IRS gives wrong information about taxes

[shanek]

No, this isn't some wacko tax protestor stuff. It's the result of a study done by the US Department of the Treasury. After posing as taxpayers calling the IRS for advice, they found that the IRS gave correct and complete answers only 45% of the time. 12% of the time the answers were correct but incomplete, which could lead the person to making errors on their tax returns. And 43% of the time the answers were flat out wrong.

How are we supposed to comply with the laws when the government can't even adequately explain to us what they are?

Sources:

http://www.accountingweb.com/item/98063
http://news-register.net/edit/story/095202003_edt001.asp
http://www.thewbalchannel.com/money/2456270/detail.html
http://www.detnews.com/2003/politics/0309/05/a01-262390.htm

 

[WildCat]

I can't imagine why the tax code isn't declared unconstitutionally vague. This is why there should be a flat tax, no deductions, exemptions, etc.

The whole tax code is a shell game used to appease special interests and micro-manage behavior. This is why politicians like it complicated.

 

[mjv]

Oh, please.

There is a reason the tax code is 9000+ pages! Wealthy people and corporations spend millions of dollars every year finding inventive ways to evade paying taxes.

Anyone recall Enron? in four of their last five years in business, the average single mom working as a waitress or at walmart paid more in taxes than they did (four years they paid zero, in case you were in a coma)!

There is one, and only one, reason that wealthy fat cat PACs are pushing the flat tax, to wipe the slate clean and restore all the loopholes that have been removed by the complexities of the tax code.

Besides, If IRS wants to have more competent people answering the questions, they will have to hire them. I imagine its $10 bucks an hour for seasonal work...you get what you pay for.

 

[corplinx]

Oh, please.

There is a reason the tax code is 9000+ pages! Wealthy people and corporations spend millions of dollars every year finding inventive ways to evade paying taxes.

Anyone recall Enron? in four of their last five years in business, the average single mom working as a waitress or at walmart paid more in taxes than they did (four years they paid zero, in case you were in a coma)!

There is one, and only one, reason that wealthy fat cat PACs are pushing the flat tax, to wipe the slate clean and restore all the loopholes that have been removed by the complexities of the tax code.

Wow, shocking revelations. And the evidence is?

 

[WildCat]

Oh, please.

There is a reason the tax code is 9000+ pages! Wealthy people and corporations spend millions of dollars every year finding inventive ways to evade paying taxes.

Anyone recall Enron? in four of their last five years in business, the average single mom working as a waitress or at walmart paid more in taxes than they did (four years they paid zero, in case you were in a coma)!

There is one, and only one, reason that wealthy fat cat PACs are pushing the flat tax, to wipe the slate clean and restore all the loopholes that have been removed by the complexities of the tax code.

Besides, If IRS wants to have more competent people answering the questions, they will have to hire them. I imagine its $10 bucks an hour for seasonal work...you get what you pay for.

No, the 9000 pages are there to create the loopholes in the first place! This is exactly how and Enron got away from paying taxes - by exploiting the myriad loopholes carefully hidden away in those 9000 pages. Congress puts them there at the behest of interest groups who lobby furiously for the privelege.

A simple flat tax has no loopholes, everyone can understand it and the only people who wouldn't like it are the tax accountants who would have to find employment elsewhere.

 

[mjv]

And the evidence is?

Right under your nose. It helps to read newspapers and magazines once in a while.

 

[Reager]

No, this isn't some wacko tax protestor stuff. It's the result of a study done by the US Department of the Treasury. After posing as taxpayers calling the IRS for advice, they found that the IRS gave correct and complete answers only 45% of the time. 12% of the time the answers were correct but incomplete, which could lead the person to making errors on their tax returns. And 43% of the time the answers were flat out wrong.

How are we supposed to comply with the laws when the government can't even adequately explain to us what they are?

Good question. But is this really only a governmental problem? I'd wonder what the statistics are for large companies. Just the other day, while shipping my computer back to Dell, I had to call Airborne Express three times, and each time got a different response to the same question.

