you were thinking about cheating on your taxes this year I would
suggest that you read the latest report from the IRS. The catchy title
says it all: (PDF Link)
INTERNAL REVENUE SERVICE
FISCAL YEAR 2010 ENFORCEMENT RESULTS
It seems that the good folks at the IRS are burning the mid-night oil.
Their results are up across the board, with only one exception. Audited
returns for companies with assets greater than $250 million fell
by nearly 50% between 2005-2010 (2010:23.44%, 2005:44.1%). This, no
doubt, reflects the fact that our large corporations are so honest these
days.
Some bits from the report. Note that there are two ways of looking at
this. The results are presented in both percent and raw data. The
percent numbers may lead you to conclude that you might not get caught
if you fudge some numbers. But the raw data will scare you in a
different direction.
-Only 1% of taxpayers with incomes under $200,000 are audited. So you
have a 1 in 99 chance of getting hit. However, in 2010 1,428,000 people
got “the letter”. There are only six cities in America that have a population greater than 1.4mm.
-If you make more than 200k, but less than a mil you have more to worry about. 153,000 (3%) in this group got nailed.
-If you are lucky enough to make more than a mil you have the IRS
looking over your shoulder. The odds are 1 in 12 for an audit. 32,500
rich folks got porked in 2010.
-Speaking of high incomes these graphs blow me away. We hear again and
again about how terrible it was during the deep recession of 2007-2009. Nonsense. The number of people filing big-ticket returns never dipped. It steadily rose.
-If I was wearing an IRS hat the first place I would look is at
partnerships. The opportunities for abuses jump out at you in these set
ups. The IRS would not hire me. They think quite differently of
partnerships in general. Of the 3.4mm partnership and 4.4mm Sub-S
returns (7.8mm total) only 28,700 were looked at. A scant 0.37%. Go
figure.
-There are 22,700 IRS agents looking for trouble. They find it. In 2010
they filed 1.64mm cases and as a result collected an extra $57 billion
(100% ten year increase). That aint hay. It comes to more than $2.5mm
per agent. These nice people are not bounty hunters working commission.
They are civil servants. But don’t for a second believe that there is no
connection to what they collect, and what is their pay grade.
-If you did slip up, you get a letter that goes like this:
It ends with:
……..So
please stop by next Tuesday at 2. Bring your papers and a lawyer might
be nice. Don’t be late, we will just lean on you harder.
Should you get the black letter; just bend over. The IRS wins 90+% of the cases it pursues.
-The final thing to consider when contemplating stiffing Uncle Sam is, "What's the downside?" In 2001 the average tax cheat spent 18 months in the slammer. If you get banged in 2011 you're looking at 27 months.
The moral of this story is to get long Haliburton.
If you work for the IRS you should just kill yourself. Seriously how can these people live with themselves?
Why the hard on for partnerships, LLCs, and S-corps? Sure the IRS can find a few bucks under those cushions, but it's peanuts compared to the billions that big business steals by playing lawyer vs. lawyer games.
I've been running small businesses for over 25 years and never had a compliance audit. The few tax inquiry letters I've received from the IRS have been easy to deal with and I can't really complain about any incompetence on their part.
The real assholes over the years have been the nazis at the state revenue departments. They make the IRS look like girl scouts.
of course, that $7 trillion or more of untaxed profits scuttled away in offshore accounts, the IRS will conveniently turn a blind eye to.
Knowing you are a STRAWMAN and knowing Uniform COMMERCIAL CODE is your way out, nobody owes these guys a cent
Bruce, only a liberal could be schitzophrenic about taxes. A conservative knows that the IRS is a tool for our oppression.
Your message seems to be "taxes are okay, government needs your money, so don't dare take your money offshore and pay your taxes like good sheeple, or else face the wrath of the man".
Meanwhile, the government you seem to believe in so much has been colluding with the banks to defraud us in a rigged market.
http://dailyreckoning.com/outing-ben-bernanke/
"Secret bailouts do not merely benefit recipients; they also deceive investors into mistaking fantasy for fact. Such deceptions often punish honest investors, like the honest investors who sold short the shares of insolvent financial institutions early in 2009.
Some of these investors had done enough homework to understand that no private-market remedy could ride to the rescue of certain financial firms. Therefore, these investors sold short the shares of certain ailing institutions and waited for nature to take its course. But the course that nature would take would be shockingly unnatural. We now know why. The Federal Reserve altered the course of nature, and did so without telling anyone.
