 Internal Revenue Service IRS Tax News. IRS announces update to the form 14457 Voluntary Disclosure Practice Pre-Clearance Request and Application. But first, an attempt at a joke, I apologize in advance. I tried doing taxes for a medical marijuana distributor, but the tax regulations were way too trippy, man. I just kept getting lost in the weeds. For example, that Purple Cush Credit, it's totally out there. I'm telling you, new marijuana laws these days, they're way too strong. What happened to the good old days when you can burn through a few weed regulations with ease, the mind's still clear enough afterwards to admire the garden? IR2022-33 February 15, 2022 Washington, the Internal Revenue Service announced today that form 14457 Voluntary Disclosure Practice Pre-Clearance Request and Application, there's a link to that here, has been revised including expanding a section on reporting virtual currency. So here it is, it looks like a crackdown here on the virtual currencies. The IRS sending out a warning that they're going after these items and you might then want to be reporting them taking preemptive action so that they go easy on you if you haven't been reporting in accordance with the law on the virtual currency. So form 14457 Permits Taxpayers who may face criminal prosecution for a willful violation of tax law to voluntarily disclose information to the IRS that they failed to previously disclose. So they're basically saying once the law goes into place and the people have not reported the income for it possibly with the use of some kind of virtual currency having exchanges that they didn't report their taxes on and so on and so forth, then the question is, well, how does the IRS take action on that? They would like to still basically say, we would like you to voluntarily give us the information, but after they're in violation, if you were to do that, then you would be basically admitting that you were in violation in the first place. So there's a disincentive after you've already been in that situation to then disclose the situation that you're in. So the IRS in that situation will typically try to say, hey look, if you tell us about it now, then we're gonna go easier on you possibly would be the general idea as opposed to if you don't tell us and you continue to go forward with not disclosing these transactions, we want you to disclose or are required to be disclosed by law and pay taxes on or whatever, then the penalties could be harder if we go after you in the future. And it looks like, of course, the IRS is trying to go after these kinds of transactions. These are one of these areas where the IRS is concerned that they don't have as much lockdown in terms of the reporting of items and revenue and so on. So updates and additions to this form include IRS criminal investigation now accepts photocopies, fax mail, fax similes and scans of taxpayer signatures. Taxpayers can send this form via eFax to 844-253-5613. There'll be a link to this in the description if you want that number. So I won't read it multiple times to reduce mailing and processing times. Previously, part two of this form had to be mailed and expanded section of reporting virtual currency, a penalty structure for employment tax and estate and gift issues, a checkbox for inability to pay in full. The updates reflect input from practitioners and stockholders and take into account trends in the type of financial asset that taxpayers hold. Quote, this is an important form and process for people who recognize it's better step forward and address their tax situations head on before facing IRS enforcement action. And quote, said Doug O'Donnell, deputy commissional service of enforcement and enforcement services and enforcement. So obviously they're basically saying, hey, it's better for you to at this point in time, tell us about it now. If you haven't been reporting things that we think you should be reporting in this area of the virtual currency, which is a new kind of area that they're still trying to wrap their hands around and strangle it till it dies. But so that means that if you take the action first, then that would typically be better after they go in and they start investigating this further if they were to take action at that point in time. That would be the idea, I believe, or at least my interpretation of it. Quote, the revised form includes a number of updates and we encourage people to review the guidelines and consult a trusted tax professional. And quote, thousands of taxpayers have used the voluntary disclosure practice since its inception. It serves as a compliance option for taxpayers who have potential criminal exposure and wish to come into compliance with tax laws. Those making such disclosures are still subject to civil examination and the payment of all applicable taxes, interest, and penalties. So obviously if you didn't report some kind of taxes that you're supposed to be reporting, then if you report the taxes, the goal is not to avoid the pain of the taxes. You're still gonna have to pay the taxes on the revenue that you earned in accordance with the tax law, which you're trying to avoid is the action further and above that, which would include penalties, interest, and possible other actions for violating the tax law at that point in time. So taxpayers who did not commit any tax or tax related crimes and wish to correct mistakes or file delinquent returns should consider other options available to comply with their tax and reporting obligations. The IRS encourages taxpayers to consult with professional tax or legal advisors and determine which option is the most appropriate. So if it was like a mistake or something like that, because you're in an area that is kind of a new area with these virtual currencies and whatnot, then the question is what action should you be taking? Should you be taking this action, possibly just amending the return because you didn't report something that you should have been reporting in terms of income? Was it a mistake or was it intentional? And so what kind of action should you be taking at that point in time? By taxpayers voluntary disclosure must be timely, accurate, and complete. The taxpayer must also cooperate with the IRS in determining the correct tax liability and make full payment of the tax interest and any applicable penalties. Cooperation includes full payment of all tax interest and penalties. So again, obviously you're not gonna get out of the tax. That's not the point. If you hid the income that you're supposed to be reporting, then if you report it, then you're gonna pay the tax. You're gonna be in compliance with the law by paying the tax or setting up some agreement to pay the tax. You're trying to avoid the penalties and interest and other kind of punishments. They could be from, you know, evading the tax in some way or not reporting it and so on. So a taxpayer who is unable to make full payment may request the IRS consider other payment arrangements. If a taxpayer anticipates, they cannot pay the total amount of tax interest and penalties required. They must disclose this and submit a proposed payment arrangement and completed and executed collection information statement form 433A. So in other words, you're gonna then try to see if you can set up, in essence, a payment plan. I believe the 433A is basically a personal financial statement saying how much money that you have and how much money you bring in, like a balance sheet and an income statement so they can assess whether or not you can actually pay the taxes upfront and whether or not it's you deserve to have, you know, like a payment plan type of setup as opposed to simply being required to pay the taxes at that point. The burden is on the taxpayer to establish an inability to pay to the satisfaction of the IRS based on full disclosure of all assets and income domestic and foreign under the taxpayers control. For more information on the voluntary disclosure practice as well as other options to come into compliance with the law, please visit. There's links to these below. IRS criminal investigation voluntary disclosure practice. IRM 9511 investigative process, other investigations IRM 4633 withholding an international individual compliance offshore voluntary disclosure program, streamline filing compliance procedures and voluntary disclosure practice. So there's links to those items here. There'll be a link to this in the description.