U.S. Tax Attorney
Our corporate tax practice provides sophisticated advisory services and meticulous planning solutions at the intersection of law and finance, guiding businesses through the entire lifecycle of corporate activity. Specializing in Subchapter Cmatters, our core competency lies in structuring complex Mergers and Acquisitions (M&A), tax-free reorganizations, divestitures, and the nuanced area of corporate liquidations (governed by IRC §§ 336 and 331, and tax-free parent-subsidiary liquidations under §§ 332 and 337). We move beyond mere compliance to offer strategic counsel that maximizes tax efficiency, manages statutory and regulatory risk, and ensures capital transactions are executed to achieve the optimal tax result, setting the appropriate basis in assets for future operations. We serve as critical partners in interpreting the Internal Revenue Code and Treasury Regulations to fortify the transactional foundation of the firm's clients.
Beyond domestic corporate planning, our expertise encompasses the increasingly complex domain of international taxation. We advise U.S. multinational corporations on the implications of outbound investment, including the intricate rules surrounding Controlled Foreign Corporations (CFCs), Passive Foreign Investment Companies (PFICs), and related anti-deferral regimes. Furthermore, we provide robust support in tax controversy and audit defense, representing corporate clients before the Internal Revenue Service (IRS) on issues ranging from complex corporate attribute utilization to transfer pricing disputes. Our approach is characterized by deep-dive analytical rigor—the same rigor applied to solving complex tax problems like entity liquidations—ensuring proactive compliance and aggressive, yet defensible, positions in any challenging tax environment.
MY PRACTICES
Reporting Crypto
Penalties
Receipt of Crypto
Sale & Transfer of Crypto
Trading Crypto
Receiving Gifts and Payments in Crypto
The Internal Revenue Service’s foundational position—set forth in IRS Notice 2014-21—is that virtual currency is treated as property for U.S. federal tax purposes. This single classification determines the tax consequences of virtually every crypto transaction. When cryptocurrency is received, the tax treatment depends on why it was received and what the taxpayer’s relationship is to the payer. Some crypto receipts constitute income taxable at ordinary rates, while others qualify as non-taxable gifts that simply transfer basis. Because all future tax consequences hinge on proper valuation at the moment of receipt, taxpayers must maintain precise records and understand the governing legal framework.
Receiving Cryptocurrency as Payment for Services or Goods. When a taxpayer receives cryptocurrency in exchange for services—whether consulting fees, freelance work, professional services, or the sale of goods—the IRS treats the transfer as ordinary income realized at the moment the taxpayer gains dominion and control over the assets. This principle, articulated in Notice 2014-21 and reinforced in the Virtual Currency FAQs (e.g., FAQ 1–3), places crypto compensation squarely within the general rules of IRC §61 governing taxable income.
For individuals not operating a trade or business, such income is generally reported on Schedule 1. For business owners, it belongs on Schedule C, where it is also subject to self-employment tax. The fair market value (FMV) of the digital asset at the exact time of receipt becomes both the amount of income recognized and the taxpayer’s cost basis for subsequent capital gains purposes. Because market prices fluctuate rapidly, the IRS expects documentation that captures the FMV as of the precise timestamped block confirmation or exchange ledger entry.
The failure to properly document these values is one of the most common sources of IRS audit disputes in the crypto space. The IRS has increasingly used blockchain analytics tools to cross-verify transaction histories, making accuracy and completeness essential.
Receiving Cryptocurrency as Wages (Employee Compensation). When cryptocurrency is received by an employee rather than an independent contractor, the tax treatment shifts, but only in the mechanics—not the substance—of taxation. The transfer is still valued at its FMV on the date the employee receives it. However, wage payments in crypto fall under the employer’s formal payroll obligations.
Under IRS Notice 2014-21 and IRC §§3401–3402, employers must withhold federal income tax, Social Security, and Medicare taxes from crypto wages and must report the value on Form W-2. The FMV at the time of payment is included in Box 1 of the W-2 and simultaneously becomes the cost basis for the employee’s later disposition of the asset.
Because employers often fail to understand these rules, the IRS has emphasized in recent guidance that crypto payroll is not exempt from traditional employment tax requirements. Employees paid in crypto, therefore, face the unusual dual exposure of under-reported wages by the employer and unreported capital gain on later sale—both of which must be corrected to avoid penalties.
