SCOTTISH recruitment firm Incubate Consulting has a double reason for celebration this April, with the completion of a successful first 12 months in business and an award nomination.
The Bridge of Allan-based business has been shortlisted for Best Recruitment Consultancy (Newcomer) in the s1jobs.com awards.
Neil Brown, Incubate’s director of Recruitment and Search, said: “We’ve had a wonderful first year in business, which has exceeded our expectations and we now look forward to expanding our successes in the twelve months to come.
“We’re delighted and honoured to have been shortlisted for best newcomer.”
The awards ceremony is due to take place in Glasgow in October.
On May 12, the IRS issued a statement of work soliciting “consulting services to support a taxpayer examination involving virtual currency.” The SOW was sent to popular cryptocurrency tax software companies such as CyrptoTrader.Tax, among others, in an effort to provide the IRS with the industry expertise necessary to identify and pursue cases where taxpayers reporting (or lack thereof) of digital assets is inconsistent with their actual cryptocurrency transactions. In other words: the IRS is hiring outside contractors who are experts in cryptocurrency to help them identify cryptocurrency investors whose tax returns either omit or contain incorrect data regarding cryptocurrency transactions. There’s only one reason why the IRS would hire experts in cryptocurrency as outside contractors: because they plan to significantly increase the volume and scrutiny of cryptocurrency audits.
How Does the IRS Treat Cryptocurrency?
The IRS defines a virtual currency as “a digital representation of value” functioning “as a unit of account, a store of value, and a medium of exchange.” Any asset with these characteristics, “[r]egardless of the label applied, . . . will be treated as virtual currency for [f]ederal income tax purposes.” Some virtual currencies are convertible, which means that they have equivalent values in one or more traditional currencies (fiat) and may act as substitutes for them. The more well-known virtual currencies, such as Bitcoin, Ethereum, and Ripple, are termed cryptocurrencies because they use cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain.
IRS Guidance on Treatment of Cryptocurrency
In Notice 2014-21, the IRS issued the first formal guidance on how cryptocurrency should be taxed. In a surprising move, the IRS applied general principles of tax law to conclude that virtual currency is property, rather than “currency,” for federal tax purposes. Consequently, an exchange of one virtual currency for another (e.g., Bitcoin for Ethereum) is a taxable transaction, resulting in gain or loss as well as a reporting obligation on the part of the taxpayer. This makes a lot of crypto transactions subject to the favorable capital gain and loss treatment instead of the more onerous ordinary income treatment. Mining and other receipt of units of cryptocurrency, such as being paid in cryptocurrency, create tax obligations and may need to be reported as ordinary income if they constitute income. Much like with the purchase of stock traded on a public exchange, simply buying or investing in cryptocurrency does not create a taxable event. Rather, it is the sale or exchange of virtual currency, or receipt of virtual currency in exchange for services performed or other property, that creates a taxable event.
The IRS provided further guidance in Revenue Ruling 2019-24, finding that a cryptocurrency “hard fork” (a single cryptocurrency splitting into two) in which no units of a new cryptocurrency are received does not result in gross income, but an “airdrop” (free distribution of units of cryptocurrency) does. In addition, the IRS has released and published on its website a set of frequently asked questions addressing the tax treatment of other virtual currency transactions, including those in which the virtual currency is held as a capital asset.
IRS Cryptocurrency Enforcement
In 2017, the IRS filed a lawsuit against Coinbase (one of the largest crypto exchanges) to obtain account holders’ names and account information. Why? Because during the years 2013 through 2015 Coinbase had almost six million customers, but only 800 – 900 taxpayers filed tax returns that reported gains from cryptocurrency. That’s a huge gap, and the court agreed that the IRS had a legitimate interest in investigating further. In 2018, Coinbase turned over 13,000 names to the IRS as a result of the litigation.
Not surprisingly, just over a year after the IRS received 13,000 names from Coinbase, the IRS sent roughly 10,000 “soft letters” to Cryptocurrency account holders. A so-called “soft letter” is not an IRS audit, but instead warns the recipient that they may want to consider taking certain action on their tax returns before an audit happens. Soft letters certainly doesn’t feel “soft” to the recipient, because anyone who gets one knows that the IRS knows something specific about them. If that isn’t on the tax return, that’s when trouble starts. Those soft letters didn’t necessarily mean that something was wrong on the recipients’ tax returns, but it may have been, and gave everyone a good faith opportunity to check the return and make sure all crypto was reported correctly.
