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IRS Cuts Deals
The other day the IRS announced new rules for settling tax liabilities for individuals. It’s a sweet deal. I thought that was interesting. Then yesterday we get an announcement from Altria (MO) that they too have cut a deal with the boys at the IRS. Coincidence? Leading indicator? Some details:
Individuals - The IRS spells out the new terms for individuals who are delinquent here.
Summary: When the IRS calculates a taxpayer’s reasonable collection potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years. In addition, equity in income producing assets generally will not be included in the calculation of reasonable collection potential for on-going businesses.
The basis of settlement is now 25 cents on the dollar. (a percentage of 1 year of income vs. 4) if payment is made in less than five months. The IRS has provided a big incentive to settle fast.
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Altria
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If you look at the headline you would think that poor old MO took it in the ear on this one. $500m is big bucks for anyone, especially if it is paid to the IRS. But actually this is “good news” for the company.
Altria got nailed by the IRS as a result of aggressive tax accounting on leveraged leases it owned. The potential loss could have been $1b. Last year MO took a charge of $627m to cover the cost of a settlement. The deal it cut with the IRS is well under budget. MO will end up with a gain of 3 cents ($61m) a share as a result of the settlement. The difference between last year's charge and the amount paid to the IRS is $127m. The net gain to the shareholders of only $61m means that the litigation expense was a cool $66 mil.
I’m thinking that the lawyers and the MO top brass are drinking expensive champagne and smoking Luckies with this result. I have a few questions:
- The IRS is Treasury and Treasury is the White House. The change in policy on cutting deals comes from the WH. Why? The fact that the new rules are geared to cash settlements in less than five months is curious. The election is in five and a half months. Are these guys trying to rig numbers to show some improvement on the tax receipt line? I wouldn’t put it past them.
- What’s the message here? Don’t pay your taxes and later cut a deal for 25 cents on the dollar? I’m no fan of taxes, but I, and most other folks, pay 100%. I wonder if the precedent being set by the IRS won’t undermine its ability to collect that 100%.
A thought:
If you believe that this WH is willing to cut tax deals to raise much needed cash, then you're apt to believe that there is plan for a tax holiday on corporate foreign income. There is a about $1 trillion of untaxed earnings sitting outside the US currently. The tax on this would come to about $200 billion. Look for a proposal from the WH to give US multinationals corporations another tax break. They would pay $100b and keep the other $100b. More champagne and smokes…
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fuck the IRS....
and fuck the governent too.
Income? What's that?
Traditionally, Income was defined as money received, esp. on a regular basis, for work or through investments, however, since the 1980s junk bond King Mike Milliken of Drexel Burnham Lambert & Allenwood Prison Fame income is the proxy used as a multiplier by to create leverage - or in the words of Ben Bernacke, "Debt is the new income"
Traditionally income was defined as money received from investments (dividends/etc). Salary/wages were definitely not part of the definition of income when the U.S. income tax was enacted.
I have no income for next year. Let the beast growl.
Stop whining and start playing by the set of rules TPTB have set for you. You have your set of rules and the winners have their set. If you don't like it, start bribing your elected representatives so that they can carve out your own special exemption in the tax code. Or better yet invest in one of the gov't approved TBTF banks, the military industrial complex, or gov't approved subsidy riddled green energy industries.
R&D is so old fashioned. Your investment now is in your elected represetative.
If the corporation is a person, then they should be able to just jail them or get 100%, 25% is rediculous. I wonder how much they set aside for campaign contributions in order to make this happen.
"More champagne and smokes…"
But still no jobs.
The Useful Idiot Barry Soetoro is lining up lucrative corporate give-aways for his post presidential employment...
Douche bag Obama Bin Lyin' will be paid $100k from Wall Street for each speech, "How I Managed Not to Prosecute a Single Bankster During the Greatest Financial Control Fraud in History"...
Bank fraud? What bank fraud? Please make your checks payable to elect Barack Obama, Presidential re-election campaign.
he aint the saviour but do you have a sub who can drive the US Hummer to the pub for a refill? Looks like the whole caboodle is in the gutter. No leader no travel. No woman no cry.
If they weren't useless bribed idiot bitchez...
They wouldn't be in line to be president...
(Since Kennedy got his head blown off anyway)...
Isn't it obvious that Treasury is directing this to prevent another debt ceiling debate in the fall? Or am I missing something?
UBIGDUMMY:
Then why is the IRS listed in the US Government blue pages of my telephone book but the Fed and FedEx are not?
R U SURE that they are listed in the blue pages. BECAUSE THEY SURE WERE NOT for a long time....
You have to look at this in the LEGAL sense. The phone book is not really going to go far in court. Why would an agent of the government, in court, argue that the IRS is NOT an agency of the US government?
US TRIAL ATTY was not arguing, he was CORRECTING, MAKING a statement of FACT to the assertion made by Diversified Metals. DM made the assertion in which it was suing, "IRS, AN AGENCY for the United States Gov't"
It was ONLY a correction/admission of an assertion from the attorneys of DM.