Receiving Cryptocurrency as a Gift. Crypto received as a gift is generally not taxable to the recipient. Internal Revenue Code §§2501–2503 establish that gifts are subject to tax only for the donor, not the recipient, and only when the amount transferred exceeds the annual exclusion amount—$18,000 for 2024. The IRS applies these rules to crypto exactly as it does to other types of property.
What makes crypto gifts unique is the transparency of blockchain transfers. Although the recipient incurs no immediate tax liability, the transfer must be properly documented because the recipient inherits the donor’s carryover basis and, for gain purposes, the donor’s holding period as well. This has critical implications: a low-basis gift can generate significant future taxable gain even when no income tax was due upon receipt.
If the value of the gifted cryptocurrency exceeds the annual exclusion amount, the donor—not the recipient—may be required to file Form 709, United States Gift Tax Return. Many donors remain unaware of this obligation, leading to frequent reporting deficiencies. Our practice advises both donors and recipients to maintain clear contemporaneous records, including wallet addresses, transaction hashes, and donor basis documentation.
Receiving Cryptocurrency Through Airdrops and Hard Forks. Airdrops and hard forks represent a distinct category of receipt for which the IRS has provided detailed guidance. Under the Virtual Currency FAQs (notably FAQ 21–24) and Notice 2014-21, a taxpayer recognizes ordinary income when they acquire “dominion and control” over new crypto units created by a fork or distributed through an airdrop.
The decisive factor is not the blockchain event itself, but whether the taxpayer is able to transfer, sell, or otherwise dispose of the new tokens. As soon as control is achieved, the FMV of the tokens at that moment becomes taxable income and simultaneously establishes the cost basis. For example, if a hard fork results in the creation of a new token that appears in the taxpayer’s exchange wallet with full access, the IRS considers the taxpayer to have realized ordinary income even if the taxpayer chooses not to sell the token.
Determining the exact moment when dominion and control arises can be technically complex, especially when tokens appear gradually across multiple platforms or when trading is temporarily restricted. These nuances have been common sources of taxpayer error and IRS disagreement, making careful documentation essential.
The Central Role of Documentation and Compliance. Across all forms of crypto receipt—whether as compensation, wages, gifts, or blockchain-generated distributions—the unifying theme is documentation. Because crypto taxation hinges on the FMV at the instant of receipt, taxpayers bear the burden of proving value, timing, and the nature of the transaction. IRS Notice 2014-21 makes clear that taxpayers must maintain “records sufficient to establish the positions taken on tax returns,” and the IRS has repeatedly stated in enforcement communications that the absence of documentation may be treated as evidence of negligence or, in more serious cases, willfulness.
Our practice offers comprehensive compliance services for taxpayers receiving cryptocurrency in any form. This includes contemporaneous valuation reports, wallet-level transaction tracing, audit-ready documentation packages, and advisory services for determining the proper tax treatment under the governing authorities. As the IRS continues to expand its crypto enforcement initiatives and deploy increasingly sophisticated analytics tools, proactive compliance is no longer optional—it is the foundation of sound tax planning.
As a New York tax attorney focused on cryptocurrency taxation, I help clients properly classify, value, and report all forms of crypto receipts—whether earned as payment, received as wages, transferred as gifts, or acquired through airdrops and forks. My services include determining the correct tax treatment under IRS Notice 2014-21 and related guidance, preparing income and gift-tax filings, establishing defensible fair-market-value records, and correcting prior non-compliance through amended returns or IRS disclosure programs. I provide full representation before the IRS, including audit defense, reasonable-cause advocacy, and strategic planning to minimize tax exposure on future transactions.
My Assistance in Crypto Matters
Sale & Transfers of Crypto
Once cryptocurrency has been acquired—whether through purchase, compensation, gifts, or blockchain-generated events—the next tax layer arises at the moment of disposition. Because the IRS classifies virtual currency as property, disposing of crypto in any manner that changes ownership or economic position generally creates a capital gain or loss under the rules governing the sale or exchange of capital assets. These principles flow directly from IRS Notice 2014-21, Internal Revenue Code §§1001, 1011, and 1221, and are elaborated upon in multiple IRS Virtual Currency FAQs. The complexity of this area lies not in the tax theory—which mirrors the treatment of stocks and other property—but in the practical challenge of reconstructing cost basis, holding periods, and fair market value across exchanges, wallets, blockchains, DeFi platforms, and custodial systems.
