The FATCA Data Haystack Remains Just That
The Foreign Account Tax Compliance Act (FATCA) has resulted in a massive influx of financial information to the IRS over the past 13 years, but the extent of this data remains unknown. Despite expectations of significant revenue, FATCA has not met its financial goals, and the IRS is grappling with the challenge of effectively utilizing the data it has received from partner jurisdictions to enforce tax compliance. Tax Notes covered the topic in an article on August 23, 2023. Gray Reed Partner Joshua Smeltzer was one of the experts interviewed. Board Certified in Tax Law by the Texas Board of Legal Specialization, Joshua uses his experience as a former litigator for the U.S. Department of Justice to defend clients in tax audits, tax appeals, and litigation in Federal District Court, U.S. Tax Court, the U.S. Court of Federal Claims, and tax issues in U.S. Bankruptcy Court.
Excerpt:
Some of the funding will be used to help narrow the field of taxpayers potentially selected for audit, as the agency has been given a mandate to go after wealthy taxpayers, said Joshua D. Smeltzer of Gray Reed. “It will be difficult to target improvements in enforcement directly to FATCA because . . . dissecting enforcement increases on a granular level is just too hard,” Smeltzer said. However, because many more taxpayers in middle- and high-income brackets have worldwide finances, “the efforts by the IRS for FATCA enforcement will increase as well,” he said.
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Tax Attorney: It’s Hard to Press the IRS on Crypto Guidance
The IRS has opted for informal legal memoranda as a means to offer guidance on cryptocurrency-related issues, creating difficulties for taxpayers attempting to push for IRS action through legal avenues. By releasing legal memoranda on cryptocurrency topics like loss deductions and like-kind exchanges, the IRS is signaling potential areas of contention with taxpayers in future disputes. However, the absence of clear guidance, especially regarding matters like the application of wash sale rules to digital assets, leaves room for ambiguity until the IRS formally addresses these issues. Joshua Smeltzer, who leads Gray Reed’s blockchain and digital assets practice, spoke with Tax Notes following a related cryptocurrency presentation to the Texas Society of CPAs with fellow tax Partner Matt Roberts. Joshua’s insight is heavily quoted in an article published on August 23, 2023.
Excerpt:
Smeltzer pointed to two taxpayers’ recent loss in Jarrett v. United States, No. 22-6023 (6th Cir. 2023) to highlight the difficulty posed by attempts to force the IRS’s hand in areas in which it hasn’t issued guidance, particularly on cryptocurrency.
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