Many of the investors who sold short ailing financial firms in 2009 were alert to the possibility that bailouts by the Federal Reserve could change the calculus. In other words, the Fed could make the bearish case less bearish…at least temporarily. Therefore, many of these investors studied the Federal Reserve’s disclosures, as well as corporate press releases, in order to quantify the Fed’s influence.
Based on all available public disclosures, the story remained fairly grim into the spring of 2009. Accordingly, the short interest – i.e., number of shares sold short – on Goldman Sachs common stock hit a record 16.3 million shares on May 15, 2009 – about 3.3% of the public float. But over the ensuing six months, Goldman’s stock soared more than 30% – producing roughly $500 million in losses for those investors who had sold short its stock. Not surprisingly, the total short interest during that timeframe plummeted to less than 6 million shares, as short-sellers closed out their losing positions.
Was it just bad luck? Or was something more nefarious at work here?"
CH, Who takes away your garbage and plows the snow? Do you not get a direct benefit from that? You don't think you should chip in a penny for that service? How about cops and firemen. What happens when your house is on fire and someone stole your car? You have to pay something for right? Do you think we should have no military? I can't believe you would think that. You think teachers are not important to the future of our economy and society? Way wrong if you do.
We are having a terrible time deciding where to draw a line on the stuff we spend money on. There is no doubt that we spend too much. We ought to cut it in half. Most things would be better if we did.
But ZERO is not the right number. So yes taxes of one form or another are necessary and fair. I pay a bunch, I wish I paid less. But I am not schizophrenic for believing that not everything can be "free". I am being realistic. How about you?
the quick and easy answer for where to draw the line is:
Essential services. You always hear that phrase when a municipality is under a budget crunch and reduces government to essential services. Duh, why would govt be providing anything but essential services? And why are they taking our money to do anything that isn't essential.
Govt is good for services that the private sector wont do and only if the services provide a benefit for everyone. Not just a selected group.
Not to answer for CH but in my hood:
Garbage guys and many other workers get to bank their annual 15 sick days
Cops arrange their schedules to max out overtime
defined benefit plans and retirement at 50 or 55
municipal workers who game the system
indexed pensions - lifetime medical benefits
... don't get me going on teachers
Of course I should pay for those things, but why can't I just pay for the services I need directly? Why can't I subscribe to a fire protection plan? Why can't I pay a private school for education? Who says that government is the best way to provide all of these services? A flat, per person "capitation" as it is called, plus the tax on "exercise of federal privilege" plus "pay for service" (think entrance fee to national parks or license fee, etc.) would provide the money to run a government of the size that was Constitutionally necessary. Arguing that anyone who is opposed to the income tax wants everything for "free" is intellectually dishonest. There is no need for "deciding where to draw a line on the stuff we spend money on". That has already been spelled out in the Constitution, courts and military basically. Everything else should be pay as you use.
You're missing the point, Bruce. If we really need those services, which I agree we do, the market will provide them. Entrepreneurs, financed by capitalists, will meet the most urgent needs of consumers in order to profit. You seem to be restricted to believing these functions can only be provided by the State, and thus somebody must be threatened with violence in order to provide them. Of course, Bruce, I don't think you'd stick a gun to a person's head who has done nothing to wrong you; however, you sure don't mind the extortion racket known as the government doing it to others. Zero is the right number, nobody has a right to threaten me to steal my property. So many people recognize the virtues of the market (anybody with a grasp on economics/reality at least does) yet nobody wants to take this to its logical conclusion and realize the market can and will provide everything absent the State.
You want private cops huh? Like you say the private sector will assume that role. So you have blackwater guys with big guns getting big bucks to keep the peace? You ought to look at some history books on that kind of thing. Bad mojo.
Yes, I'd like to actually voluntarily pay people to provide me with goods/services that I actually want. Further, I even want to keep my money without people believing they have a "right" to steal it. A private security agency would have a lot more incentive to do its job then one that gets paid with stolen money and thus sits around and eats doughnuts then retires on a pension also funded with stolen money. You should look into private security firms that even exist today all over the world and do an excellent job protecting who/what they are voluntarily paid to; they work pretty well.
What or who will prevent such private entity(ies) from becoming your master (feudal overlord) rather then lowly servant (bodyguard)? Are not you trading "one tyrant thousand mile away for thousand tyrants one mile away"?
And only a rabidly-dumb conservative would call Bruce a fan of Big Guv! How inane and funny. I'd get a refund on that shoddy lobotomy, my friend.
its all totally normal for a totally manipulated and rigged market
I was taught this method of audit-proofing yourself by an old businessman who had a short stint with IRS at the onset of his career. The method is the following. During the calendar year, the filer has to set aside some deductions (sort of a parachute) for amount of 1-2% of expected taxes to be paid. In the case of an audit, it becomes an open game, all the files are reopened and one can add more deductions and amend the return. So, when you walk into the bureaucrats' hole, tell them from the start, "I wanted to thank you for doing this audit. I forgot to include these deductions and I am glad we will be able to add them to my return." The IRS bugs will respond with "Have a nice day" faster than you can blink.