Selling Cryptocurrency for U.S. Dollars. The most straightforward taxable disposition occurs when a taxpayer sells cryptocurrency for fiat currency such as U.S. dollars. Under IRC §1001(a), the taxpayer must recognize gain or loss equal to the difference between the amount realized—typically the USD received—and the adjusted basis of the cryptocurrency sold. Basis is generally determined by the cryptocurrency’s fair market value at the time the taxpayer acquired it, adjusted for any prior income recognition events.
The holding period is essential because it determines whether the gain is subject to short-term or long-term capital gains rates. Property held for one year or less produces short-term gain taxed at ordinary income rates; property held for more than one year qualifies for preferential long-term capital gains treatment under IRC §1(h). Because crypto assets may be moved across wallets and exchanges without any change in ownership, reconstructing holding periods often requires detailed blockchain and exchange-level tracing. Any misalignment between taxpayer-provided records and IRS third-party reports—such as Form 1099-B or Form 1099-DA from exchanges—can result in automated mismatch notices or full audit inquiries.
Crypto-to-Crypto Trades (Swaps and Conversions). Many taxpayers are surprised to learn that exchanging one cryptocurrency for another is also a taxable event, even when no fiat currency is involved. The IRS makes this explicit in Notice 2014-21 and in FAQs 6–7: exchanging Bitcoin for Ethereum, trading ETH for USDC, or converting tokens within a decentralized platform constitutes a disposition of property. Under the realization doctrine, the taxpayer must treat the transaction as though they sold the first asset for its fair market value in USD and then used the proceeds to purchase the second asset.
The taxpayer therefore recognizes capital gain or loss on the “sale” of the relinquished asset, while the “purchase” of the new asset establishes a fresh basis equal to the FMV at the time of the exchange. Because like-kind exchanges under IRC §1031 are available only for real property after the Tax Cuts and Jobs Act, crypto-to-crypto trades cannot be deferred under prior like-kind principles. The elimination of §1031 treatment for personal property caught many early crypto traders off guard, leading to multi-year compliance gaps that the IRS is now actively investigating through blockchain analytics and exchange reporting.
Using Cryptocurrency to Purchase Goods or Services. Using crypto to buy something—whether a car, a laptop, a plane ticket, or a cup of coffee—is treated exactly the same as selling the crypto for cash and spending that cash. This rule follows directly from Notice 2014-21 and longstanding property-tax principles. The taxpayer recognizes capital gain or loss based on the difference between the crypto’s basis and its fair market value at the time of use.
This is one of the most frequently overlooked taxable events. Many taxpayers assume that spending crypto for personal consumption does not generate tax consequences. However, the IRS has repeatedly reiterated that any use of crypto as a medium of exchange constitutes a disposition. For taxpayers who make frequent micro-transactions, such as purchasing goods through crypto debit cards, the volume of taxable events can be extremely high and often requires specialized software and legal oversight to reconstruct. Failure to properly account for these transactions can lead to significant underreporting penalties.
Transferring Cryptocurrency Between One’s Own Wallets or Exchanges. A critically important distinction arises when a taxpayer moves cryptocurrency between wallets or exchanges they personally own. Such internal transfers do not constitute taxable events because there is no change in beneficial ownership, no realization, and no economic gain or loss. However, the IRS places the burden of proof on the taxpayer to demonstrate that the transfer was indeed internal.
Blockchain records alone often do not conclusively establish ownership of both sending and receiving wallets. Therefore, taxpayers must maintain corroborating records—such as exchange statements, screenshots, correspondence, or transaction reports—linking the wallets to their identities. Without proper documentation, IRS examiners may treat the inflow to a new wallet as an unreported purchase or income event, especially when the corresponding outgoing transfer is not immediately identifiable. Our firm routinely prepares transfer-mapping documentation to prevent these recharacterizations and to preserve the integrity of basis and holding-period records.
