The IRS is looking for a new strategy to crack down on crypto traders. The headlines have been all over the crypto news, from Forbes to Coindesk.
- The IRS is hiring consultants to crackdown on cryptocurrency tax evasion.
- The IRS approaches contractors to audit your crypto tax returns.
- The IRS solicits contractors to examine crypto trader’s tax returns.
So the big question is, have you decided who your go-to tax preparer is yet?
If the answer is yes, have you asked your tax preparer if they have ever defended a crypto tax return to the IRS?
Did you know that 98% of tax preparers have never defended a tax return before the IRS? And of that remaining 2% how many of them know anything about crypto?
We are talking about a microscopic field, and it is crucial when you are picking a tax preparer that you can find someone that can defend you until the end.
Defending Crypto Traders
At Donnelly Tax Law, we do more than prepare tax returns. We have actually defended crypto traders in audits from the IRS.
We are specialists in going back and repairing prior tax returns where the cryptos have been misreported. We have done over 1000 tax amnesty returns as compared to other tax firms who have had no experience here.
We know how to defend people before the IRS.
If a tax preparer has never defended their work on crypto tax returns, how do they know that they did it right?
How do they have a feedback loop that tells them what is working with the IRS and what isn’t working to come back and change how they prepare the return?
Without that feedback, it is essentially like preparing crypto tax returns in the dark.
If you are worried about getting the best defense against the IRS when you get a letter, boy do we have a membership for you.
Audit Defense for Crypto Traders
Our CryptoTaxAudit membership is designed as a peace-of-mind policy. It’s the only monthly membership that will warn you, educate you and defend you from an IRS audit. If you get contacted by the IRS on any tax return, you have experts on hand who can handle the situation, and these experts are the best in handling crypto.
If the IRS contacts you, they may be auditing your cryptos, but chances are it is to audit something else on your tax returns.
People are scared because the form letter approach is disturbing to people. People are terrified of interacting with the IRS.
We can handle all the common issues, and we are experts in managing the crypto issues.
Most people have simple tax returns where you simply report all the w2’s and 1099s, how many children you have, and it is done with little to worry about.
It’s simple in that it is rarely going to experience an audit. But you may get an audit letter because you forgot to submit something that you should have. Maybe you left off a 1099 because it came late or didn’t come to you.
But, when you introduce cryptocurrency tax reporting, even someone who would otherwise have a simple tax return, now has a complex tax return.
Why? Because reporting income from cryptocurrency, anti-money laundering forms, and financial losses from crypto is a skill that few accountants have, and that tax software typically does not support.
What’s so complicated about tax reporting for Crypto Traders?
Tax reporting for crypto traders is complicated because there is no W2 or 1099 to plug in answers from. You have to interact with the tax form itself. As a result, there is a chance for mistakes. It may not even be a mistake on your part; it could be a mistake on how the IRS is looking at what you reported.
Either way, the moment you get a letter from the IRS, there is a problem. It may not even be something that you did wrong. But it is a problem because now you have to deal with the IRS to get this solved, and they are pretty tenacious.
A lot of people look at it, and to them, it is a simple matter. They just want to call up the IRS and talk to someone who knows more and explain the problem to them.
However, every time you call you get someone different and you are going to have to wait about 40 minutes to talk to somebody, which can be painful.
The person on the other side of the phone typically “does not know how to fix the problem”.
That is one of the flaws that people have with that assumption: I will just call the IRS.
READ MORE: Crypto Audit Defense With CryptoTaxAudit
Calling the IRS
When you call the IRS, it’s just like on TV when the police bring you in for questioning. You have Miranda rights, and you never say anything until you have a representative/lawyer present.
Because the police are experts at the good cop/bad cop, they will suck you into admitting something that you have to fix later. The same thing is true with the IRS.
Especially when you call up collections. I call them up for clients, and they immediately go for the jugular on me. They ask, where does the client work, where is his banking? And you think these are innocent questions but, no, these are the places they are going to go to seize your assets.
They ask it in such a way that these first two questions have to be answered, or I can’t help with the situation. That is how they manipulate the call.
The client that thinks they will just call up the IRS and explain it to them has already made the first mistake.
The IRS doesn’t want to know their story. They want cash, and they want it right away. Especially when we go into cryptos, you are into a mess.