The trick here is the fact that the IRS auditors are reprimanded for those audits that actually lose money for gov-t. In other words, if they choose to audit an account and end up issuing a bigger refund than originally audited for, they are in trouble. 2-3 cases like this one and their job is in trouble.
And if you are not audited within say a calendar year... would you:
You have 3 years to file a 1040X to amend a return for:
"... filing status, dependents, total income, deductions or credits."
Yes basically treat the set aside deductions as insurance premium. Most of the time, dealing with IRS is like attending a dentist who doesn't believe in anesthesia - the insurance premium will be well worth it. And if you don't end up using it, just eat the loss and pay the extra tax. P.S. If your quote is correct and one can amend returns up to 3 years old, I think its still worth to keep the deductions untouched past that period because IRS can audit up to 6 (???) years back. Maybe someone with CPA-like credentials can post more credible info as I am not quite sure about the 6 year number.
I always thought the pyscholinguistics the usa government frames taxes in is interesting. “Your taxes” rather than “taxes” or “our taxes.”
Obama’s tax bill last year has sent 70 new hired IRS agents full time tracking after Americans with money in Hong Kong banks. Assuming the salary and expenses for housing, etc. for the 70 agents is 60000 dollars a year, they need to recover 4 million dollars in back taxes each year to cover their costs. This is ignoring their medical needs and pension requirements in the future.
It seems so desperate but there is not enough wealth in America to pay off the federal debts and cover the budget so it must be something more than just paying “your taxes” it does really seem like a prision nation where taxes are used not so much to fund the government as they are to control the people as slaves to work like bees to make someone else richer.
And they say this is a free, non-corrupt and transparant nation?
Looking across the internet, there seems to be a general consensus of "We're getting boned by the gov't". Awesome. Now that we've got that out of the way, lets stop the head nodding and looking around the room for that one person to kick the party off. It's not going to happen. We're all in or we're all out.
Wake me up when lead starts flyin...
Well the first "shots" have already been fired.
Joe Stack took them.
pods
About the term, "income" (used by Seasmoke, above).
18. Is the term “income” defined in the IRC and, if not, where is it defined?
Answer: The Eighth Circuit Court of Appeals has already ruled that the term “income” is not defined anywhere in the IRC: “The general term ‘income’ is not defined in the Internal Revenue Code.” U.S. v. Ballard, 535 F.2d 400, 404 (8th Circuit, 1976).
Moreover, in Mark Eisner v. Myrtle H. Macomber, 252 U.S. 189 (1920), the high Court told Congress it could not legislate any definition of “income” because that term was believed to be in the U.S. Constitution. The Eisner case was predicated on the ratification of the 16th amendment, which would have introduced the term “income” into the U.S. Constitution for the very first time (but only if that amendment had been properly ratified).
In Merchant's Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921), the high Court defined “income” to mean the profit or gain derived from corporate activities. In that instance, the tax is a lawful excise tax imposed upon the corporate privilege of limited liability, i.e. the liabilities of a corporation do not reach its officers, employees, directors or stockholders.
for me by far the best strategy i have seen is to have NO income (actually 8000 is best) for the past 3 years (and the now next 2 years as well ) and have lots of capital gains and collect your money TAX FREE at 0 % bracket
Amazing how you will go to jail for cheating on taxes but not one banker in jail for the biggest fraud/ponzi scheme in history. What a sad state of afairs.
TIMMY GEITHNER DIDNT PAY HIS TAXES , why would anyone else ?......Moral hazard is BITCH !
+100
Because there are two sets of rules, one for the masters one for the slaves. Look at the Rangel/Snipes tragicomedy. We don't have anything like the rule of law, we don't have the Constitution...hell we don't even have the Magna Carta!
Yep....that all ended that fateful day on February 21, 1871......
http://www.serendipity.li/jsmill/us_corporation.htm
What we do have is the “law of the Jungle” (MSM flippantly said so on SNL around 5 years ago) … plan accordingly.
Do these numbers include informational audits?
