David Cay Johnston on IRS failures

[Number Six]

This is an excellent article by Dr. Johnston: https://www.theguardian.com/commentisfr ... Qd7RlH4aiA

What resources would be necessary to interdict the type of tax fraud he is talking about in the future?

[Cpt Banjo]

Dr. Johnston? I don't think he has a degree, much less a doctorate.

The only way to address this kind of fraud is to greatly increase the IRS's budget and install a Commissioner who has the guts to go after the big dogs who pull this kind of stuff. But it ain't gonna happen under the current administration.

Having said that, some of the techniques used by the Trump family were completely legitimate (e.g., valuation discounts).

[wserra]

Dr. Johnston? I don't think he has a degree, much less a doctorate.

He did win a Pulitzer for tax reporting, and was a Pulitzer finalist twice more. That's not chopped liver.

[Arthur Rubin]

Unfortunately, an IRS with the power to go after hidden transactions would also have the power to destroy political enemies (of the Commissioner, not necessarily of the President). I'm not sure it should be done unless the IRS were independent, similar to the way the Federal Reserve is independent of the President and Congress.

[Famspear]

Unfortunately, an IRS with the power to go after hidden transactions would also have the power to destroy political enemies (of the Commissioner, not necessarily of the President). I'm not sure it should be done unless the IRS were independent, similar to the way the Federal Reserve is independent of the President and Congress.

I don't understand what is meant by the phrase "to go after hidden transactions".

At any rate, the IRS certainly has the legal power to investigate "hidden" transactions -- for example, by examining filed tax returns and by issuing an administrative summons to discover information that is hidden (even where no tax return has been filed). The IRS has the legal power to issue a notice of deficiency and (following prescribed procedures) to assess tax and pursue enforced collection procedures.

Also, I'm not understanding what is meant by the phrase "I'm not sure it should be done". What is the "it" that should not be done?

[Famspear]

Note: Under Internal Revenue Code section 7601, the Secretary of the Treasury or his delegate (including the Commissioner of Internal Revenue) has the legal authority, to the extent he deems it practicable, to cause officers or employees of the Treasury Department to proceed through each internal revenue district and inquire after all persons therein who may be liable to pay any internal revenue tax, and all persons owning or having the care and management of any objects with respect to which any tax is imposed.

And, under section 7602, for the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary of the Treasury or his delegate is authorized by law to examine any books, papers, records, or other data which may be relevant or material to such inquiry, to summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary may deem proper, to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and to take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.

Further, under section 7608(b), any criminal investigator of the Internal Revenue Service whom the Secretary of the Treasury or his delegate charges with the duty of enforcing any of the criminal provisions of the internal revenue laws, any other criminal provisions of law relating to internal revenue for the enforcement of which the Secretary is responsible, or any other law for which the Secretary has delegated investigatory authority to the Internal Revenue Service, is, in the performance of his duties, authorized to execute and serve search warrants and arrest warrants, and serve subpoenas and summonses issued under authority of the United States, to make arrests without warrant for any offense against the United States relating to the internal revenue laws committed in his presence, or for any felony cognizable under such laws if he has reasonable grounds to believe that the person to be arrested has committed or is committing any such felony; and to make seizures of property subject to forfeiture under the internal revenue laws.

[Famspear]

In discharging his duties, the Commissioner of Internal Revenue is required by section 7803(a)(3) to ensure that employees of the Internal Revenue Service are familiar with, and act in accord with, taxpayer rights under other provisions of the Internal Revenue Code, including—

(A) the right to be informed,

(B) the right to quality service,

(C) the right to pay no more than the correct amount of tax,

(D) the right to challenge the position of the Internal Revenue Service and be heard,

(E) the right to appeal a decision of the Internal Revenue Service in an independent forum,

(F) the right to finality,

(G) the right to privacy,

(H) the right to confidentiality,

(I) the right to retain representation, and

(J) the right to a fair and just tax system.

[Number Six]

Ah, the taxpayer rights and IRS reforms of the late 90s after those scary hearings about IRS abuses. Unfortunately many taxpayers still fold when they hear about the big bad IRS. I even had someone on Facebook recently say that if you don't pay your taxes you will go to jail, specifically the "war tax resistors", but the worst that usually happens is lots of economic trouble, with bank accounts sucked dry.

In the case of the wealthy, many taxpayers have a lot more shielding and success. I had a client I did tree work for who was cited by the NYC tax authorities on taxes and successfully beat them. https://www.dta.ny.gov/pdf/archive/Deci ... 1425391175