The IRS’ COVID lull in enforcement formally ended June 15th with the issuance of 5 million Notices of Intent to Collect. Nearly 1 in 6 American taxpayers has past due income taxes, so it is likely that someone you know will be tagged by the IRS' stepped up enforcement.
The IRS spent the past eighteen months preparing for this new spate of enforcement by onboarding AI technology to supplement the information garnered from recent ‘John Doe’ subpoenas sent to Coinbase, Kraken and other cryptocurrency brokers and the trove of data willingly supplied by taxpayers seeking PPP, unemployment and EIDL COVID support. With the IRS’ improved ability to spot likely attempts to hide transactions, it should be no surprise that referrals from IRS’ collections to IRS’ criminal prosecutions are up 42% so far in 2021.
If you think you may receive one of these Notices of Intent to Collect from the IRS, it is more important now than ever before to bring yourself in compliance with the law. One of the unique aspects of tax law is the emphasis on voluntary compliance. This works at multiple levels: taxpayers voluntarily report their income and tax due to the IRS and, if they misreport their income taxpayers are afforded an opportunity to voluntarily self-correct. Taxpayers who self-correct before the IRS comes calling are often spared any referral for criminal prosecution and can sometimes have certain penalties waived.
If your financial situation has changed due to COVID, now may be an ideal time to ‘come-correct’ and actually benefit from the IRS' stepped up enforcement. You may have had a financially bleak 2020 and perhaps 2021 is only beginning to warm up for you. This means you may be entitled to calculate any repayment plan with the IRS based upon a reduced income from COVID lockdowns.
With so many variables at play, now is the time to seek expert advice and representation. While nobody wants to pay more than absolutely necessary to get in compliance with the law, it is more crucial than ever to avoid turning a collection case into a prison sentence.
If you or someone you know has received an IRS collection letter and are unable or unsure how to proceed contact me at 312 577-9405, or David@RatowitzLawGroup.com.