate way for most crypto people to solve things.
It's a great way to put the tax liabilities off into the future when people can pay.
Everyone Should Make A Case For A Crypto Tax Amnesty Program
Will the IRS create a Crypto Tax Amnesty Program? I don't know.
Everyone should contact their representative to make this case.
And if the IRS fails to do that, let me lay out an affordable strategy for people to get back into compliance if they want to comply.
What Can You Do If The IRS Does Not Create A Crypto Tax Amnesty Program
It's a two-step step approach.
First, as we come into doing your taxes for the year 2020, I recommend that you file your tax return completely honest, report all your gains, and declare everything.
Make this the year that you start filing honest tax returns that have integrity.
Related Reading: Why Is An Old Law Still Relevant For Like-Kind Exchange (LKE)?
We Have A Fantastic Alternative To A Crypto Tax Amnesty Program
Second, what do you do about the previous year's?
Well, seeing how the IRS is going back and auditing people who file amended returns and putting a lot at jeopardy in correcting those things.
My suggestion is that you get a hold of the services of CryptoTaxAudit.
We have a service where they watch your IRS accounts and see when the IRS puts an audit flag on an account.
The IRS is set up where their supercomputers will flag an account. We see that. And roughly six months later, the IRS will send an audit letter.
That creates a six-month month window where you can have professionals look at your return.
We can calculate your crypto gains.
We could submit an amended return so that your return is fixed before an IRS audit happens.
This will save you 20 to 40 % on accuracy penalties and other late payment issues.
So, I think this is a fantastic alternative to continuing to hide or continuing to be fearful.
And as you start to file with compliance, as you go one year after another, then eventually, the statute of limitations will start to protect you.
Time will start to protect you.
The CryptoTaxAudit Alert Membership service can watch all these years.
We will give you the heads-up if the IRS is on your tail and give you the advance notice to take action.
My Biggest Hope Is That The IRS With Come Out With A Crypto Tax Amnesty Program
My biggest hope is that the IRS will come out with a crypto tax amnesty program that can help bring 50 % of the younger generation into tax compliance.
Again, this is too much noncompliance for the IRS to continue to allow. Beating people with fines and penalties is not the way to nurture support for a voluntary tax system.
Become a member of CryptoTaxAudit today.
Schedule a consultation with Donnelly Tax Law.
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