The Truth About Frivolous Tax Arguments
irs.gov
irs.gov
They've used "big data" for years to target the tax cheats they think will give them the best return on their dollar. That's why they don't go after the mega-rich -- their lawyers delay the process so much that their return is lower than going after small business owners.
As far as government orgs go, they're probably one of the most efficient.
My personal experience with them was actually very positive, even though I was there for an audit. They called me in, they said, "here are our concerns", I said, "here's my documentation". We went back and forth, and mutually agreed that some things were ok and some were not. We decided I owed some extra money, but they waived the fees and penalties.
Overall, I think they're one of the better orgs in the government.
They apparently can't implement their own backup policy, can't comply with congressional subpoenas, and has generally slow walked and foot dragged through the entire investigation.
http://www.motherjones.com/politics/2013/05/irs-tea-party-sc...
But mostly my point was that they do not deserve the hate they get in most cases.
Frankly, there are a lot of fraudsters out there, and when there started to be a large number of new conservative nonprofits started by people without prior experience running such organizations, the field was ripe for folks to step in with fake charities, so they could collect money from outraged “tea partiers”.
As an example, Ben Carson’s whole political campaign is basically a direct mailer donation scam (the people running it were previously running supplement scams, etc.) which somehow transcended its original scope and turned into a real campaign, much to the surprise of Carson and his buddies.
It’s not surprising that the IRS staffers would notice a pattern of abuse with a pretty good hit rate on particular keywords, and then target groups with those keywords for increased scrutiny, making them fill out a few extra forms. It was stupid of them to do so, because the political fallout is predictable. But it’s hardly the roaring scandal it’s made out to be.
I really have trouble finding this scandalous, prima facie. The conservative nature of these groups was purely incidental, it seems to me -- have I missed something?
[citation needed]
The TEA stands for Taxed Enough Already(backronym). They're not opposed to paying any taxes, they're opposed to paying more.
More than this, the IRS has been used as a weapon for much longer. Under the Clinton Administration, the IRS was used to harass WND and Joseph Farah.
No. Their stance is to reduce and or eliminate taxes; it is not to avoid paying taxes owed. Whether you (or the IRS) agree with that political stance is entirely irrelevant to these groups' taxable status.
I can provide a little context here. When I was in college I was a conservative Republican. Some right-wing groups in Washington deliberately and consciously helped me and many other students set up tax-exempt organizations. Everything was technically OK.
But in retrospect? It's pretty clear their strategy was to create a bunch of exempt organizations through which to funnel money for political purposes. The big loophole at that time was that you could be a 501c3 and provide "education" and remain exempt. Now if ALL of that education just happened to benefit the right-wing of the GOP, well I guess that's just a coincidence.
Frankly, the IRS was totally right in going after these groups. The problem is they overreached in some cases. Many of the groups are not following the spirit of the law and I would wager that many of them are not even following the letter of the law.
For example, you're not supposed to coordinate with election campaigns if you're a 501c3, but what if everyone on your board is actively involved in local Republican politics? Even if your board meeting is technically non-partisan, when everyone goes out for drinks afterwards (on the non-profit's tab) you can be sure that election strategy is going to be a topic of conversation.
For the record, I do not see liberal groups flagrantly disregarding the law in such a manner, which makes sense because they're ideologically less committed to dodging taxes.
TLDR: If a bunch of people are organizing around the concept "taxes suck, let's not pay them!" it's a pretty safe bet that many of them are actually breaking the law.
It turned out that the IRS had bolo'd ("be on the lookout") all applications that used "open source" and although I don't know for sure it seems like that was what caused the problem.
> Controversial intensive scrutiny of political groups
> Beginning in March 2010, the IRS more closely scrutinized certain organizations applying for tax-exempt status under sections 501(c)(3) and 501(c)(4) of the Internal Revenue Code by focusing on groups with certain words in their names.[46][47][48] In May 2010, some employees of the "Determinations Unit" of the Cincinnati office of the IRS, which is tasked with reviewing applications pertaining to tax-exempt status, began developing a spreadsheet that became known as the "Be On the Look Out" list.
