Aggregated willful failure to file

[Demosthenes]

From the President just-released Green Book:

MAKE REPEATED WILLFUL FAILURE TO FILE A TAX RETURN A FELONY

Current Law

Current law provides that willful failure to file a tax return is a misdemeanor punishable by a term of imprisonment for not more than one year, a fine of not more than $25,000 ($100,000 in the case of a corporation), or both. A taxpayer who fails to file returns for multiple years commits a separate misdemeanor offense for each year.

Reasons for Change

Increased criminal penalties would help to deter multiple willful failures to file tax returns.

Proposal

Any person who willfully fails to file tax returns in any three years within any five consecutive
year period, if the aggregated tax liability for such period is at least $50,000, would be subject to a new aggravated failure to file criminal penalty. The proposal would classify such failure as a felony and, upon conviction, impose a fine of not more than $250,000 ($500,000 in the case of a corporation) or imprisonment for not more than five years, or both.

The proposal would be effective for returns required to be filed after December 31, 2009.

As some of you know, I've been trying to get this puppy through for three years now.

[Demosthenes]

And how long before the folks at Lost Horizons, SuiJuris, etc. begin complaining about the change?

I also idly wonder how many LHers and SJers would actually be affected by the change. 20%, 10% or less? Idle musings on a Monday afternoon.

It's irrelevant since most LHers and SJers will never be subject to criminal prosecution.

Several recent defendants - Larken Rose, Sherry Jackson, Wesley Snipes, for example - would have ended up as convicted felons with longer prison sentences.

The original proposal that I was working on had a higher three years aggregate tax amount ($100,000) but the Obama administration lowered it on their own which may indicate that they are serious about getting this particular proposal passed.

[Judge Roy Bean]

Once upon a time............

Bubba and Ernest worked in a grocery store and seeing how rich the owner was getting decided they should go into business for themselves. They pooled their money, bought a truck and headed out to the truck farms. They start in watermelon season, paying $0.25 per melon. They take them into town and sell them out of the back of the truck across from their former employer for $0.25 a piece. They sell so many that they work themselves night and day to keep up with the demand.

Weeks go by and they start figuring out they're not making any money. Dreams shattered, Bubba turns to Ernest: "I told you we needed a bigger truck."

No offense, Demo, but here the propeller-heads that write the law are trying to rationalize getting a bigger truck instead of rethinking the original business model.

[jcolvin2]

Lots of interesting proposals in the Green Book:

http://www.ustreas.gov/offices/tax-poli ... rnbk09.pdf

[Demosthenes]

Lots of interesting proposals in the Green Book:

http://www.ustreas.gov/offices/tax-poli ... rnbk09.pdf

True, that. The insurance proposals are whoppers.

[Arthur Rubin]

I can't say I think much of the 28% limit on the tax benefit of deductions. I mean, if you spend $10,000,000 to protect a return of $11,000,000, you'd be out quite a bit of money.

Not having any insurance companies among my clients, I decline comment on the insurance proposals.

As for the 1099-MISC on rentals, I thought that was already in effect. I always 1099'd contractors on my rental property.... At least it allowed me to determine those handymen (handypersons?) who didn't want the payments reported to the IRS, and decide whether I wanted to retain them...

[SteveSy]

I'm having a hard time finding the tax cuts for individuals and families, I see welfare provisions but no tax cuts. I did see they're trying to get rid of the stupid 20% upfront nonsense for OIC. I can't see too many people offering up 20% of their tax bill, most likely a financial stake in their heart, on the hope the IRS will accept the rest of their offer. Stories like Gattago's would make anyone squeamish of using the program.

They should add some amnesty for people who owe taxes also if they're going to get really tough. Stop their interest and penalties along with the promise of allowing them to keep 60% of their current income if they pay and file and don't get behind for 10 years or something like that.