Just about a year has gone by, and now the IRS is looking to hire crypto experts to assist with audits of taxpayers who have crypto. The statement of work looks for contractors who can “ingest all data provided by the IRS, as well as any attendant or related data the contractor collects through their systems.” Even though a cryptocurrency blockchain is anonymous, it remains susceptible to tracing as a public ledger. According to the statement of work, contractors should be able to analyze blockchain data and application programming interface keys obtained from virtual currency exchanges. Further, a contractor should “be available to consult with the IRS during meetings with taxpayers or their representatives,” including meetings with IRS Appeals Officers, “assist the IRS with trial preparation,” and, if needed, “to testify at trial as a summary witness explaining the calculations derived from the underlying data.” In other words, play time is over.
Can the IRS Do That?
You might be thinking, wait, I thought IRS data is private and they can’t provide my tax return information outside of the IRS agency, right? Yes, in general that’s the rule: the IRS has to keep tax return information private. But there are exceptions to that rule, and the IRS has used outside contractors before. The IRS has long relied on such advice for valuation purposes—most frequently for valuing non-cash charitable contributions, gifts, and estates. Conservation easements and artwork are especially contentious valuation items, often pitting the IRS’ experts against the taxpayer’s. Indeed, for artwork, the IRS has institutionalized reliance on outside expert advice in the form of the Commissioner’s Art Advisory Panel, comprised of academics and industry representatives from the private, public, and non-profit sectors, and the Art Appraisal Services (AAS) unit in the IRS Appeals Office. The panel provides advice and makes recommendations to AAS regarding the acceptability of appraisals that taxpayers submit supporting the fair market value claimed on the wide range of works of art featured in income, estate, and gift tax returns. In addition, anytime a tax return selected for audit includes an appraisal of a single work of art valued at or more than $50,000, the examining agent or appeals officer is required to consult AAS for possible referral to the panel, which meets in closed session to review all referred appraisals.
Procedures adopted by the AAS ensure strict compliance with the confidentiality requirements. These procedures ensure that information provided to panel members does not include the taxpayer’s name, the type of tax, the tax consequences of any adjustments to the appraised value, or details regarding the appraiser. To minimize the possibility that panelists recognize a taxpayer’s entire collection, the works of art are usually discussed in alphabetical order by artist or, in the case of decorative art, by object type. If there is a conflict of interest with a panelist and a work of art under review, the panelist does not participate in the discussion and is excused from that portion of the meeting.
In sharp contrast with how it has routinely used outside expert advice on artwork appraisal audits, the IRS pushed the envelope when in 2014, it engaged the California-based litigation powerhouse Quinn Emanuel Urquhart & Sullivan to assist with Microsoft’s transfer pricing audit, spanning the company’s 2004 to 2006 tax years. The $2.2 million contract with Quinn Emanuel was authorized by a Temporary Treasury Regulation issued in June 2014, issued two weeks after the contract was awarded. The regulation was issued under the IRS’ authority for summoning “books, papers, records, or other data” for examination and summoning individuals for taking their testimony under oath. Those regulations have now been finalized, and provides that a contractors may “receive and review” the summoned materials and “participate fully” in taking the testimony of the summoned person “in the presence and under the guidance of an IRS officer or employee.”
News of the Quinn Emanuel contract provoked sharp criticism from practitioners and on Capitol Hill, with many questioning the propriety of the IRS’ delegating a core governmental function—a tax audit—to private litigators. In a summons enforcement action, Microsoft challenged the validity of the regulation on those grounds. But a taxpayer challenging summons enforcement is in for an uphill battle. Although the district court expressed concern at “Quinn Emanuel’s level of involvement in this audit” and was troubled by “[t]he idea that the IRS can ‘farm out’ legal assistance to a private law firm,” the court ordered enforcement of the summons. The case is United States v. Microsoft Corp., 154 F. Supp. 3d 1134, 1143-44 (W.D. Wash. 2015).
