Where are those scarce government resources going?
The Internal Revenue Service employs approximately 88,000 full time staff. This is two and a half times as many as the FBI.
Then, what about Spies v. Bean counters? Incomparable! The number of the CIA’s staff cannot “at present, be publicly disclosed.” So says cia.gov.
The almost-overnight sensation of the IRS offshore account voluntary disclosure program is about to close.
After the deadline was extended three weeks ago, from September 23rd to October 15th (see https://pearlmanlaw.wpengine.com/irs-extends-voluntary-disclosure-deadline-for-secret-offshore-account/), the final deadline is now only days away. See also the New York Times article, “Tax Evaders Face Choice: Pay or Pray” by Lynn Browning.
While touting itself as a program by which taxpayers with unreported income in foreign bank accounts can “come in from the cold,” avoid criminal prosecution, and pay a penalty which is stiff, but not as severe as the penalties a taxpayer would be subject to outside the program, what seems to get lost in the discussion of this program is the fact that taxpayers who seek to participate are required to confess to a tax crime, waive their 5th Amendment right against self incrimination before knowing whether the Government will commit not to pursue criminal charges against them.
That is a danger of this program. Still, news accounts plus telephone conversations with IRS employees working in its criminal investigation division report that thousands of taxpayers are lining up to participate, submitting written disclosures in order to get that promise not to prosecute and the stiff but less horrible than otherwise penalty structure.
A revenue agent with the Internal Revenue Service has agreed to plead guilty to a federal tax fraud charge for filing a personal income tax return that claimed he suffered a loss in a real estate transaction when in fact he realized a substantial profit. (“Revenue agent” is the official title for the people at the IRS who audit tax returns.)
In a plea agreement, Jim H. Liu, 43, of Diamond Bar, Calif., agreed to plead guilty to subscribing to a false tax return — a charge that carries a penalty of up to three years in federal prison.
Liu admitted he filed a false tax return for the 2002 tax year that improperly claimed a loss on his sale of a property in Pomona. Liu sold the property for a profit of more than $48,000, but he instead claimed a loss of more than $4,200.
The tax loss to the government, as a result of Liu’s filing, was approximately $14,642.88.
What do they call it when a business owner withholds payroll taxes from his or her employees’ paychecks, spends that money on other expenses, doesn’t send the withholding tax payment to the IRS, then, does the same thing again, and then again, and then again?
The “again and again” part is called “pyramiding”: the employer is pyramiding its failure to pay one payment period after another, growing the company’s debt to the government astronomically.
Another way to describe it is digging the hole deeper, and deeper. (Recall Bill Clinton’s sensible advice: If you’re in a hole, first thing: stop digging.)
The act of failing to pay to the IRS (actually the U.S. Treasury) is a way to live especially dangerously for business owners, managers, and decision makers at the company. James Bond thinks he’s living dangerously? Feh!
The reason it is so dangerous is: The IRS has the power to hold the owners, managers, and decision-makers at the company personally responsible for the unpaid withholding tax with little more than the stroke of a pen. (This is called the “Trust Fund Recovery Penalty.”)
With this extraordinary power, the IRS can “pierce the corporate veil” with an ease unknown to ordinary creditors. Once it does, this liability is NOT deductible and it is NOT dischargable in bankruptcy. So there is a triple-whammy which can be devastating, and “pyramiding” the debt multiplies the problem.
This triple-whammy is then magnified further by the state tax dept, if the business is in a state which has an income tax; States have similarly huge, extraordinary powers and often the state is even tougher than the IRS.
A taxpayer searching around the internet asked this question. It is a very good question because it asks about the reach — and the limits — of the IRS’s power to reach into our lives whether we like it or not.
For those unfamiliar with the term, a “lien” is essentially a claim — someone claims you owe them money.
In certain situations, the person (or business, or government agency) making the claim can file a document announcing this claim with the County Clerk or other public records authority.
By filing a lien with the County Clerk, the claimant announces to the world (and especially to credit reporting agencies) that the claimant says you owe it money.