I have been audited the last two years EACH YEAR, sometimes on up to three different annual returns at a time. Am I some statistical anomaly? This all started with the 2008 return. Wasn't there a finance crisis then? I have probably spent more time with the IRS these last two years than with my best friend or wife. Many times the cryptic nature of their demands is as mysterious as Kafka's Castle. Or there is some clerk in some small office that pops up to add his two words on the process in some unexpected communication which delays its efficiency, or requires me to re-submit forms I have already submitted two or three times to the same office. Is there somewhere I can complain about this harrassment besides IRS customer relations?
....reminds me of a nightmare with Kalifornia's Franchise Tax Board. They hire Red Bull drinking idiots on the cheap to keypunch who routinely screw up number entries like your SSN. Once that happens, you are in for hours on hold and are deadbeat guilty until they take their good old government time on a scavanger hunt to prove your innocence.
After having spent many years examining the laws which created and empowered the IRS I have come up with the following analysis. Any critique is welcomed.
Federal taxing authority is mentioned 3 times in the constitution, creating two great classes of taxes. Direct and Indirect. The constitution placed very specific limitations on each class of tax. A direct tax must be governed by the rules of apportionment, an indirect tax must be governed by the rules of uniformity.
Since the income tax did not conform to these constitutional limitations, the income tax of 1894 was struck down by the supreme court. This lead to the congress creating the 16th amendment which appeared to grant new taxing authority to congress. It reads: "Congress shall have the power to tax incomes, from whatever source derived, without regard to the rule of apportionment."
This must be one of the most evil and pernicious uses of word magic in all of legal history. Notice it did NOT say that congress now had the power to levy a DIRECT tax without the rule of apportionment? It merely exempted INCOME from those rules. (For any who don't already know, according to the rule of apportionment several standards must be met. Any direct tax must be clarified, in advance, as to how much will be collected over a specific time frame, with a beginning and an end. Then the tax will be apportioned out to the states for collection whose contribution to the total will be based on the number of representatives they have in congress.)
While few understood the deceitful nature of this amendment it was, nonetheless, immediately challenged in the federal court. Ultimately the supreme court made a ruling in the Brushaber case that the income tax did not violate the taxing clauses of the constitution by ruling that the income tax was, in fact, an INDIRECT tax.
An indirect tax ( http://financial-dictionary.thefreedictionary.com/Indirect+taxes) has been commonly understood to be a VOLUNTARY tax, like a sales tax. If you don't want to pay a federal tax on tobacco then don't smoke, or grow your own. It has also been described as a tax on the exercise of a government granted privilege. For example, for the privilege of incorporating the law holds that you shall be obliged to pay a tax on the income of said corporation.
So, since working for a living is neither voluntary, nor the exercise of privilege, how can the income tax fit this definition?
Finally, and this really is my biggest point in all of this. If the constitution in no way limits the percentage of income that congress can tax, that means they can take 100% of a persons income, turning them into a slave. After all the highest tax bracket in WWII was 94% if I recall.
I made this point in an email exhange with a law professor from Georgetown and his only answer came down to the point that it would be politically untenable for congress to actually raise rates to the level of slavery. I responded that the political side was irrelevant, and I asked the question again, this time louder. "DOES U.S. LAW GIVE CONGRESS THE POWER TO TAKE, BY FORCE, EVERY CENT OF INCOME WE EARN OR DOESN'T IT? ARE WE JUST SLAVES WHO ARE ALLOWED TO KEEP A PORTION OF OUR INCOME AT THE WHIM OF CONGRESS OR ARE WE FREE MEN?"
Not surprised that I never heard from that guy again. Sorry for the long winded post but I had a lot to say on the subject.
You think the 16th Amendment was bad......read this:
http://www.serendipity.li/jsmill/us_corporation.htm
good post raising interesting points. i do not think anyone would deny the right of congress to have a share of your income for redistribution to those less fortunate (like those who are short of depleted uranium in iraq or plaon old lead in afghanistan or those needing food stamps).
I think your reference to slavery can be nuanced. Slavery in my definition is that state where you have enough to eat, drink and have a bed, but have nothing left over for any kind of chance of betterment or easier living.
It gets a little blurry when you can afford the next best standard of imported crap from asia, but I estimate that the poor quality of politics over the last fifty years has enslaved around 40% of the population. Now there are only 43 million on food stamps, but..well I am sure there are other metrics what you could dream up that would eloquently state the degree of slavery and how that can be defined.
A police state is the same as a slave overseer in my view.
I am not disputing the taxing powers embodied in the constitution. The congress has every right to levy taxes, provided that these taxes fall within the limitations of the taxing clauses. The income tax clearly misses these limitations by a long shot.