> The list, first distributed in August 2010, suggested intensive scrutiny of applicants with names related to a number of political causes, including names related to the Tea Party movement and other conservative causes.[48] Eventually, IRS employees in at least Cincinnati, Ohio; El Monte, California; Laguna Niguel, California; and Washington, D.C.[49] applied closer scrutiny to applications from organizations that:[50][51][52]
> referenced words such as "Tea Party", "Patriots", or "9/12 Project", "progressive," "occupy," "Israel," "open source software," "medical marijuana" and "occupied territory advocacy" in the case file;[47][48]
To be excused from taxes, as every such organization regardless of their politics is claiming they should be, an organization is required to obey certain rules that aren't supposed to depend on the specifics of their politics. Things such as actively trying to get a particular candidate elected explicitly violate the rules and, by law, should cost an organization its tax-exempt status. Yet Obama's IRS enforcers have had no objection to tax-exempt "community organizers" going door to door on election day to "get out the vote" but, for some reason, only knocking on doors of registered Democrats.
Regardless of any political theories about taxes in general, which the IRS is not empowered to take a position on, these organizations are all the same in claiming that THEY themselves don't have to pay them. The IRS is supposed to investigate such claims, and yet while liberal organizations were able to go as far as actively encouraging individual registered Democrats to vote in the specific election being held that very day (in which only one candidate was from the party of everyone being encouraged to go vote) without fear of scrutiny by Obama's IRS, any organization that so much as used the term "liberty" in its name was, it turned out, risking audits, time-consuming scrutiny of their activities, potential denial of tax-exempt status because they might get involved in politics, etc. We can't have political activists claiming tax-exempt status getting involved in politics, right? Well, it turned out to depend entirely on their politics, not on the nature of their activities.
ALL organizations claiming tax exempt status are making the same claim with respect to paying their own taxes, and your claims regarding your own tax liability is the ONLY thing the IRS is empowered to scrutinize. To claim that, among those groups, the ones who believe that "WE don't have to pay at all, and OTHERS should be taxed less" are more likely breaking the law than those whose position is "WE don't have to pay at all, and OTHERS should be forced to pay more for our agenda" is ridiculous.
This is all aside from the routine political and personal vendettas employees with this sort of power will invariably engage in. These violations are not just a few 'bad apples', as this sort of activity is a systemic issue, and the IRS actively protects the wrongdoers.
Actually, they only enforce regulations. Congress (specifically the House) makes the regulations.
This is incorrect.[1][2]
[1] https://en.wikipedia.org/wiki/United_States_administrative_l...
See my above comment for one of the "rebuttals".
"This document, including the relevant legal authorities cited, is not intended to provide an exhaustive list of frivolous tax arguments. Merely because a frivolous argument is not included in this document does not mean that it is not frivolous."
Some in the US might remember a year when the 'Estate Tax' was suspended - that is, if a relative died and passed along an inheritance amount, it wasn't taxable like in years prior or once the suspension expired after 2010.
As a recipient of some funds - a mid single digit thousand figure - from my maternal relative passing, I paid off my credit card and - this was my mistake - included the amount received in some kind of 'income' field. This set into motion one of the most ridiculous, patience-testing exchanges in my adult life. In mid-2011, they sent me a letter wanting a check for $X,XXX.
I wrote back a clear explanation of the error in question - that the funds were an inheritance and not subject to the taxes being claimed. I sent it via FedEx, and eventually got a response. They still wanted the entire $X,XXX!
This back and forth - me being as polite and stubborn as possible in writing - and the IRS kept wanting money, offering no proof why the amount they claimed owed was actually owed (I asked repeatedly for citations). This went on for a FULL YEAR. In the second to last correspondence, I had pages and pages of the 2010 tax code included, with relevant highlights, obscure forms...yet still felt taking a polite (if a bit dense) tone would be better than getting angry, you know, poking a gorilla with a stick kind of thing.
In the end, I sucked it up and sent them about $150, what they eventually came down to after all this time, just to get them to shut up. The IRS, without question, wasted time, resources, and money stubbornly pursuing money that they weren't entitled to at all.