Although the Court upheld the summons, a warning that “this case may lead to further scrutiny by Congress” proved prophetic when, in 2019, Congress passed the Taxpayer First Act, which added a new Section of the Internal Revenue Code that expressly prohibits the type of Quinn Emanuel arrangement permitted in Microsoft. That new subsection precludes an outside consultant from examining summoned “books, papers, records, or other data,” except for “the sole purpose of providing expert evaluation and assistance to the Internal Revenue Service.” It also prohibits any person, “other than an officer or employee of the Internal Revenue Service,” from “question[ing] a [summoned] witness under oath.” It is a question of when and how the IRS’s use of outside experts in cryptocurrency cases will be challenged in court – not if.
The Bottom Line
The Coinbase reporting gap puts this problem in perspective: in just one exchange there were over six million customers and less than one thousand taxpayers who reported cryptocurrency transactions. The IRS is justifiably wondering who the rest of the account holders are, why they haven’t reported any cryptocurrency transactions on their tax returns, and will be looking soon to make some strong examples out of cryptocurrency account holders who fail to fulfill their income tax obligations.
Thank you to Tax Notes reporter William Hoffman for bringing this issue to my attention.
I’m going to state the obvious: it’s a stressful time for most people around the world right now. Small businesses are closing for good, restaurants are barely making end’s meet offering takeout, and event venues are wondering if they will ever be able to host concerts again. On top of all of that, many individuals are grieving the loss of a loved one, or weathering their own COVID-19 diagnosis.
You’re probably saying to yourself: “how on earth could I potentially launch a business in the middle of all of this?” That’s exactly what news outlets and doomsayers want you to think – that there is no opportunity for a fresh start in the midst of a pandemic. I am proposing quite the opposite.
The Online World is Bustling as We Speak
If you don’t believe me yet, just think back to last month when Amazon announced they were hiring 100,000 new workers to accommodate for their surge in product demands. Walmart also hired 100,000 new workers amid product requests, with other companies like CVS posting 80,000 new available job openings. Other e-commerce companies across the board are presently experiencing a surge in their products, as shopping online has become the only way to get our hands on the products we love the most.
Moving into the world of freelancing, many assume that freelancers and online gig workers have suffered a blow throughout this pandemic. Think again. Forbes highlighted that freelancers are experiencing increased demand in their digital services for the new companies pivoting online. Companies once only accessible through brick-and-mortar now need websites built, pictures taken, copy written, and videos edited. Instead of hiring a person that costs them $60,000 per year, they can outsource all of it to freelancers happily awaiting their orders on the likes of Fiverr.com and Upwork.com.
So, although the physical world may look like a ghost town, product demand, service offerings, deals, and discounts didn’t disappear. In fact, they’re all still there! You just need to go online.
Get In on the Action Before It’s Too Late
Millions are pouring online to launch their online version of their business today. Traditionally in-person industries, like personal training and dance lessons, are also pivoting online using video streaming software. Many personal trainers are offering one-on-one Zoom lessons, as well as nutrition consultations. And don’t forget doctors – the telemedicine advancements have been astronomical. Every single industry could benefit from leveraging the internet.
Right now is the perfect time to launch a freelancing profile, an online business, or a service-based streaming site. People are looking for their same beloved products and services today, even if they have to stay at home. If you don’t get online and accommodate the change, someone else will.
Before I wrap this up, here are 4 more reasons why you should finally make that business dream a reality through your laptop:
Many Sites Are Offering Discounts Today: Businesses are ready to negotiate right now. The uncertainty of the future has many big name companies, like WordPress or Squarespace, willing to offer their usual website packages for less money if you sign up with them for 12-24 months at a time. Be sure to call these companies in advance and ask for deals.
There is Demand for Your Services: Whether you want to freelance write or sell a product, the statistics above don’t lie: there is a lot of demand for what you could be offering.
Accumulate Reviews Before Your Competitors Do: On most freelancing sites, user profiles come with reviews as social proof. The more reviews you accumulate, the more people will readily buy from you. If you get started amassing these reviews today, you will be that much farther ahead of the person who decides to freelance one year from now.
Digital Immersion is the Future: The world was already heading towards total gig economy immersion. Coronavirus has just confirmed it. Previous studies estimated that 60% of the U.S. workforce would be in the gig economy by 2027. I say that number comes much sooner after this pandemic.