My point on the slavery issue is simply whether or not the idea that the sum total of your labor can be legally extracted from you at gunpoint. If so then of what use is the 4th amendment and the bill of rights in general? If our rights are truly inalienable then the only way this could have found standing in law is if the people gave up their rights voluntarily which, if it could be argued were true, would represent the greatest sleight of hand in human history.
And? Hell a strict reading of 13th amendment should ban conscription but that got blasted down around WW1. After all by its definition, conscription is involuntary servitude. The government does not obey it's own laws. The government as an entity exists only for it's self aggrandizement and to dole out goodies to those that serve it or ally with it.
We are all slaves to the Fed God. Why else would they levy our incomes even if we try to flee?
On the bright side it is not necessary for all to work for a living. Many make their living through crime, graft, and leeching off the welfare state.
Bernank Lookin' Shameful: "The government does not obey it's own laws. The government as an entity exists only for it's self aggrandizement and to dole out goodies to those that serve it or ally with it."
Some One Else Had This Problem:
"Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness..."
Signed by 56 Domestic Terrorists under Current Gestapo-Homeland Insecurity Anti-Patriot Act...
You can trace it back to several points, but yeah, the constitution doesn't matter to the government anymore, other than trying to keep appearances up for the masses, less they get too uppity.
Farthest back I've found was this from another ZH poster:
http://kanata.250free.com/crown1.htm
But previously I was aware that Lincoln declared marshall law, which was never rescinded.
Also, you have the Continuity of Government CoG, that appears to have been put into place after 911. Cheney was quoted as saying the plans were activated.
See here for starters:
http://constitutionally.blogspot.com/
This also does away with the constitution, and pretty much makes it a dictatorship.
Then you have the US going bankrupt in 1933, being reformed as a corporation in permanent debt to the Federal Reserve, World Bank, and IMF which own the corporation known as "UNITED STATES GOVERNMENT"
Yes, the IRS a corporation too, and no, not part of the treasury.
So basically, the idea that we even have a government is an illusion, and therefor we shouldn't feel bad about watching the whole thing burn, or even encouraging it. The only thing that has kept this sham going as long as it has is giving a majority of people a stake in the status quo, IE a comfortable life as long as they play along. But if everyone is broke, with nothing at stake, why prop it up? Thats why Northcom was setup, to crush any revolts.
We are definitly living in interesting times......
The horror of war and MASSIVE political and civil unrest is COMING TO THE UNITED STATES.
Please watch the video “Hero of War” at (http://youtu.be/z0XPqiQM92Q) and see what the MAINSTREAM MEDIA doesn’t want you to see.
-Anonymous
Wow this look like a movie but the truth is that it’s not.
Deja vu. Seems like I've seen this before somewhere!
You make the erroneous assumption that the MSM gives a rat's ass about what I see.
You actually clicked on that link?
"In 2001 the average tax cheat spent 18 months in the slammer. If you get banged in 2011 you're looking at 27 months."
How many months did Charlie Rengel get?
Another example of a warped, perverted system acting to support and preserve itself.
If we had a flat tax rate for income, you could send in your 1040 on a postcard - but legions of accountants, lawyers, tex consultants, IRS agents and jailers would be unemployed. Also, politicians couldn't bend the rules in new ways every so often to help their friends do what you can't.
Still doesn't matter - the complexity of the system will cause it to self-destruct. Imagine a worldwide HVAC system - trying to keep the globe at a constant 73 F everywhere. It would blow gaskets, fuses and linkages so fast - in the US, it's only a matter of time, and not long at that.
Too stupid to live, just like one of my puppies (in childhood) that ran out in front of the garbage truck. Sad, but unavoidable, and the results will be the same.
"Imagine a worldwide HVAC system"
you mean like this one?
http://www.youtube.com/watch?v=eosrujtjJHA
Have you got a 27 B stroke 6?
Anything that requires any sort of income reporting is repulsive, even if it is just a postcard. Fourth and Fifth need to apply.
The IRS has such an easy time with it because of reporting. It's like sending a signed confession in every year or quarter, and if you fudge the numbers you're really in the soup, because they have the paperwork where you were lying your ass off and signing off on the fraud.
Geez, you don't suppose that if any one could actually UNDERSTAND the tax code more folks could get the numbers right the first time???
Just an after thought....
Ought to drop Thimmey a note in that regard. He has first hand experience. Milestones
Another reason to abolish income taxes and the IRS, and to just go to a VAT tax. Charlie Rangel wouldn't have had any problems if we had that.
The new health care bill also makes the IRS the police of all your bank accounts and ATM transactions.
Perhaps Big Gov will follow the UK model next -- paychecks sent to the IRS first, they will pass along what they think you don't owe.
VAT for me please.