When you hear an economics professor discussing the term “arbitrage”, it’s quite likely that they mean it in its broadest sense, which essentially means buying a certain product or stock at one price and at the exact same time selling that product or stock at a higher price. Certain types of arbitrage are legal because they help to steady the market, while others are not allowed under law. If you are thinking about engaging in some form of arbitrage, then you need to consult with an attorney and/or do some research on your own to ensure that the practice you’re thinking about engaging in is actually allowed under federal laws and regulations.
Of course, arbitrage can mean more specific things as well. For example, one form of arbitrage involves bonds and high-yield investments. If a person is taking the money that they’ve made from tax-advantaged bonds and investing those profits into riskier and higher-yielding investments, say, the stock market, then what they’re engaging in is arbitrage. This type of financial transaction is heavily regulated by the federal government, and in many instances it’s downright discouraged. The federal government doesn’t want people taking profits earned in a low-risk manner and putting them at risk of being lost in a riskier market, and so they regulate these types of financial transactions.
Arbitrage compliance, or the act of adhering to these regulations, is required by the IRS, and if you either fail to report profits from this type of arbitrage or you don’t pay the IRS what they require you to pay, then you are committing tax fraud, which, of course, is quite serious. The IRS could prosecute you and force you to pay the federal government what you owe them. This is a huge hassle, and it’s costly, because you’re not only paying the government what you owe them, but you’re also having to pay a tax attorney who’s defending you.
Since arbitrage compliance is quite complex and because it’s so heavily regulated by the IRS, it’s important for anyone engaging in this type of arbitrage to hire a firm to help them make sure they’re compliant. The fact that the rules and regulations related to this type of arbitrage are always changing only makes it even more critical that you hire outside help to ensure that you’re being compliant. Arbitrage is complicated, but it’s also constantly changing, and thus you need to hire an arbitrage services firm to ensure you’re being compliant.
There are quite a number of arbitrage services firms out there, but few of them have the track record of Arbitrage Compliance Specialists. Since 1986 they’ve been helping clients with their arbitrage compliance, and they’ve never had a single error during all that time. They also have a 100% success rate when it comes to defending their clients against the IRS. If what you want in an arbitrage compliance firm is a feeling of confidence in their ability to do their job successfully, then this is the kind of firm you want to work with.