What are you waiting for? The beauty of launching an online business is that it costs much less than opening a retail store. You just need internet, a laptop, and the desire to make it happen. Get in on the action before it’s too late.
Alexandra Fasulo is a full-time freelance writer, serial entrepreneur, social media influencer, and published author based out of Brooklyn, New York. Known as a digital nomad or fondly, the Freelance Fairy, through her YouTube and TikTok accounts, Alexandra is passionate about all forms of digital marketing, content creation, and small…View full profile ›
The armies of the world’s two most populous nations are locked in a tense face-off high in the Himalayas, which has the potential to escalate as they seek to further their strategic goals.
Officials quoted by the Indian media say thousands of Chinese troops have forced their way into the Galwan valley in Ladakh, in the disputed Kashmir region.
Indian leaders and military strategists have clearly been left stunned.
The reports say that in early May, Chinese forces put up tents, dug trenches and moved heavy equipment several kilometres inside what had been regarded by India as its territory. The move came after India built a road several hundred kilometres long connecting to a high-altitude forward air base which it reactivated in 2008.
The message from China appears clear to observers in Delhi – this is not a routine incursion.
“The situation is serious. The Chinese have come into territory which they themselves accepted as part of India. It has completely changed the status quo,” says Ajai Shukla, an Indian military expert who served as a colonel in the army.
China takes a different view, saying it’s India which has changed facts on the ground.
Reports in the Indian media said soldiers from the two sides clashed on at least two occasions in Ladakh. Stand-offs are reported in at least three locations: the Galwan valley; Hot Springs; and Pangong lake to the south.
India and China share a border more than 3,440km (2,100 miles) long and have overlapping territorial claims. Their border patrols often bump into each other, resulting in occasional scuffles but both sides insist no bullet has been fired in four decades.
Their armies – two of the world’s largest – come face to face at many points. The poorly demarcated Line of Actual Control (LAC) separates the two sides. Rivers, lakes and snowcaps mean the line separating soldiers can shift and they often come close to confrontation.
The current military tension is not limited to Ladakh. Soldiers from the two sides are also eyeball-to-eyeball in Naku La, on the border between China and the north-eastern Indian state of Sikkim. Earlier this month they reportedly came to blows.
And there’s a row over a new map put out by Nepal, too, which accuses India of encroaching on its territory by building a road connecting with China.
Why are tensions rising now?
There are several reasons – but competing strategic goals lie at the root, and both sides blame each other.
“The traditionally peaceful Galwan River has now become a hotspot because it is where the LAC is closest to the new road India has built along the Shyok River to Daulet Beg Oldi (DBO) – the most remote and vulnerable area along the LAC in Ladakh,” Mr Shukla says.
India’s decision to ramp up infrastructure seems to have infuriated Beijing.
“According to the Chinese military, India is the one which has forced its way into the Galwan valley. So, India is changing the status quo along the LAC – that has angered the Chinese,” says Dr Long Xingchun, president of the Chengdu Institute of World Affairs (CIWA), a think tank.
Michael Kugelman, deputy director of the Asia programme at the Wilson Center, another think tank, says this face-off is not routine. He adds China’s “massive deployment of soldiers is a show of strength”.
The road could boost Delhi’s capability to move men and material rapidly in case of a conflict.
Differences have been growing in the past year over other areas of policy too.
The new federally-administered Ladakh included Aksai Chin, an area India claims but China controls.
Senior leaders of India’s Hindu-nationalist BJP government have also been talking about recapturing Pakistan-administered Kashmir. A strategic road, the Karakoram highway, passes through this area that connects China with its long-term ally Pakistan. Beijing has invested about $60bn (£48bn) in Pakistan’s infrastructure – the so-called China Pakistan Economic corridor (CPEC) – as part of its Belt and Road Initiative and the highway is key to transporting goods to and from the southern Pakistani port of Gwadar. The port gives China a foothold in the Arabian Sea.
In addition, China was unhappy when India initially banned all exports of medical and protective equipment to shore up its stocks soon after the coronavirus pandemic started earlier this year.
How dangerous could this get?
