Although the IRS lost a lot of staff over the past few years due to budget cuts, retirements, and hiring freezes, it has been hiring additional enforcement personnel in the past few months. The personnel are being trained and are starting to hit the field. That means the IRS is ramping up to increase tax compliance through enhanced visibility and enforcement. The IRS is targeting several areas, but two of major note are payroll taxes and cryptocurrency transactions.
Firms that withhold Social Security and Medicare taxes from employees’ paychecks but use the funds to pay other creditors instead of sending the money to the IRS are a TOP target for both the IRS and the Department of Justice. The civil enforcement division of the IRS is working much more closely with the criminal enforcement division and expects to make many more criminal cases than it has in the past.
The IRS is even sending teams of revenue officers to Wisconsin, Texas, Arkansas, and other locations where there are fewer Revenue Service employees because the brick-and-mortar offices have closed. IRS collectors will pop-in unannounced on noncompliant taxpayers and attempt to resolve ongoing payroll tax issues that continue to go unresolved after multiple prior attempts have gone nowhere.
Cryptocurrency transactions are also garnering attention. The IRS examiners are sending letters to people they believe have cryptocurrency accounts. This is all part of the Service’s efforts to clamp down on unreported transactions. In 2017, a court ordered Coinbase, a virtual currency exchange, to turn over to the IRS information on some U.S. customers who bought and sold bitcoin through the firm. The IRS has also set-up teams of agents to work on cryptocurrency-related audits.
Our Tax Attorney at Sodowsky Law Firm, PC Can Help You
So, beware, if you are in either or both of these camps. Make sure you keep up with your reporting and paying requirements. If you know someone who is struggling with payroll tax issues or other tax issues, have them contact the Sodowsky Law Firm, PC to arrange a confidential discussion of the issues.