This form allows taxpayers who may face criminal prosecution for willfully violating tax law to voluntarily disclose information to the IRS that they failed to previously disclose.
IRS announces an update to this form. The IRS announced today that Form 14457, Voluntary Disclosure Practice Preclearance Request and Application has been revised to include reporting virtual currency. This allows taxpayers who may face criminal prosecution for willful violation of tax law the opportunity to voluntarily disclose information they previously failed to provide US authorities in order prevent potential charges against them or their business. Learn more.
The new changes include:
The IRS Criminal Investigation division now accepts photocopies, faxes and scans of taxpayer signatures.
Taxpayers can send this form via eFax to 844-253-5613 to reduce mailing and processing times. Previously, Part II of this form had to be mailed.
There is now an expanded section for reporting virtual currency.
A penalty structure for employment tax and estate and gift issues has been added. A check-box for inability to pay in full has also been included.
Could reporting undisclosed information has saved these fellows from cyber crime related to crypto? Perhaps. The form allows the user to disclose unreported income by selecting from income ranges starting with $0 - $50,000 up to greater than $100,000,000. The best strategy is to use other legal methods for reducing or eliminate your tax liability related to the requirement for all taxpayers to report all income. Here's one strategy.
Hugo Sergio Mejia, listed as number 6 of the 10 top cases of the IRS Criminal Investigation division.
Hugo Sergio Mejia was sentenced to three years in federal prison and required to forfeit all assets derived from running an unlicensed business that exchanged at least $13 million in Bitcoin and cash. He charged commissions for the transactions and established separate companies to mask his true activity. This included drug traffickers who would use his services to convert their money into Bitcoin or cash. Learn more.
Rossen G. Iossifov, listed as number 5 of the 10 top cases of the IRS Criminal Investigation division.
Rossen G. Iossifov was sentenced to 121 months in federal prison for participating in a scheme where popular online auction and sales websites advertised high-cost goods (typically vehicles) that did not actually exist. Once victims sent payment, U.S.-based associates would accept victim funds, convert these funds to cryptocurrency, and transfer the cryptocurrency to foreign-based money launderers. Learn more.
Ross Ulbricht, listed on page 4 of IRS Criminal Investigation Annual Report (2021).
On November 5, 2020, the United States forfeited thousands of bitcoins that were seized by the CI Cyber Crime Unit in 2015 from Silk Road creator Ross Ulbricht. Ulbricht was convicted by a New York federal jury of seven criminal counts, including conspiracy to distribute narcotics and money laundering. Learn more.
Roman Sterlingov, also listed on page 4 of IRS Criminal Investigation Annual Report (2021).
On April 27, 2021, Roman Sterlingov was arrested at Los Angeles International Airport on criminal charges related to his alleged operation of a bitcoin money laundering service on the darknet. Over the course of its decade-long operation, Bitcoin Fog moved over 1.2 million bitcoin – valued at approximately $335 million at the time of the transactions. Learn more.
Volodymyr Kvashuk, also listed on page 4 of IRS Criminal Investigation Annual Report (2021).
Kvashuk sold the gift cards on a third-party website at a large discount. In exchange, he received bitcoin. He attempted to use the bitcoin to hide the origins of the money. With this money, he bought a $1.6 million waterfront property, a $160,000 Tesla vehicle, and funded a million dollar investment account. Kvashuk then lied to his tax return preparer about where his income came from. Learn more.
From the IRS Criminal Investigation Annual Report with Chief Jim Lee:
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