So, while I respect their power and genuinely believe in their mission to acquire funds to keep the government working in its basic fashion, I have absolutely no pity for staff members who have to read through line after line of bullshit excuses, because they do it too.
• Quoting from a court case and claiming it says they do not have to pay tax. The case turns out to be real...but what they are quoting is not from the court's ruling but rather is from a brief submitted by the losing side.
• Quoting from a court case and claiming it says they do not have to pay tax. The cited court exists, but the case does not.
• Similar to the above, but the cited court itself does not exist.
• They cite a real case from a real court, but the parts they quote to support their argument do not exist.
• On those very rare occasions when they cite a real case, from a real court, and actually quote from the court's ruling, it turns out to be a ruling that was overturned quickly by a higher court.
• (One of my favorites) Saying that a court lacked jurisdiction because the flag in the courtroom had a gold fringe, which they say signifies that this is an "Admiralty Court" and only has jurisdiction over the seas and navigable waterways.
The article mentioned the argument that the Federal government only has authority over D.C., Guam, Puerto Rico, etc., but doesn't say why some people believe that. I've seen two arguments for that belief. The first is that the Federal government was created by the Constitution specifically to run D.C. and other Federal territory and was not given any authority over anything else.
The second is that there is someplace in the tax code that says something like "For purposes of this section, 'United States' includes D.C., Guam, [...]" and they think "includes" means "consists of only" (and they ignore the restriction to "this section" and so think this applies to the whole tax code).
I've never run into an argument from these people that was not, frankly, idiotic. If one of their arguments does not immediately fail due to a fundamental misunderstanding of basic English, it falls apart as soon as you try to track down original sources.
The government will seize your property and incarcerate you if you don't pay.
The IRS funds democracy. They are not scum.
You have the opportunity to make an impact. But it requires an extraordinary amount of work to make your voice heard over the other ~324M people. As it should.
0. There's no direct vote on laws. This alone makes the US not a democracy, but a republic at best. 1. There's no direct vote for president and vice president. 2. Elected representatives or the president do not care one iota about their constituents between the elections. If you think they do, explain things like TPP 3. Two party system merely creates the illusion of choice. Both parties are right wing, with democrats being slightly more centrist.
Here is a good discussion of these differences: http://www.lexrex.com/enlightened/AmericanIdeal/aspects/demr...
Actually, it most often representative democracy, which may be a republic, but may just as easily be, say, a constitutional monarchy.
Why do we need so many middlemen? Is this _really_ a democracy? Or is it a mere visibility of "rule of the people" designed to keep the working class, well, working, for the benefit of the ruling class?
For some reason you are arguing as if a direct democracy would somehow magically address the problems you outline for a representative democracy.
But in all but the smallest organizations, a direct democracy is simply unworkable and so your complaints don't really move the discussion forward. Do you want to go to the ballot box once a week to vote on every decision currently made by your representatives at the local, state, and federal level? Do you think that is more workable than a representative mechanism?
High level players are able to change the rules.
The best "players" have great teams studying the rules. Those without the resources to do so make their best attempt by using amateur understanding and common advice.
I like public parks, and schools and fire. I don't like funding wars or corrupt police, but those are separate issues.
Every high income nation has income taxes. The US is the only high income nation that still has the death penalty. Let's fix that first.
Ultimately, getting rid of taxes won't change anything. You're talking about a broken system; the system of debt, war and money. They're all related. If humanity is going to survive another 10,000 years, we need to deal with the real issues of consumerism and move away from money entirely.
> I don't like funding wars or corrupt police, but those are separate issues.
That is an effect of taxation. You wouldn't be forced to fund them otherwise.
> Every high income nation has income taxes.
The popularity of something doesn't mean it's good or correlated to high income.
> Ultimately, getting rid of taxes won't change anything.
This is a pretty extraordinary claim.
If it was posted in response to a an "Ask HN: What should we do with federal income tax policy?" or "Ask HN: How would you reduce the power of the IRS?", it would be on topic and less worthy of downvotes (of course, both of those threads would probably be flag worthy as improper for HN, but that's a different issue.)
Even for the first of those contexts, its really inadequately argued. But, in the context of the actual thread, its basically off-topic noise.