The Inflation Reduction Act, signed into law this month by President Joe Biden, empowers the IRS with nearly $80 billion in new funds. The world’s most powerful tax collection agency is using the money to go on a hiring spree to fuel much tougher enforcement efforts.
It is widely assumed that the audits will be brutal and widespread. Taxes start with tax returns, which must be signed under penalties of perjury. The Biden administration has said that the audits on steroids are for fat cats who have escaped having to pay their fair share for too long. The administration has suggested the IRS would perform no new audits on anyone making less than $400,000 annually. Republicans tried to include that in the law, but every Senate Democrat voted against the amendment, as well as IRS audit protection for those earning less than $400,000.
In other words, American taxpayers at every income level are fair game regardless of income. So buckle up, and think about whether your taxes — and records — are vulnerable. How would they look under a microscope? Tax returns must be signed under penalties of perjury. What’s more, if you try to change that language, the IRS says it doesn’t count as a tax return — which means your statute of limitations on an audit never begins. You can be audited forever.
Related: US govt delays enforcement of crypto broker reporting requirements
Speaking of perjury, the IRS asks on every individual tax return, “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”
The 2022 version of that question is even more intrusive as we’ll see. The IRS says that all taxpayers filing Form 1040, Form 1040-SR or Form 1040-NR must check one box answering either “Yes” or “No” to the virtual currency question. The question must be answered by all taxpayers, not just those who engaged in a virtual currency transaction in 2021.
The IRS agents hired to audit billionaires are authorized to use deadly force on you or even your dog based on their “opinion”. pic.twitter.com/autqppvql8
— Wall Street Silver (@WallStreetSilv) August 13, 2022
In the tax world, a simple yes or no question can be a surprisingly big deal — if you answer wrong. But can you check “No?” Taxpayers who merely owned virtual currency at any time in 2021 can check the “No” box when they have not engaged in any transactions involving virtual currency during the year or limited their…
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