2021 “Green Book” Introduces Comprehensive Financial Account Reporting
The “Green Book” is a US Treasury Department document that presents detailed explanations of an Administration’s revenue proposals in support of a President’s annual budget request. On May 28, 2021, the Biden administration released its “Green Book” titled “General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals”. The Green Book was last issued in […]
Upcoming Virtual Currency FBAR and FATCA Reporting Enforcement
Under current FinCEN regulations, a foreign account holding virtual currency is not reportable on the FBAR. However, FinCEN in its FinCEN Notice 2020-2, proposes amending reports of foreign financial accounts (FBAR) regulations to include virtual currency accounts as a type of reportable account. FATCA requires foreign financial accounts reporting as well. For individuals, FATCA applies […]
THE TAX GAP TO RISE TO APPROXIMATELY $7 TRILLION
The US Treasury reports that it is expecting the tax gap to rise to approximately $7 trillion over the course of the next decade if left unaddressed. In May 2021, the US Department of the Treasury issued the “THE AMERICAN FAMILIES PLAN TAX COMPLIANCE AGENDA” describing the Biden Administration (Administration) initiatives for restoring IRS enforcement […]
Additional IRS Funding Will Increase IRS Enforcement
How IRS Finds “Mismatches” via its Automated Compliance Programs
The IRS uses the information it collects to detect, prevent, and reduce noncompliance and fraud. The US Government accountability Office (GAO) produced a Tax Administration Report on December 2020 (Better Coordination Could Improve IRS’s Use of Third-Party Information Reporting to Help Reduce the Tax Gap). IRS research (via GAO) discloses that when third-party reporting exits, […]
IRS Global High Wealth Group is a Tool to Reduce the Tax Gap
In its April 28, 2021 Press Release (the “Release”) “Investing in the IRS and Improving Tax Compliance”, the US Department of the Treasury addresses available enforcement activities relating to reducing the U.S. Tax Gap; estimated to reach approximately $7 Trillion over the next ten years. The Release states that providing the IRS with the resources […]
High-Income Individuals and Corporate Tax Returns are Targets of IRS Additional Funding Program
The 2022 discretionary funding request (request) made by the Biden Administration will invest in a “fair and robust” tax system that includes tax compliance enforcement directed at High Income and High Net Worth Individuals and Corporations. The funding program request states that the tax reforms are targeted to ensure that “the wealthy and well-connected pay […]
IRS Examination Functions Have Shifted
The commentary in A Closer Look: Impacting the Tax Gap by IRS Commissioner Chuck Rettig discusses how the IRS has shifted its examination focus to tax returns that include high income taxpayers, pass-through entities, multinational taxpayers involving international tax issues, large pension plans, private foundations, virtual currencies and Non-filers. The commentary sheds a lot of […]
IRS is on a Mission is to Reduce the Tax Gap
The difference between the amount of tax owed by Taxpayers for a given year and the amount that is actually paid timely for that same year is known as the “Gross Tax Gap”. The IRS looks at this number as an estimate of the annual amount of noncompliance with the US tax laws. In the […]
Out of Compliance Taxpayers Beware of The J5
In 2017, following the Panama Papers and Paradise Papers data leaks, the Organization for Economic Co-operation and Development (OECD) issued a “call to action” for countries to do more to tackle enablers of tax crimes. The result of this “call to action” was the 2018 establishment of an operational alliance known as the “Joint Chiefs […]
FinCEN is seeking Feedback on the Corporate Transparency Act (CTA)
The CTA is a recent reporting requirement that is expected to enhance U.S. national security through increasing the difficulty involved for harmful actors to exploit opaque legal structures for laundering money, financing terrorism, proliferating weapons of mass destruction, trafficking humans, and drugs, and committing tax fraud and other crimes. Included in the AML Act of […]
IRS sends “Soft Letters”
An IRS “soft letter” is an IRS “tickler”. IRS will send a “soft letter” to provide an opportunity for the Taxpayer to address an issue that could avoid the need for further IRS contact or examination. If a Taxpayer does not respond, or the explanation is inadequate, the IRS could initiate an examination. The soft […]