The Challenge of Basis Tracking and Reconstruction. While the legal framework governing crypto sales and transfers mirrors that of traditional property, the practical challenge lies in reconstructing a defensible basis ledger across sometimes thousands of transactions and dozens of platforms. Issues arise when taxpayers have:
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used multiple exchanges with inconsistent or missing data,
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withdrawn or deposited tokens across self-hosted wallets,
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participated in staking, lending, or liquidity pools that produce hybrid transactions,
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suffered losses from hacks, rug pulls, or abandoned projects,
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or engaged in high-volume trading without a structured tracking method.
Because capital gains reporting occurs on Form 8949 and Schedule D, the IRS expects a complete and accurate itemization of each disposition. In recent years, the IRS has significantly expanded information reporting obligations for exchanges and custodians. With the implementation of Form 1099-DA, the agency now receives detailed disposition-level data directly from platforms—data that it will automatically compare against taxpayer filings. Any discrepancies may generate CP2000 notices or referral for examination.
Our practice specializes in reconstructing transaction histories using blockchain analytics, exchange APIs, and forensic accounting tools to build an audit-ready basis ledger that aligns with IRS standards.
Strategic Tax Planning for Crypto Dispositions. Strategic planning is essential for optimizing outcomes on crypto dispositions. This includes reviewing holding periods to qualify for long-term rates, implementing tax-loss harvesting before year-end, identifying wash-sale exposures (though the wash-sale rule under IRC §1091 currently does not apply to crypto—but may be applied by analogy in exams), and determining the most favorable cost-basis methodology, such as FIFO, specific identification, or HIFO where defensible.
Given the IRS’s increasingly aggressive posture—evident from summonses issued to exchanges, John Doe orders, and the expansion of its Digital Asset Initiative—proactive planning and documentation are critical steps in protecting taxpayers from penalties and unnecessary tax liability.
As a New York tax attorney focused on cryptocurrency transactions, I assist clients in accurately determining and reporting gain or loss on the sale, exchange, or transfer of digital assets. My services include reconstructing basis and holding periods across complex wallets and exchanges, applying IRS cost-basis rules, and preparing detailed capital-gain calculations that withstand audit scrutiny. I advise on tax-efficient disposition strategies, loss-harvesting opportunities, related-party transfer issues, and cross-border implications for international clients.
For clients with incomplete records or historical trading activity, I perform forensic wallet analysis and develop defensible methodologies when data is missing. Where past reporting errors exist, I prepare corrective filings, negotiate with the IRS, and represent clients through audits and appeals. My goal is to transform fragmented transaction histories into a clear, compliant tax posture while minimizing exposure and maximizing legitimate tax benefits.
My Services
Crypto Trading: U.S. Tax Implications
For investors engaged in high-volume cryptocurrency trading, or for international clients participating in U.S. markets, trading activity introduces unique tax complexities that go beyond standard capital gain and loss reporting. The IRS distinguishes between casual investors and traders in securities for tax purposes, a classification that can dramatically affect how gains and losses are recognized. Additionally, non-resident aliens (NRAs) who engage in frequent trading may inadvertently trigger U.S. tax obligations under the concept of a U.S. trade or business (USTB). Careful structuring and timely elections are therefore essential for high-activity traders and international participants to optimize outcomes and mitigate risk.
Active U.S. Traders: Investor vs. Trader Status. The first critical determination for U.S. taxpayers is whether their trading activity qualifies for trader status under IRS rules. Casual investors, even if highly active, generally report gains and losses under standard capital asset rules. By contrast, taxpayers who meet the IRS criteria for a trader in securities can elect Mark-to-Market (MTM) accountingunder IRC §475(f). This election allows the taxpayer to treat all gains and losses as ordinary income, converting capital losses—which are normally limited to $3,000 per year against ordinary income—into fully deductible losses against all income.
Eligibility for trader status is evaluated based on the frequency, volume, and intent of trading. Courts have emphasized that the taxpayer must trade substantially, with continuity and regularity, and that the primary purpose of the activity is to profit from short-term market movements. For cryptocurrency traders, this analysis requires detailed documentation of daily transactions, holding periods, and trading strategies. Once eligibility is established, a timely §475(f) election must be filed, typically by the due date of the prior year’s tax return, to ensure compliance and secure MTM treatment.
Non-Resident Alien Traders and U.S. Trade or Business Risk. Non-resident aliens who engage in trading cryptocurrency may face a separate set of risks. The IRS examines whether frequent, continuous, and regular trading rises to the level of a U.S. trade or business (USTB). If it does, the NRA becomes subject to U.S. income tax on gains connected with the activity, potentially including gains that would otherwise be foreign-source and exempt under standard treaty provisions.
