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The IRS is Overloaded—But That Doesn’t Mean Taxpayers Can Relax in 2022

News, Offshore Account Update

Posted in on January 31, 2022

The Internal Revenue Service (IRS) recently published an update to the status of its operations during the COVID pandemic, and this led to a wave of media coverage warning taxpayers to be prepared for an “overloaded” IRS during the 2022 filing season. But, while some of the IRS’soperations may be behind schedule, this does not mean that taxpayers can afford to relax. As Virginia IRS lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, taxpayers must be as careful as ever to ensure that they are meeting their federal obligations.

Taxpayers Need to File Timely and Compliant Tax Returns

Even if the IRS is behind, taxpayers still need to timely meet their obligations under federal law. This means that taxpayers must accurately complete their federal returns and file them on time (or timely request an extension). Taxpayers must also determine if they have any additional filing obligations, such as an obligation to file a Report of Foreign Bank and Financial Accounts (FBAR), IRS Form 8938 or both pertaining to their foreign financial assets.

The IRS Will Catch Up Eventually

If you file a false, fraudulent or late return, the IRS might not contact you right away, but it will contact you eventually. Once the IRS contacts you, it is too late to file an amended return or make a voluntary disclosure. At this point, the damage will have already been done, and you will be forced to deal with the consequences of your failure to make a complete and accurate filing—even if this point comes years down the line.

The IRS is Still Prioritizing Compliance—Especially in Certain Areas

While the IRS may be overloaded in general, it is still prioritizing certain functions. These prioritized functions include compliance. The IRS is continuing to audit individual and business taxpayers’ returns and the IRS’ Criminal Investigation Division (IRS CI) has been extremely active as of late. In particular, IRS and IRS CI appear to be devoting substantial resources to enforcement in the areas of:

  • COVID-related tax fraud and other crimes
  • Cryptocurrency tax compliance
  • Foreign financial asset reporting
  • International tax compliance
  • Small business and gig economy tax fraud (including fraudulent deductions)

As a U.S. taxpayer or business owner, what does all of this mean for you? Ultimately, it means that you need to treat the 2022 tax season just like any other. All U.S. taxpayers need to take the necessary steps to timely comply with their federal reporting and tax payment obligations; and, if they have concerns about compliance, they should consult with a lawyer before making decisions that could get them into trouble with the IRS.

Contact Virginia IRS Lawyer Kevin E. Thorn

If you have questions about federal tax compliance in 2022, we can help. Virginia IRS lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, has extensive experience advising individual and corporate taxpayers on all IRS-related matters. To request a consultation, call 703-752-3752, email ket@thornlawgroup.com or contact us confidentially online today.

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