Understand?
And how did the US attorney make this correction?
Through an argument (or claim) to the court.
It says so at the bottom of the claim.
http://calltodecision.com/THE%20DIVERSIFIED%20METALS%20CASE.pdf
Not sure where your beef with me comes from? I understand this completely, and have read this multiple times.
A US attorney cannot make a correction in a court unless he is the plaintiff in a court of record. He may argue as to a statement of fact, but he (Betty) cannot make a correction without pleading to the court.
The US attorney is not the tribunal.
Big difference.
pods
Sorry if you thought I had beef, not my intention.
I have the Court certified Doc for this trial, along with dozens of other embarrassing cases that I keep for a rainy day.
Diversified Metals, when listing the parties involved, blessedely made the assumption like nearly 100% of americans that the IRS is an Agency. So when they filed the paries involved and since the IRS was one of the parties involved, They wrote, "IRS, An Agency for the United States Gov't"
BETTY, US TRIAL attorney, (THANKFULLY) just happened to correct the wrong ASSUMPTION in the ANSWERS AND CLAIM, that IRS IS NOT an Agency. Thats all. It was not a topic of debate, if DM attorneys, rebutted with "OH YES THEY ARE" then the COURT would have had to get involved. This is technically NOT evidence or something that is being refuted. DM attorneys made a mistake, US BETTY Trial attorney is just CORRECTING the false assumption with a statement of fact. DM did not refute the corrected claim, as it was NOT challenged and had NO BEARING on the case whatsover. This topic was just a DELIGHTFUL Slip by an honest Betty.
I am not being nasty, or belittling, but do you kinda grasp the fact that this corrected claim is insignificant to the case, but VERY SIGNIFICANT to all peoples beliefs.
It is just a statement of FACT, was not disputed, by DM or the Court.
On a personal note, It was fun getting several copies of this case from the clerk. Interesting experience as there was an IRS Agent standing at the counter with me. He blurted, Oh is that the case that supposed change the way everyone lives? I smirked, something like that! LOL, The Clerk gave me the weirdest looks, and odd behavior during the process. I have many Cases, that are VERY damaging, hidden away that are just as embarrasing.
Wow thank you for the thread - Ok I will ask the obvious question - if the IRS is not an agency of the United States governement then what it is? I am not questoining the thread conversation NOR am I questioning the veracity of your post - I am simply uninformed - Many thanks in advance.
The problem with this is the IRS comes after companies and people for 4 times the amount that is owed, then "settles" for 25%... If a company or individual does not acquiesce to this generous offer, they extend audit to multiple years.
I have seen this first hand. Sad to be arm twister for a broke Uncle Sam.
There were points in history where nations (including the US) had much higher tax rates. And people gladly paid them. The problem we have now is that the tax code is ridiculous patronage & patronizing cluster. It is my dead horse I beat here on ZH. But I honestly think that eliminating 95% of the tax code would solve 95% of our fiscal problems. It would also go along way to sooth social tensions. For example, it is absurd that romney pays a lower tax rate than the typical working single mom. It is absurd that the current head of the IRS could not properly file his own taxes.
Fuck the poor.
If she's a single mom somebody already did.
Shit Romney is bad for America. He'll fuck her too.
It's a valid point.
Taken a step further, we have too many good minds wasting away on preparation of taxes. These people are good with numbers and research. Imagine if all these minds are employed in a field to do something actually productive. Private space exploration, technology improvements, etc. Having to pay some one to do your taxes is nothing but a privatized tax and provides no benefit to the individual or the society.
Since we are taking steps in the right direction. I would argue/agree with you and the other posters that the carveouts and deductions contributed equally, if not more to our bubbles than the Fed/fiat.
Eliminating carve-outs, credits, subsidies, and ridiculous Gumby accounting rules for corporations would make it feasible to lower if not eliminate taxes on individuals.
Sliding them a pass on repatriation is just throwing a little more gas on the grease-fire that is moving jobs to Ooompa Loompas at a record pace.
But I think we secretly like plutocracy and corruption; it's been the core of American politics from the jump.
No deductions. A simple, progressive tax code. Would something like this be so horrible?
0 - $20K - no tax
$20K - $30K = 2%
$30K - $40K = 4%
$40K - $60K = 6%
$60K - $80K = 8%
$80K - $100K = 10%
$100K - $130K = 15%
$130K - $160K = 20%
$160K - $190K = 25%
$190K - $240K = 30%
$240K - $290K = 35%
$290K - $340K = 40%
$340K - $400K = 45%
$400K - $500K = 50%
$500K - $750K = 55%
$750K - $1MIL+ = 60%
Taxation is theft, the whole idea of having a state is so the political class can steal the money of those who produce.