Mike

 

[mjv]

No, the 9000 pages are there to create the loopholes in the first place! This is exactly how and Enron got away from paying taxes - by exploiting the myriad loopholes carefully hidden away in those 9000 pages. Congress puts them there at the behest of interest groups who lobby furiously for the privelege.

A simple flat tax has no loopholes, everyone can understand it and the only people who wouldn't like it are the tax accountants who would have to find employment elsewhere.

No, that's not the way it works. Your are correct that the loopholes are inserted by lobbyists who are bought and paid for by the wealthy, but the loopholes are inserted into language that is attempting to strengthen or clarify the tax code.

My dad always said when someone supports something strongly, you have to always check where the money is going. The wealthy want a flat tax so that they no longer have to spend millions on lobbyists and accountants to avoid paying taxes. If a flat tax were imposed it would be very simple for them to just hide their income (as was done in the past and stopped by changes to the tax code) by having their income sent oversees, transferred to their children, or hidden in various schemes and enterprises. The end result is the multimillionaire in a multimillion dollar home, numerous luxury cars, a jet, and other perks who mysteriously has no "income" that is subject to the flat tax.

So what happens when the wealthy have free reign to avoid paying taxes? Well, the flat tax will either have to be increased, which will increase the burden on the middle class (so we gain nothing and possibly lose in the bargain) or they will have to amend the flat tax code to strengthen it and ensure collection (and the wealthy will have loopholes inserted, so the code must be strengthened, which will include loopholes, etc.).


I don't like the current tax code more than anyone else, but a flat tax is a bad, bad, idea.

 

[WildCat]

No, that's not the way it works. Your are correct that the loopholes are inserted by lobbyists who are bought and paid for by the wealthy, but the loopholes are inserted into language that is attempting to strengthen or clarify the tax code.

My dad always said when someone supports something strongly, you have to always check where the money is going. The wealthy want a flat tax so that they no longer have to spend millions on lobbyists and accountants to avoid paying taxes. If a flat tax were imposed it would be very simple for them to just hide their income (as was done in the past and stopped by changes to the tax code) by having their income sent oversees, transferred to their children, or hidden in various schemes and enterprises. The end result is the multimillionaire in a multimillion dollar home, numerous luxury cars, a jet, and other perks who mysteriously has no "income" that is subject to the flat tax.

So what happens when the wealthy have free reign to avoid paying taxes? Well, the flat tax will either have to be increased, which will increase the burden on the middle class (so we gain nothing and possibly lose in the bargain) or they will have to amend the flat tax code to strengthen it and ensure collection (and the wealthy will have loopholes inserted, so the code must be strengthened, which will include loopholes, etc.).


I don't like the current tax code more than anyone else, but a flat tax is a bad, bad, idea.

All those schemes and transfers are the result of a complicated tax code. Where's the loophole in a flat tax? If the tax code reads simply:"All income over $20,000 is subject to a 20% tax" there is no loophole! It doesn't change GAAP after all.

Please give examples of how income could be hidden in this example.

 

[Reager]

All those schemes and transfers are the result of a complicated tax code. Where's the loophole in a flat tax? If the tax code reads simply:"All income over $20,000 is subject to a 20% tax" there is no loophole! It doesn't change GAAP after all.

Please give examples of how income could be hidden in this example.

Here's a simple one: What is included as 'income'?

Mike


Edited to change "in income" to "as income."

 

[mjv]

All those schemes and transfers are the result of a complicated tax code. Where's the loophole in a flat tax? If the tax code reads simply:"All income over $20,000 is subject to a 20% tax" there is no loophole! It doesn't change GAAP after all.

Please give examples of how income could be hidden in this example.

Off the top of my head, I recall seeing a news program in the '80s about CEO types who would simply do the following (and I am obviously paraphrasing):

Live in a fully furnished house owned by their company (who also pay the bils), drive a car owned by the company, throw parties paid for by the company, eat food purchased and prepared by the company chef, etc.

Then, have the company pay you a salary of only $19,999.

Heck, If I didn't have to pay for my car, home, entertainment, travel, or food, I could get by on that.

There were many other schemes mentioned, but I can't remember them in detail.

