Technological advances have made it a challenge for taxing authorities to pursue those they believe are hiding money in order to avoid paying taxes -- until recently, that is. The IRS has worked diligently to find ways to track people who own cryptocurrency in order to make sure they pay taxes on it. For this reason, some cryptocurrency owners, including some here in Massachusetts, could find themselves facing allegations of tax crimes.
Like other people across the country, when Massachusetts residents do not know how to do something, they often turn to someone who does. For instance, fixing an electrical problem, treating an illness and even preparing their tax returns often require some help. People rely on those with the knowledge and experience in certain areas to handle matters on their behalf. When it comes to preparing taxes, the person someone relies on could potentially end up committing tax crimes. What happens to the taxpayers?
Boston taxpayers are required to report all of their income, which includes any virtual currency owned. The problem is that it is easy to forget about it and that could draw the attention of the IRS. In fact, the federal taxing authority recently announced that it has begun contacting certain owners of this type of currency via mail.
Most Massachusetts taxpayers fill out their yearly tax forms, and they make sure they include every dollar of income in order to avoid any adverse repercussions for not doing so. Perhaps it's because they know, or at least suspect, that when it comes to collection taxes, the IRS has many tools at its disposal. One of those tools is the Information Returns Processing System.
Owning a business is a dream of many Massachusetts residents, but doing so comes with certain financial responsibilities. Most people fulfill these obligations, which include paying personal and business taxes. Every so often, the IRS alleges that certain business owners commit tax crimes by falsifying returns and failing to pay amounts the agency believes are due.
It is tax time again. Numerous Massachusetts residents may anticipate refunds while others expect to pay. In either case, filings need to be made, and many people turn to others for help in maximizing refunds and minimizing payments. The problem is innocent people could end up paying for taxes filed incorrectly because they unknowingly became the victims of scammers.
The old adage “just because you are charged with a crime does not mean you are guilty” is more than just a cliché used by criminal defense attorneys to procure business. Many times there is a real life application.
In prior posts, we highlighted the difference between an honest mistake that results in the incorrect amount of taxes paid, and outright fraud where a taxpayer affirmatively tries to avoid paying taxes. Indeed, it is easy to point out the difference between fraud and mistakes in the abstract, but what defenses are actually available when the IRS thinks that you cheated on your taxes?
For most people, dealing with the IRS may not be at the forefront of their plans in January, especially when they have not received their w-2's or corporate bonuses from the past year. Nevertheless, what you do between now and the federal income tax filing deadline (April 17) could subject you to civil or criminal penalties depending on how it is viewed by tax authorities.
For some people, this week’s snow storm will be a unique opportunity to hunker down and complete their federal income tax returns. For some people, it may take only an hour or two. For others, it may be a project that takes the entire week and then some.