To mitigate this risk, it is critical to evaluate the type of trading, the frequency of transactions, and whether any U.S.-based platforms or entities are involved. While the U.S. provides safe-harbor exceptions for trading in stocks, securities, and commodities, these exceptions do not automatically extend to digital assets, which can be classified variably depending on IRS interpretation and emerging guidance. Structuring the NRA’s trading through appropriate foreign entities or custodial arrangements, combined with careful documentation of all trading activity, can preserve treaty benefits and prevent the classification of gains as effectively connected with a U.S. trade or business.
Margin and Leveraged Trading Considerations. High-activity traders often employ margin or leveraged trading, introducing additional tax and reporting complexities. Borrowed funds generate interest expense, which may be deductible under IRC §163, but margin calls and forced liquidations can produce taxable dispositions of cryptocurrency at unfavorable market prices. Each event—borrowing, liquidation, and repayment—has distinct tax consequences that must be carefully tracked.
Failure to accurately report margin-related gains and losses can trigger significant IRS scrutiny. Detailed records of loan agreements, interest payments, collateral movements, and liquidation dates are essential to substantiate deductions and avoid disputes. Properly managed, margin and leveraged trading can be integrated into an overall tax strategy to optimize deductibility while maintaining full compliance.
Strategic Planning and Compliance for Traders. The common thread across high-frequency trading, MTM elections, and international operations is the necessity of strategic planning and rigorous compliance. For U.S. traders, this includes determining eligibility for trader status, timely filing of §475(f) elections, and precise tracking of all trades to support MTM accounting. For international traders, it involves structuring operations to avoid unintended U.S. tax exposure, documenting safe-harbor qualifications, and preserving treaty protections. For margin and leveraged trading, it requires reconstructing complex interest and liquidation events to substantiate deductions and report taxable dispositions accurately.
Because IRS enforcement in the cryptocurrency trading space is expanding—through platform reporting, blockchain analytics, and international cooperation—traders must adopt proactive measures to maintain audit-ready records, defend MTM positions, and optimize tax efficiency without risking non-compliance.
As a New York tax attorney specializing in cryptocurrency, I help high-activity traders and international investors navigate the complex U.S. tax rules surrounding crypto trading. My services include determining eligibility for trader status, preparing and filing Mark-to-Market (MTM) elections under IRC §475(f), and ensuring all gains and losses are reported accurately as ordinary income when applicable.
For non-resident alien traders, I provide strategic structuring and entity planning to mitigate U.S. trade or business (USTB) exposure, preserve treaty benefits, and ensure compliance with IRS reporting obligations. I also advise clients on margin and leveraged trading, including proper accounting for interest expenses, liquidations, and collateral movements.
For clients with extensive or complex trading histories, I reconstruct transaction records across wallets, exchanges, and DeFi platforms, producing audit-ready documentation and providing proactive guidance to minimize risk. My goal is to ensure that clients trading cryptocurrency at any scale maintain full compliance while optimizing their tax outcomes.
My Services
Reporting Income: Navigating DeFi, Mining, and Staking
As the cryptocurrency ecosystem evolves, ordinary income reporting has become increasingly complex. Beyond basic compensation or capital transactions, taxpayers now encounter income streams generated through mining, staking, lending, and liquidity provision in decentralized finance (DeFi). The IRS treats these activities as ordinary income under the same general principles that govern property and services transactions, with taxable events recognized when the taxpayer gains dominion and control over the asset. Accurate classification, valuation, and timing are essential, as these transactions establish both immediate income reporting obligations and the cost basis for future capital gains.
Mining and Staking Rewards. Mining and staking represent foundational mechanisms in blockchain networks, but they also generate taxable income at the moment tokens are received or unlocked. According to IRS guidance, the fair market value (FMV) of newly acquired tokens at the time of receipt constitutes taxable ordinary income, regardless of whether the tokens are subsequently sold. This value simultaneously establishes the cost basis for any future disposition.
