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Tax law is a highly complex and ever-changing field, with new changes happening all the time. As such, plenty of people find themselves in trouble with the IRS – either through malicious intent, or an honest mistake. Today, we’re taking a look at a couple of cases from the IRS Criminal Investigation list of the top cases of 2021, and providing some tips on how you can ensure you stay out of trouble next year.
A Bulgarian Bitcoin Boss
In January of 2021, a Bulgarian national was convicted of a scheme to defraud over $7 million in funds from American bitcoin investors. Rossen G. Iossifov used a cryptocurrency exchange located in Bulgaria to launder money stolen in a variety of schemes by sending the funds to partners located within the U.S., who would then convert the funds into cryptocurrency and launder it via Iossifov’s cryptocurrency exchange.
This case is a great example of the current state of cryptocurrency in U.S. tax law. Although legislation specifically targeting cryptocurrency is still few and far between, the IRS is no less dedicated to pursuing those who use digital assets for more nefarious purposes. For the time being, cryptocurrency is handled in a similar manner to other financial assets and securities, such as stocks, coins, and precious metals. However, the IRS has been clear that it views cryptocurrencies as property, rather than currency, which means that cryptocurrency users still owe taxes on any profits they make from the assets they purchase, sell, trade, or otherwise manage the assets.
A Shocking Solar Scheme
In November, the owner of a solar generator business (DC Solar) utilized a classic Ponzi scheme, which ended with a plea of guilty to conspiracy to commit wire fraud and money laundering. The owner, Jeff Carpoff, received a 30-years prison sentence after he was found to have fleeced investors for over a billion dollars – the biggest fraud in the history of the Eastern District of California. Investors were lured in by solar tax credits, falsified financial documents, and what appeared to be a legitimate business.
Ponzi schemes like this are easy to fall for. The investments almost seem too good to be true (because they usually are). The best you can do is to ask lots of questions and demand detailed reports from the investor before you hand over any money or assets.
The IRS’s 2022 Criminal Investigation list will be out in the next few months, and we’re sure there will be other mind-boggling cases to learn about. In the meantime, whether you have cryptocurrency questions, disputes with the IRS, concerns about a possible Ponzi scheme, or more, the team at Weisberg Kainen Mark, PL is here to help. Contact us today.
Weisberg Kainen Mark, PL
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