 

[shanek]

Re: Re: IRS gives wrong information about taxes

Good question. But is this really only a governmental problem? I'd wonder what the statistics are for large companies. Just the other day, while shipping my computer back to Dell, I had to call Airborne Express three times, and each time got a different response to the same question.

At least in that case, you have the option of switching to Compaq or Gateway. Or not buying a computer at all. No such option exists with the Income Tax. You MUST pay it, and if you get it wrong you could go to jail. At the very least, you'll have to pay penalties.

 

[Reager]

Re: Re: Re: IRS gives wrong information about taxes

At least in that case, you have the option of switching to Compaq or Gateway. Or not buying a computer at all. No such option exists with the Income Tax. You MUST pay it, and if you get it wrong you could go to jail. At the very least, you'll have to pay penalties.

Well, frankly, duh. Only the government has the power to tax. But if the 'right hand not knowing what the left hand is doing' phenomena is characteristic of all large entities, then that's not really a valid reason why we shouldn't have an income tax.

Mike

Edited to add the bit about only government can tax.

 

[Tony]

Re: Re: Re: Re: IRS gives wrong information about taxes

Well, frankly, duh. But if the 'right hand not knowing what the left hand is doing' phenomena is characteristic of all large entities, then that's not really a valid reason why we shouldn't have an income tax.

Actually it is, its also the best argument against the death penalty. Innocent people could go to jail (or be put to death) because of a government error. I don’t accept that.

 

[WildCat]

Off the top of my head, I recall seeing a news program in the '80s about CEO types who would simply do the following (and I am obviously paraphrasing):

Live in a fully furnished house owned by their company (who also pay the bils), drive a car owned by the company, throw parties paid for by the company, eat food purchased and prepared by the company chef, etc.

Then, have the company pay you a salary of only $19,999.

Heck, If I didn't have to pay for my car, home, entertainment, travel, or food, I could get by on that.

There were many other schemes mentioned, but I can't remember them in detail.

Simple, benefits count as income. In this case, what would he have to pay to rent the house, car, etc.

I doubt any CEO would accept such a deal even now, because once he leaves the company he loses all of this!

 

[WildCat]

Here's a simple one: What is included as 'income'?

Mike


Edited to change "in income" to "as income."

Anything of value transferred to or used for your benefit as compensation for you employment.

It's really quite simple, only when you make 9000 pages redefining such simple terms does it become complex.

 

[Reager]

Re: Re: Re: Re: Re: IRS gives wrong information about taxes

Actually it is, its also the best argument against the death penalty. Innocent people could go to jail (or be put to death) because of a government error. I don’t accept that.

Huh? Where do you get that leap in logic? The IRS can make mistakes (just like any other human institution) therefore the government should not have the power to collect an income tax? Please explain. There is ALWAYS the possibility of mistake, in any human endeavor. Using your rationale, the government should not exist, because no matter what it does it could always make a mistake.

Now, the mistake argument is more persuasive when talking about the death penalty because the dp is final. But in my opinion, principled arguments against taking human life are "better" reasons for opposing the death penalty than merely "we could make a mistake." Like I said above, if that's your rationale, why draw the line at the death penalty?

Mike

 

[Reager]

Anything of value transferred to or used for your benefit as compensation for you employment.

It's really quite simple, only when you make 9000 pages redefining such simple terms does it become complex.

Perhaps, but all it took was one question from me and you're "quite simple" tax code just doubled in size.

Mike

 

[tedly]

What's included in 'income' ?

How about capital gains, and investment income? Lottery winnings?

In Canada there has been one thorough government study of the tax system, done by a fat-cat tax lawyer. Interestingly enough Mr. Ted Carter was also an honest man.
The Carter commission came to the stunning conclusion that ' a buck is a buck' and that it all should be taxed at the same rate. As it is now the worst way to make money is to work for it.
The report was done in about 1964, and has been so thoroughly buried that you might find a copy in the Harvard library,

 

[shanek]

Re: Re: Re: Re: IRS gives wrong information about taxes

Well, frankly, duh. Only the government has the power to tax.

But the government doesn't have to collect taxes in such a tyrannical fashion.