From the Tax Law Offices of David W. Klasing - IRS Report Shows that the IRS Is Going After Tax and COVID-Related Fraud, Money Laundering, and Cybercrime

IRVINE, Calif., Jan. 18, 2022 /PRNewswire/ -- The IRS is ramping up its investigative and prosecutorial efforts against tax evaders using previously unknown or unavailable measures to defraud the federal government. We know this because they tell us all about it, through their annual report. Released in November, this year's report suggests some new targets of the government's efforts to reduce the tax gap and earn back the massive amounts of money being spent on bolstering their enforcement capabilities.

Specifically, the IRS is looking closely at recipients of federal aid programs created to assist American small businesses throughout the pandemic. The government also makes no secret about their intention to go after those who use cryptocurrencies to evade taxes or further cybercrimes. Based on the report, the IRS has realized that they can now spot sophisticated evasion schemes, and they are hungrier than ever.

Not every case is so cut and dry, however. Whether you have concerns about a future government investigation or if the IRS has already come knocking at your door, the dual-licensed Criminal Tax Defense Attorneys and CPAs at the Tax Law Offices of David W. Klasing may be able to help. To hear more about our various services, call us at our offices at (800) 681-1295.

Annual IRS Report Signals Enforcement Actions Against Specific Tax Crimes

Each year, the IRS' Criminal Investigations Division (IRS-CI) releases a report that provides information about the investigation strategies and targets that they have pursued recently and how they intend to move forward. This year's report places specific focuses on a few key areas in which the IRS has ramped up their efforts, including pandemic relief fraud and cybercrimes such as cryptocurrency evasion schemes.

The report serves as more than just a press release to let the public know what the IRS is up to. It is also meant to be a warning to potential perpetrators that the IRS is not done in these areas yet. The government will likely be checking up on many small businesses who utilized COVID-19 relief measures or deal substantially in cryptocurrency. If you are concerned about increased government action that might affect you or your small business, reach out to the dual-certified tax attorneys and CPAs at the Tax Law Offices of David W. Klasing as soon as possible.

IRS-CI Targets COVID-19 Relief Schemes

One of these focuses that has only recently become prevalent is in the area of fraudulent schemes intended to take advantage of the government's pandemic-related relief efforts. Between the current administration and the previous one, several tax relief and favorable loan opportunities have been created to help keep small businesses open through the challenges of quarantine and social distancing.

However, these opportunities have motivated certain tax violators to engage in fraudulent practices to obtain more than their fair share of relief. The IRS listed a number of examples of instances where they uncovered these schemes and secured guilty convictions from perpetrators across the U.S.

The majority of IRS-CI charges involving COVID-19 relief fraud involved taxpaying small businesses improperly obtaining loans through the Paycheck Protection Program (PPP). The PPP was originally intended to provide employers with favorable loan rates so that they could continue to meet their payroll obligations while being affected by quarantine measures.

However, many taxpayers sought PPP loans for their own benefit, which they obtained by making false or misleading statements in their applications about the number of employees at their company. The IRS also cited a number of instances where owners of businesses which received PPP loans used the loans for their own personal benefit instead of distributing them to their employees.

The examples in the IRS report represent the most excessive and flagrant schemes that they discovered. These cases involved massive amounts of money being misappropriated to purchase luxury homes and cars. However, all of the example cases had another thing in common: they all ended in jail time.

IRS-CI Annual Report Focus on Cybercrimes and Cryptocurrency

Another emerging area that the IRS is quickly recognizing as a threat is in cryptocurrency. While cryptocurrency is a highly popular and lucrative investment, it also can be used to pursue illicit means of funding criminal enterprises and evading taxes. The report claims proudly that the IRS-CI's Cyber Crime Unit was responsible for seizing roughly $3.5 billion in crypto assets over the year covered in the report, which would account for 93% of the total value seized by the IRS-CI in that same time.

One area that the IRS was keen to mention in the report was the part that cryptocurrency plays in furthering cyber-attacks such as ransomware. Ransomware is a type of computer virus where the perpetrator of the attack can seize the contents of the computer and lock it until their demands are met. These demands are typically a certain dollar amount of money paid through a cryptocurrency to ensure that the funds cannot be traced back to the attacker.

The IRS also identified cybercrime schemes involving payments to dark web sites such as Silk Road and money laundering for drug cartels. If your business utilizes cryptocurrencies for large transfers, you should be planning on hearing from the IRS. To that end, we recommend that you get your financials in order with the help of our dual-certified tax attorneys and CPAs.

The Tax Law Offices of David W. Klasing Can Defend You Against the IRS

If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.

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 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 a 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!

The fight to protect you, your net worth, your very liberty or your small to middle market business starts with us. We can set you up with one of our dual-licensed Criminal Tax Defense Attorneys and CPAs when you call the Tax Law Offices of David W. Klasing at (800) 681-1295 or schedule online today.

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Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]

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