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Posted On September 07, 2021
Should You Beware of Operation Hidden Treasure?

Should You Beware of Operation Hidden Treasure?

A crypto holder who hasn’t been reporting cryptocurrency transactions or has been filing incorrect reports should watch out for Operation Hidden Treasure. This unique IRS program seeks to uncover crypto holders who have failed to fulfill their federal tax requirements. This unique program is a collaboration between the criminal office and the civil office of the agency. It aims to unearth a specific group of cryptocurrency traders.

A couple of months ago, the IRS announced openings for contractors and vendors willing to be part of its crypto enforcement efforts. It seems the companies are now operational. According to a recent Forbes report, blockchain analytic companies will handle a huge chunk of work for this IRS initiative.

Issuance of John Doe Summons

A John Doe Summons is a fundamental part of Operation Hidden Treasure. The IRS can use this innovative tool when it’s uncertain about the identity of a particular taxpayer or cohort of taxpayers. The agency must serve the taxpayer or group of taxpayers in question with two or more John Doe Summonses.  In fact, Northern California and Massachusetts federal judges have directed Circle, Kraken, Poloniex, and Payment Ventures Inc. to be served with this kind of summons.

Crypto Owners on the IRS Radar

The agency has announced that it will be pursuing crypto owners who completed transactions worth over $20,000 from 2016 to 2020. Some of the warnings the agency is closely monitoring are owners cautiously organizing crypto transactions to bypass reporting requirements, taking advantage of shell companies and corporations, and recurring brief stops along specific chains.

What Steps Can A Holder with Unreported Crypto Take?

Avoiding Discussing Past Compliance Blunders

A crypto holder should resist the temptation of talking to his or her accountant regarding unreported crypto. The reason is that there is no attorney-client privilege between the holder and the accountant. The accountant may be, therefore, ordered to provide information about the holder to the investigators or testify against the holder in court.

Working Closely with a Tax Debt Attorney

Thanks to the attorney-client privilege, the crypto holder can discuss his or her unreported crypto with the tax debt attorney. Now, a client no longer runs the risk of information getting disclosed. The attorney can then assess the holder’s situation and provide him or her with practical tax debt help. The attorney can also advise the holder on options for preventing a criminal case, such as a civil disclosure and other legal options.