The reporting obligations depend on the taxpayer’s activity level. Individuals engaging in mining or staking casually may report the income on Schedule 1 (Line 8z) as other income. Professional miners, or those operating as a trade or business, report the income on Schedule C, which allows the deduction of related expenses, such as electricity, hardware depreciation, and software costs. Proper recordkeeping—including timestamps, wallet addresses, and transaction hashes—is critical for demonstrating the precise moment of income recognition and defending reported values in the event of IRS examination.
DeFi Lending and Interest Income. DeFi platforms increasingly allow users to earn interest by lending crypto, providing liquidity, or participating in automated yield strategies. The IRS treats these earnings as ordinary income, typically recognized either as accrued or received, depending on the taxpayer’s accounting method. For instance, a liquidity provider who deposits tokens in a lending protocol and earns interest must include that interest in income at the point it is credited or becomes accessible.
The challenge in DeFi lies in identifying and separating various forms of income, which may include base token interest, reward tokens, or governance incentives. Failure to accurately classify these streams can result in misreporting, as IRS auditors will expect all income-generating activity to be captured and reported. Casual participants may report interest on Schedule 1, while professional or business operations can leverage Schedule C to deduct directly attributable expenses, including transaction fees, gas costs, and platform service charges.
Liquidity Pool (LP) Fee Income and Complex Yield Components. Participation in liquidity pools is another source of taxable ordinary income. LP fees are generally recognized as ordinary income at the time earned, while the underlying LP tokens may have a separate tax treatment upon withdrawal. Additionally, DeFi yields often comprise multiple components—such as base interest, reward tokens, and governance tokens—each potentially subject to different tax reporting rules.
Taxpayers must carefully parse these components to correctly establish income recognition and future cost basis. Misclassification can trigger IRS adjustments, penalties, and interest. Detailed records of all token receipts, timestamps, valuations, and withdrawals are essential. Experienced practitioners can reconstruct income streams, establish defensible FMV determinations, and ensure accurate reporting on Schedule 1 or Schedule C, as appropriate for the taxpayer’s level of professional involvement.
Strategic Compliance and Risk Mitigation. The common thread across mining, staking, and DeFi activities is that ordinary income recognition often occurs before any cash is realized. Taxpayers who fail to recognize these events in a timely and accurate manner risk significant exposure, including underpayment penalties, interest, and potential audit inquiries.
Strategic compliance requires meticulous tracking of all inflows, precise FMV documentation, correct accounting for costs and expenses, and proper classification of each type of income. Proactive planning may also include entity structuring for professional operations, timing strategies to manage income recognition, and reconciliation across multiple wallets, platforms, and chains. Given the IRS’s growing focus on DeFi and blockchain reporting, careful planning and accurate reporting are now essential components of responsible cryptocurrency tax management.
As a New York tax attorney specializing in cryptocurrency, I help clients accurately identify, classify, and report all forms of ordinary income generated within the crypto ecosystem. This includes income from mining, staking, DeFi lending, liquidity pools, and other decentralized finance activities. My services ensure that every taxable event is recognized at the correct moment, with defensible fair market values, proper cost-basis tracking, and IRS-compliant documentation.
For casual participants, I prepare income reporting on Schedule 1, and for professional or business operations, I structure filings on Schedule C, including deductions for directly attributable expenses such as hardware, software, gas fees, and platform service charges. I also assist clients in reconciling complex DeFi yields, distinguishing between interest, token rewards, and governance tokens, to ensure complete compliance while minimizing tax exposure.
For clients with past unreported income, I provide corrective filing and audit support, including thorough transaction reconstruction, reasonable-cause statements, and representation before the IRS. My goal is to transform intricate crypto activity into a clear, compliant tax position while helping clients manage ongoing DeFi operations efficiently and with confidence.
Strategic Tax Reporting Services
Penalties, Remedies, and Defenses: Resolving Crypto Tax Non-Compliance
For clients with prior unreported cryptocurrency activity, penalties and enforcement risk represent one of the most serious challenges in the U.S. tax system. The IRS has increasingly focused on digital asset reporting through exchange information returns, blockchain analytics, and international cooperation. Non-compliance can trigger accuracy-related penalties, civil fraud charges, and even criminal exposure in extreme cases. Effective resolution requires a combination of strategic remediation, thorough documentation, and, where appropriate, formal disclosure procedures.
