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Megan L. Brackney Quoted In Forbes Article Entitled “Cryptocurrency Front And Center In Revised IRS Voluntary Disclosure Practice”

Megan L. Brackney was quoted in a recent Forbes article entitled “Cryptocurrency Front And Center In Revised IRS Voluntary Disclosure Practice,” published on February 15, 2022. Brackney analyzes the implications of the recent updates to the IRS’s Voluntary Disclosure Practice Preclearance Request and Application on both tax practitioners and taxpayers. 

The article notes:

Megan Brackney, a partner at Kostelantz & Fink, LLP in New York, who handles federal and state voluntary disclosures and other tax controversies, welcomed the new form and instructions because it provides a lot more clarity on what the penalties taxpayers will face will be. “We have been waiting for clarification on the penalty framework for situations other than taxpayers filing amended returns to report income tax and foreign assets. It is very welcome news to see the penalty framework for taxpayers who are using the voluntary disclosure to get caught up after years of not filing, and who have other compliance issues with tax other than income, such as estate, gift, and employment tax. The IRS’s penalty framework in these areas is consistent with its approach in income tax cases,” explained Brackney.

She further explained, “This new guidance gives taxpayers much more certainty about their penalty exposure in estate, gift, and employment tax matters. I believe that this increased predictability will cause more taxpayers to make voluntary disclosures. However, the voluntary disclosure process has been very slow in the past few years, with some taxpayers waiting for more than a year to receive preclearance and other taxpayers waiting years to resolve their cases. Hopefully, the IRS will work through those issues so that the voluntary disclosure process can move more quickly, which is a benefit for the IRS and taxpayers.”

“The IRS has updated the form to include more specific focus on virtual currency. The IRS has expanded the information that a taxpayer has to provide in requesting preclearance, now requiring the taxpayer to state from the asset all noncompliant virtual currency that the taxpayer owned, controlled, acquired, or disposed during the disclosure period. Taxpayers may be surprised that they have to provide this much detailed information up front. From my experience, however, the IRS can be trusted to use this information only to determine whether the taxpayer is eligible to make a voluntary disclosure. It does require some faith, however,” explained Brackney.

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