The problem of social inequality is created mainly by three factors;
- Taxation based on income, this is an economic brake and targets labour over capital
- The ability of money to purchase laws due to a monopolistic legislature and judiciary
- Usury, charging interest on money (and real estate) and being able to hold collateral against debt; vastly exacerbated by fractional reserve banking
If these problems are identified as root causes, then solutions follow;
- Identify taxation as immoral (illegal) and abolish it entirely*
- Instead of creating new laws all the time, simplify all the law into a natural (moral) law and REQUIRE a jury in every case to interpret it
- Identify usury as immoral and therefore illegal, abolish fractional reserve banking
* Social inequity has been created by usury, taxation and fractional reserve banking, it is not unreasonable to use a tax for a fixed duration to re-balance the wealth gap. This tax would be levied only on capital (assets), not labour, a tax on capital would provide a great incentive to invest in production (now tax free). Non productive assests such as one vehicle and one home would be not assessed to a maximum of say 20 times the national average, so maybe upto 300k for a vehicle and 5mil for a home. Tax would be on individuals only, and be set at say 2%.
Government spending should also be addressed, where spending should be almost entirely redirected into productive paths - I'll avoid a complete description due to space.
This would result in falling asset prices, and one negative aspect may be capital flight - such things would need to be considered in implementation.
what's so horrible ?
are you insane ?
the money belongs to those who produce it. the first question to ask to these bastards who WASTE our money is
WHAT HAVE YOU DONE WITH OUR MONEY WE HAVE ALREADY GIVEN YOU ?
clearly, they have no reasonable answer, therefore... why give them MORE ? again... are you insane... ?
60% of your money to these arseholes ? fuck that shit.
flat tax, no deductions, and 10% of what is made. the onus is on these spending fuckers, not on the producers, and yes, get the government OUT of the things they do not belong.
no wonder we are so fucked..... with people so willing to give away the product of their efforts to these morons.....
insane.....
Taxation is theft.
Theft is horrible.
Taxation is horrible.
Considering the cost of a good prostitute, cocaine, and penthouse suite - not horrible at all.
Horrible for whom?
For anyone making less than $290k: win. For anyone making more: loss.
First of all, there should be no income tax, period. But if we are going to have an income tax, there should never be a 0% bracket because everyone needs to have skin in the game.
Agree with point 2. Point 1 is for lunatics that think national defense and health and safety can be provided for free.
So there was no national defence prior to 1913? Wow. The spanish, mexicans, and british might have to disagree.
Are these guys trying to rig numbers to show some improvement on the tax receipt line? I wouldn’t put it past them.
I think its a bit of that and a bit of this: If the reds block on the debt ceiling and we get another show like last year, any and all additional tax revenue NOW will help get the blues through the mess and give the blues some room to make the reds look bad.
One rule for the rich fat cats, another rule for the common man.
Isn't the USA a wonderful place - freedom for all and a level playing field - NOT!
Pack up your bags and head for greener pastures!
Vote with your feet - leave the fascist country of the USSA!
Cheers
Done! 5 years ago, and I was under 30 when I did it. Most of it in the Caribbean.
The unfortunate thing was that I had to work in Iraq and Germany for the US MIL in order to facilitate my Expat living.
Gold Standard please! Otherwise Gulag Archipelago here we come!
Pretty old trick isn't it. The Catholic Church, at least, invented something similiar where if donations and income from Church property were coming in below budget, you rev up the investigation of sin and then sell dispensations to the sinners.
The tax liabilities are grossed up by penalties. Then interest on penalties. Then more penalties on the interest and penalties. Followed by more interest on the penalties and interest on the first penalties and interest. Discounts are not what they seem at first glance.
People could even get better offers if no one paid their taxes, but then, what would be the point?
Taxes are the lifeblood of our fascist government, feed it at your own risk.
That's been my reasoning sof ar as well.
Don't feed the Federal Trolls and they'll die off.
People don't realize the power is in their hands to make it stop. Rage against the machine
Well, someone would die off, that's for sure. Hedge accordingly.
Yeah, I'm expecting the multinational corporate tax break. Those guys really need a break, too. They suck jobs out of our country and get deals that make it harder for the small businesses to compete. But they also provide plenty of support for our legislature, so they get a seat at the table.
Moreover, Big O needs the cash in order to avoid another debt ceiling showdown. I think Bruce has it nailed. If O can just push this debate until after his second coronation (or at least second election)....then all will be well. Nothing will be rotten in the States. Trust us.
Dear clueless,
You will find Bruce with the fraud faggots smoking and drinking all the while blowing currency bubbles betting against America. Bruces 100% is really 15%, and in total more than your salary.
It's easy to point out the flaws after you've exploited the weak and vulnerable, right Krasting?
You mean... The Big Orifice?
Debt ceiling showdowns are unvoidable at this point. US takes in $500B and spends $1.5T annually, easily. That is why we have a running tab of +$1T in budget deficits for years now. The real choice is by those who are willing to lend that +$1T each year. They hold the purse strings, not congress or the president.