Crypto Traders Can Have Peace of Mind
Why do you have peace-of-mind as an Audit Defense member of CryptoTaxAudit?
The moment you get the letter. You call me up. You give me a copy of the letter. I will talk to the IRS for you. I will translate the problem. I will tell them if it’s a small problem or big problem. I will call the IRS up. I will talk to the IRS as an intermediary. I will defuse the situation with the IRS. They don’t get information from me that we don’t want to disclose to them. They don’t get your banking information. They don’t get your employer’s information. They don’t get your phone number.
They talk to me, and we go straight to the matter. They know they can’t get that from me because I am an enrolled agent. Most enrolled agents are former IRS, so they can’t pull the wool over their eyes.
That is the most significant value.
And if the issue has to deal with crypto. What we say and what we deliver to the IRS is so critical.
We don’t want to spend time unwinding a mess somebody made trying to call the IRS themselves.
Once they have you in their target, there is some IRS guy who has a quota they want to make off your income. And you need to defend yourself.
That’s representation. We are talking to the IRS on the phone.
Cryptos Take Audits to Another Level
As part of an audit, there are a lot of things that happen.
One is gathering records, and the client has to do that. He knows his records. We don’t know that. We don’t go to their house and pull the box from under their bed. The client has to gather the records.
But now we have to organize the records. These are expenses. These are incomes. These are crypto-related. We have to organize it and put it into a fashion, so we can answer the questions the IRS is asking for us. They will ask for copies of all your bank statements for whatever year they are looking at; They will want them all for that year. They are looking to see what the deposits are. Deposits are typically a sign of income.
They are going to look at all the deposits and say it seems to me like you made x amount of money because of all your deposits. They are going to ask me how it didn’t happen that way. You are claiming deductions for expenses you had. They are going to go through your checkbooks/credit card statements. They have a different way of looking at how you do your taxes. They are looking at the external factors to prove that you are reporting all the income you got.
That is the organization. The client can do all that, or we can do all that. Typically, The client usually has us do that, and it’s a billable service.
Once we put it together along with a cover letter, we have what we are going to send to the IRS. We are going to send the whole packet to the IRS.
All the interactions with the IRS are free if you are already an Audit Defense Member of CryptoTaxAudit when you get an IRS letter.
What Else Do Crypto Traders Get With CryptoTaxAudit?
Also included is all the tax law research where we research the tax law and code to find our angle of attack. That is included as well, and it is a valuable service. We understand the tax law, the court cases, we do research, we hire outside lawyers to do additional research when we need to. That’s the expensive work if you hired a lawyer, and for Audit Defense Members at CryptoTaxAudit that is all free.
Approximately 14 million taxpayers (roughly 10% of all taxpayers) owe money to the IRS. They are on payment plans, or they are being audited to get on payment plans.
This number was already expected to shoot up to 21 million before the Coronavirus, which is sending everyone into bankruptcy. So we are looking at an explosion of need. We are looking at 1/6th of all Americans having tax issues with the IRS. Which means they are getting letters from the IRS.
The IRS stimulus package is like a free loan handout and the IRS will inevitably seek repayment by other means. Therefore, they are tempting people into bad situations with the IRS.
The reality is that crypto traders are making a lot of money and the IRS is broke. It makes crypto traders a major target.
CryptoTaxAudit for Crypto Traders
With our monthly Audit Defense Membership plan, you get a peace-of-mind policy knowing that as a crypto trader you are in the best hands to handle your audit defense with the IRS. You get unlimited representation against the IRS. We will call them as many times as need be to solve your situation.
Our time building up your legal defense is 100% free, compared to lawyers who are charging $250 an hour for this service, and they don’t know crypto as we do.
Also included is all the tax law research where we research the tax law and code to find our angle of attack. That is included as well and is a high-price service. We understand the tax law, the court cases, we do research, and we hire outside lawyers to do additional research when we need to. That’s the expense work if you hired a lawyer, but with CryptoTaxAudit that is all free.
Become a member of CryptoTaxAudit today. Pick the best plan for you. Don’t wait.
Not a member? No problem! We can still help you as a standard billable service if you have already received an IRS letter.
Our Audit Defense Membership service is our way of making this defense affordable to everyone and for everyone to have peace-of-mind in knowing they have the best protection against the IRS.
Learn more about CryptoTaxAudit.
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