--- Cindy Neun <cindyoflasvegas@...
> To: egroups <c.smith@...>
> From: Cindy Neun
> Date: Wed, 05 Feb 2003 07:20:45 -0800
> Subject: [legality-of-income-tax] Today in New York
> TODAY in New York Times
> February 5, 2003
> Bush Budget Increases Push to Find Tax Cheats
> By DAVID CAY JOHNSTON
> resident Bush's budget would increase by a third or
> more the number of
> audits of taxpayers suspected of hiding income
> received from their
> businesses, partnerships, investments and offshore
> The administration identified five areas to which
> more resources would be
> devoted to stem tax cheating: abusive corporate tax
> shelters, unreported
> income among higher-income taxpayers, failure by
> employers to turn over
> taxes withheld from paychecks or even to withhold
> them, misuse of trusts and
> offshore accounts to hide income, and "tax denial"
> schemes that are based on
> claims that the tax code does not apply to most
> The proposal is a first step toward reversing a long
> decline in enforcement
> of the tax laws. It could bring in billions of
> dollars owed to the
> government and would also help the states, which
> rely on Internal Revenue
> Service enforcement much more than on their own
> But the proposal for I.R.S. financing falls far
> short of what Charles O.
> Rossotti, the last I.R.S. commissioner, said in
> November that the service
> needed to enforce the tax laws adequately.
> Under the Bush plan the I.R.S. would get an
> additional $133 million for
> these audits and other law enforcement work in these
> five areas. Over all
> the I.R.S. would receive $10.4 billion, a 5.25
> percent increase, but still
> less per tax return, after adjusting for inflation
> than it got five years
> ago. Law enforcement, which includes audits, takes
> up almost 40 percent of
> the I.R.S. budget.
> The additional money would "target the real problem
> areas in a fair and
> evenhanded manner, restoring confidence in the tax
> system for hard-working
> taxpayers," said Pamela Olson, assistant treasury
> secretary for tax policy.
> "At the same time the I.R.S. goes after those who
> cheat," Ms. Olson added,
> "the I.R.S. must provide better service to
> law-abiding taxpayers and respect
> every taxpayer's rights. It can and it must do
> But according to the formula Mr. Rossotti
> recommended in his final report to
> the I.R.S. Oversight Board, the agency would need an
> overall increase of
> more than 7 percent, as opposed to the 5.25 percent
> proposed by President
> Bush, to start closing the law enforcement gap.
> Over the last five years, demands on the I.R.S. have
> grown in several ways.
> Congress has made the tax code far more complex,
> while at the same time
> imposing complicated new procedures to protect the
> rights of taxpayers. A
> growing number of promoters now teach people to
> exploit those procedures to
> thwart audits and the collection of taxes, according
> to Mr. Bush's budget.
> Congress also ordered better service to cooperative
> taxpayers. Without extra
> money to handle these duties, the I.R.S. diverted
> money from audits, which
> in turn lowered the risks of cheaters being caught.
> The Treasury Department did not detail how much of
> the extra money would be
> applied to each of the five areas of cheating. It
> said only that with $133
> million more it could increase audits of individuals
> who make more than
> $100,000 from 125,000 last year to 166,000 next
> year, a one-third increase,
> at a cost of about $3,200 per audit. For some tax
> dodges the number of
> audits would increase by more than a third; for
> others, the figure would be
> The department also proposed tougher rules to make
> both promoters of tax
> shelters and the companies that buy them keep more
> records and make more
> The use of artificial losses in foreign currency
> transactions to make
> capital gains vanish is one of the most popular tax
> dodges. So are corporate
> transactions that inflate interest deductions.
> Entrepreneurs who place their
> business in a trust, because promoters persuaded
> them that it will make
> profits immune from taxes, are another area covered
> by the budget proposal.
> The extra money would also increase audits of those
> who buy into the growing
> number of fraudulent schemes asserting that it is
> legal to stop paying taxes
> if one uses a "pure trust," renounces his Social
> Security number or declares
> himself a sovereign citizen or a citizen of the
> state in which he lives (but
> not the United States). Another fraud, known as the
> 861 position, asserts
> that wages paid by American-owned companies are
> exempt from tax. None of
> these claims have been upheld by any judge anywhere,
> but the Treasury
> Department has acknowledged that the frauds have
> flourished in recent years.
> Promoters of these schemes often cite as evidence
> that taxes need not be
> paid the statements of those senators and
> representatives who in the last
> five years have described the I.R.S. in terms like
> "rogue agency" run by
> "jackbooted thugs" and other remarks that the
> promoters twist into
> assertions that the I.R.S. is not a legitimate
> agency of the government.
> This year the vast majority of tax cheats the I.R.S.
> identifies will get
> away without paying. Mr. Rossotti's report showed
> that the I.R.S. has only
> enough money to pursue about a fifth of individual
> Copyright 2003 The New York Times Company |
Do you Yahoo!?
Yahoo! Mail Plus - Powerful. Affordable. Sign up now.