Cryptocurrency and S Corporations in List Of New IRS Compliance Campaigns

From Forbes.com

The Large Business and International (LB&I) of the Internal Revenue Service (IRS) has announced five additional compliance campaigns. The campaigns target AMT credits carryforwards, S corporation distributions, virtual currency, reorganizations, and transition tax.

A compliance campaign is pretty much what it sounds like: an attempt to get taxpayers to comply with existing laws. Typically, it works like this. First, the IRS identifies a behavior that’s considered a concern—like, say, failing to report offshore income. Then, the IRS tries to figure out how best to educate taxpayers about the problem while also curbing the behavior.

Curbing the behavior can take many different forms. One of the most obvious is increased or targeted audits. The IRS may send out “soft letters”—think of those as a stern warning. Those letters advise the taxpayer that the IRS is aware of behavior that could be problematic, and as a first step, they are advising taxpayers of their filing requirements and may ask for additional information. A soft letter can look like this (example downloads as a pdf) and include language like this:

We’re sending you this as an inquiry. This inquiry is not an audit of your tax return, or of your failure to file one.

Campaigns are generally developed after significant research to maximize results. Clearly, if there is a problem that IRS sees on repeat, that’s worth consideration. True to form, the IRS says the most recent campaigns “were identified through LB&I data analysis and suggestions from IRS employees.”

But before you stop reading because maybe, say, you’re a small business (and not a large one), consider this: Targets are targets. Don’t be fooled by the “large business” label. While it’s true that campaigns are developed with certain taxpayers in mind, these are universal tax issues that could affect numerous taxpayers, including small businesses.

Continue Reading Here