Failure to Report Income or Gains. One of the most common compliance issues arises from failing to report cryptocurrency income, whether from sales, swaps, mining, staking, or DeFi activity. The IRS may assess a 20% accuracy-related penalty on underpaid tax, along with interest, and, in severe cases, pursue criminal investigation for tax evasion.
For non-willful failures—typically unintentional oversights or negligence—the Streamlined Filing Compliance Procedures (SFCP) provide a pathway to resolve prior omissions. These procedures allow taxpayers to submit amended returns, report previously unreported crypto income, and request penalty reduction or elimination. My approach includes preparing complete amended submissions, establishing the non-willful nature of the conduct through sworn statements, and ensuring that all income and gains are accurately reconciled with IRS reporting data.
Willful Tax Evasion or Fraud. In instances where non-compliance is willful—such as deliberate concealment of transactions or assets—the IRS may impose the civil fraud penalty of up to 75% of the underpayment, in addition to potential criminal fines or imprisonment. In these cases, resolution requires participation in the Voluntary Disclosure Program (VDP), which allows taxpayers to proactively disclose unreported income and mitigate civil and criminal liability under defined terms.
Managing a VDP application is highly technical and strictly procedural. It requires full, truthful, and timely disclosure, comprehensive transaction reconstruction, and coordination with IRS counsel. My practice guides clients through every step of this process, ensuring compliance with procedural requirements while advocating for the most favorable resolution achievable under the law.
Failure to Report Foreign Accounts. Cryptocurrency held in foreign wallets, exchanges, or custodial accounts can trigger reporting obligations under FBAR (FinCEN Form 114) and FATCA (Form 8938). Non-willful failures to file FBARs can result in penalties up to $10,000 per violation, while willful violations carry far more severe consequences, including penalties equal to the greater of $100,000 or 50% of the account balance.
For non-willful omissions, the Delinquent International Information Return Submission Procedures (DIIRSP) allow taxpayers to submit the required forms retroactively. My approach focuses on demonstrating reasonable cause, establishing the non-willful nature of the failure, and coordinating amended filings to minimize penalties while preserving good-faith compliance in audit or VDP settings.
Audit Defense. Even when filings are accurate, the IRS may challenge key aspects of cryptocurrency reporting, including cost basis, income classification, or the characterization of activity as hobby versus business. In such cases, robust audit representation is critical.
I provide full support during IRS examinations, including forensic reconstruction of transaction histories, blockchain analysis, and detailed accounting of cost basis and holding periods. By preparing clear, defensible documentation at the transaction level, clients are positioned to withstand scrutiny, resolve disputes efficiently, and reduce the risk of unnecessary penalties.
Strategic Resolution and Risk Mitigation. Across all types of non-compliance, the unifying principle is proactive, documented resolution. Whether through streamlined procedures, voluntary disclosure, amended filings, or audit defense, the objective is to minimize penalties, mitigate interest accrual, and prevent escalation to criminal exposure. Clients benefit not only from legal representation but also from strategic planning designed to prevent recurrence, including structured recordkeeping, ongoing transaction monitoring, and periodic compliance reviews.
As a New York tax attorney specializing in cryptocurrency, I help clients navigate and resolve IRS penalties arising from prior unreported or misreported crypto activity. My services include handling accuracy-related penalties, civil fraud exposures, FBAR and FATCA compliance issues, and full audit representation.
For non-willful errors, I guide clients through Streamlined Filing Compliance Procedures and Delinquent International Information Return Submission Procedures, preparing amended returns, reconciled income reports, and sworn statements to demonstrate good faith and mitigate penalties. For willful non-compliance, I manage the rigorous Voluntary Disclosure Program, ensuring timely, truthful, and complete submissions to minimize civil and criminal liability.
In audit situations, I provide forensic reconstruction of all transactions, detailed cost-basis analyses, and defensible valuation records to support reported income and holdings. My approach combines strategic remediation, proactive planning, and expert representation to protect clients’ interests, reduce exposure, and restore full compliance with U.S. tax law.
My Services: Crypto Tax Penalty Resolution and Compliance Support
Viacheslav Kutuzov | International & U.S. Taxation Expert
We minimize your taxes domestically and internationally...
Viacheslav Kutuzov
VIACHESLAV KUTUZOV, Esq.
International and U.S. Taxation Expert
New York Tax Attorney & Counselor-at-Law (6192033)
55 Broadway, Floor 3, New York, New York 10006
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