“We routinely see both armies crossing the LAC – it’s fairly common and such incidents are resolved at the local military level. But this time, the build-up is the largest we have ever seen,” says former Indian diplomat P Stobdan, an expert in Ladakh and India-China affairs.
“The stand-off is happening at some strategic areas that are important for India. If Pangong lake is taken, Ladakh can’t be defended. If the Chinese military is allowed to settle in the strategic valley of Shyok, then the Nubra valley and even Siachen can be reached.”
In what seems to be an intelligence failure, India seems to have been caught off guard again. According to Indian media accounts, the country’s soldiers were outnumbered and surrounded when China swiftly diverted men and machines from a military exercise to the border region.
This triggered alarm in Delhi – and India has limited room for manoeuvre. It can either seek to persuade Beijing to withdraw its troops through dialogue or try to remove them by force. Neither is an easy option.
“China is the world’s second-largest military power. Technologically it’s superior to India. Infrastructure on the other side is very advanced. Financially, China can divert its resources to achieve its military goals, whereas the Indian economy has been struggling in recent years, and the coronavirus crisis has worsened the situation,” says Ajai Shukla.
History holds difficult lessons for India. It suffered a humiliating defeat during the 1962 border conflict with China. India says China occupies 38,000km of its territory. Several rounds of talks in the last three decades have failed to resolve the boundary issues.
China already controls the Aksai Chin area further east of Ladakh and this region, claimed by India, is strategically important for Beijing as it connect its Xinjiang province with western Tibet.
In 2017 India and China were engaged in a similar stand-off lasting more than two months in Doklam plateau, a tri-junction between India, China and Bhutan.
This time, too, talks are seen as the only way forward – both countries have so much to lose in a military conflict.
“China has no intention to escalate tensions and I think India also doesn’t want a conflict. But the situation depends on both sides. The Indian government should not be guided by the nationalistic media comments,” says Dr Long Xingchun of the CIWA in Chengdu. “Both countries have the ability to solve the dispute through high-level talks.”
Chinese media have given hardly any coverage to the border issue, which is being interpreted as a possible signal that a route to talks will be sought.
Pratyush Rao, associate director for South Asia at Control Risks consultancy, says both sides have “a clear interest in prioritising their economic recovery” and avoiding military escalation.
“It is important to recognise that both sides have a creditable record of maintaining relative peace and stability along their disputed border.”
A consortium of media outlets are suing the Cooper administration over public records concerning the state’s response to coronavirus. We talk with Rose Hoban, editor of North Carolina Health News, about why her outlets and others are resorting to legal action for the records.
More than 102,000 people in the US have lost their lives to Covid-19 – by far the biggest death toll in the world.
What did Trump say?
“We will be today terminating our relationship with the World Health Organization and directing those funds” to other global public health charities, Mr Trump said in the White House Rose Garden.
“The world is now suffering as a result of the malfeasance of the Chinese government,” he said.
He added that China had “instigated a global pandemic that has cost over 100,000 American lives”.
The president accused China of pressurising the WHO to “mislead the world” about the virus.
What’s the background to this?
Mr Trump’s criticism of the WHO’s handling of the pandemic began last month when he threatened to permanently withdraw US funding, suggesting the UN health agency had “failed in its basic duty” in its response.
“It is clear the repeated missteps by you and your organisation in responding to the pandemic have been extremely costly for the world,” he wrote in a letter to WHO chief Tedros Adhanom Ghebreyesus on 18 May.
He later labelled the WHO a “puppet of China”.
China has accused the US of being responsible for the spread of the virus on its own soil, attributing the outbreak to American “politicians who lie”.
Earlier this month, Chinese Foreign Ministry spokesman Zhao Lijian said Mr Trump was trying to mislead the public, smear China and “shift the blame for [the US’s] own incompetent response”.
WHO member states have since agreed to set up an independent inquiry into the global response to the pandemic.
The UK’s coronavirus furlough scheme will finish at the end of October, Chancellor Rishi Sunak has confirmed.
At the No 10 briefing, Mr Sunak also set out how employers will have to start sharing the cost of the scheme.
From August, employers must pay National Insurance and pension contributions, then 10% of pay from September, rising to 20% in October.
Also, workers will be allowed to return to work part-time from July, but with companies paying 100% of wages.
