FIRST: The number one priority of IRS is going to be the small businesses that are not paying employees trust fund taxes, you know the amount deducted from your paycheck for IRS taxes, social security, etc. The employer is supposed to send those funds to IRS every quarter.
Well, the IRS has devoted time and effort to train 2056 Revenue Officer in trust fund recovery. The Revenue Officer shows up at your front door, the request your bank statements for the past year. If the expenses show they are a benefit to the debtor or seemed to support the lifestyle of the debtor, instead of paying IRS the trust fund money, this will catch the Revenue Officer’s attention. Then the Revenue Office will order up your 1040’s for the years in question. Those lifestyle expenses should show up as income, if they do not, the Revenue Officer makes an assessment and makes a referral to criminal or civil division.
If you find yourself in the IRS’s cross hairs, you should figure out exactly where that money went. If it is income, file an amended 1040 as fast as possible. This may mitigate the IRS’s decision to send to civil or criminal, also it may help you avoid that 75% penalty.
SECOND: The IRS has used the COVID break to increase its access to information and data.
IRS has been issuing John Doe summons to firms that deal with assets overseas, and crypto firms. The John Doe summons gave IRS access to all the people who deal with the crypto firms and those firms that deal with foreign assets.
Therefore, if you have been buying foreign assets or crypto, make sure you have reported any income that you used to purchase these assets, because the IRS has all the information and data on file to cross check against you tax return.