Mr Sunak said the Coronavirus Job Retention Scheme will adjust so “those who are able to work can do so”.
Some 8.4 million workers are having 80% of their salaries paid for by the government – up to £2,500 a month – under the scheme, which was originally intended to last until the end of July.
Earlier this month, the chancellor extended the scheme until the end of October, but did not spell out how employers would start contributing.
Under Friday’s changes, furloughed workers will continue to get 80% of pay until the end of October, but by then a fifth of their salary will have to be met by employers.
“Then, after eight months of this extraordinary intervention of the government stepping in to help pay people’s wages, the scheme will close,” Mr Sunak said.
Asked if he would “switch the furlough scheme back on” in the case of a second peak in cases and the reintroduction of lockdown measures, the chancellor said the scheme “as it stands in a national way, in the way that it is designed” will end in October.
“Eight months, as I said, is I think a generous and long period of time,” he said.
The chancellor is attempting a delicate balancing act.
Slowly withdrawing very expensive government support programmes without crashing the economy.
Cash-strapped employers must decide if they can take on an increasing burden to keep workers for whom there may be little or no work.
The chancellor says the government can’t go on meeting the full cost of the furlough scheme.
But the withdrawal is more gradual than many had feared and the government hopes that the support withdrawal will be mirrored by business demand recovering.
We may be about to find out how many real jobs are left in the post-coronavirus economy.
Employers’ claims under the scheme have reached £15bn so far, however the scheme is expected to cost a total of around £80bn, or £10bn a month.
The Office for Budget Responsibility is set to publish detailed costings next week.
It comes as the latest UK-wide figures show another 324 people have died after testing positive for coronavirus in hospitals and the wider community, bringing the total to 38,161.
Some 131,458 people were tested for coronavirus on Thursday, with 2,095 more positive cases reported.
Restaurateur David Moore told the BBC he is “deeply, deeply worried” about the changes to the scheme.
Mr Moore, who owns London restaurant Pied a Terre, said it is unfair for hospitality firms to start paying towards wages when they do not have any revenues.
“It is massively disappointing and sheer lunacy to try to get an industry who hasn’t had any revenues for what will be then probably five months, to ask them to start contributing,” he told BBC Radio 4’s The World at One.
He warned that some businesses could go bust as a result.
“Will we have any money coming through the door to help contribute? If we don’t it is all too late, a lot of businesses are heading down the pan.”
Labour’s shadow chancellor Anneliese Dodds also warned about job losses.
“It is concerning that there is no commitment within these plans for support to only be scaled back in step with the removal of lockdown,” she said. “Nor is there any analysis of the impact on unemployment of a ‘one size fits all’ approach being adopted across all sectors.”
How will the scheme change?
From 1 July, businesses will be allowed to bring furloughed employees back part-time, a month earlier than previously announced. The move is aimed to help support people back to work, the government said.
It will be down to individual firms to decide what part-time means. They will be able to set the hours and shift patterns staff will work when they return, but companies will have to pay wages while they are in work.
“Extending the job retention scheme and making it more flexible is key to getting the economy back on its feet,” said Federation of Small Businesses national chairman Mike Cherry.
“By providing employers with the adaptability they’ll require as businesses adjust to a new normal, and bringing forward the flexible furlough launch date, the government is giving hope to small firms right across the UK.”
From 1 August the level of government grant will be reduced “to reflect that people are returning to work”.
Furloughed workers will continue to receive 80% of their pay, but from August it will include a growing employer contribution. It will start with bosses paying NI and pensions in August, plus 10% of pay in September, rising to 20% in October.
The details: How employers’ contributions will increase?
During August the government will pay 80% of wages up to a cap of £2,500. Employers will have to pay NI and pension contributions. For the average claim, that’s 5% of the gross employment costs the employer would have incurred had the employee had not been furloughed.
In September, the government will cut its grants to 70% of wages up to a cap of £2,190. Employers will pay NI and pension contributions and 10% of wages to make up the 80% total up to a cap of £2,500. That works out at 14% of the average gross employment costs the employer would have incurred.
In October the government grant will be cut to 60% of wages up to a cap of £1,875. Employers will pay NI and pension contributions and 20% of wages to make up the 80% total up to a cap of £2,500. That’s 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.