[The Observer]

I'm having a hard time finding the tax cuts for individuals and families, I see welfare provisions but no tax cuts. I did see they're trying to get rid of the stupid 20% upfront nonsense for OIC. I can't see too many people offering up 20% of their tax bill, most likely a financial stake in their heart, on the hope the IRS will accept the rest of their offer. Stories like Gattago's would make anyone squeamish of using the program.

They should add some amnesty for people who owe taxes also if they're going to get really tough. Stop their interest and penalties along with the promise of allowing them to keep 60% of their current income if they pay and file and don't get behind for 10 years or something like that.

There was nothing stupid about the 20% offer deposit requirements. It was enacted precisely because taxpayers were submitting OICS that had no merit in being considered in the first place. Primarily these offers were submitted because (1) it allowed the taxpayer to delay the IRS from collecting the liability and (2) a number of lawyers, CPAS, enrolled agents, and other tax representation firms were using the OIC system as another way of creating billable hours with the knowledge that the offer they were submitting had no economic chance of being accepted by the IRS.

Prior to the current deposit requirements, the IRS was wasting valuable man-hours in processing offers that weren't going anywhere because the taxpayers had the means to satisfy their tax liability in one form or another. Taxpayers, either because of their own greed or because they were led astray by the hucksters above, saw the OIC program as nothing more than some sort of amnesty program. Many of them submitted offers even as they continued not filing and paying their current taxes. With the current deposit rules (which has the alternative of the taxpayer making payments on the deposit amount rather than 20% upfront - which you did not mention) it has forced taxpayers to realize that the offer-in-compromise is a serious arrangement where they are going to have to part with real money in an honest effort to resolve their tax liabilities and get a fresh start on their life.

I don't support a tax amnesty program since it sends the message to people that they don't have to really pay until such time when the goverment decides to wave the white flag.

[SteveSy]

There was nothing stupid about the 20% offer deposit requirements. It was enacted precisely because taxpayers were submitting OICS that had no merit in being considered in the first place. Primarily these offers were submitted because (1) it allowed the taxpayer to delay the IRS from collecting the liability and (2) a number of lawyers, CPAS, enrolled agents, and other tax representation firms were using the OIC system as another way of creating billable hours with the knowledge that the offer they were submitting had no economic chance of being accepted by the IRS.

Prior to the current deposit requirements, the IRS was wasting valuable man-hours in processing offers that weren't going anywhere because the taxpayers had the means to satisfy their tax liability in one form or another. Taxpayers, either because of their own greed or because they were led astray by the hucksters above, saw the OIC program as nothing more than some sort of amnesty program. Many of them submitted offers even as they continued not filing and paying their current taxes. With the current deposit rules (which has the alternative of the taxpayer making payments on the deposit amount rather than 20% upfront - which you did not mention) it has forced taxpayers to realize that the offer-in-compromise is a serious arrangement where they are going to have to part with real money in an honest effort to resolve their tax liabilities and get a fresh start on their life.

20% maybe impossible for most, and a serious risk considering there is no guarantee the IRS will compromise at all. So what the IRS wastes time, credit card companies waste tons of time on OIC and they're making a crap load, or were prior to economic decline. The IRS can easily double, triple or quadruple a tax bill with just penalties and interest.

I don't support a tax amnesty program since it sends the message to people that they don't have to really pay until such time when the goverment decides to wave the white flag.

Yes, that's why credit card companies have collapsed under the pressure of offering to stop penalties and interest if the consumer would just pay the principal. They don't even have the benefit of liens and levies in most States, nor the benefit of being able to summons financial institutions and yet they still thrive. Besides the government doesn't offer amnesty so often people would wait for the next one. In fact the amnesty I'm talking about is really giving up little. They still get their tax. The mission should be to get people back in the system voluntarily and where they will continue to pay tax voluntarily, not to spend a inordinate amount of money to stomp them in the ground.

I think it more often than not that people get behind and they're scared shitless that if they voluntarily offer the information under the current scheme the IRS will just smash them and its very likely it will. If Gottago's situation is valid, and I have no reason to believe its not, why would anyone go that route? They face just about the same situation if they hide and get caught, possibly better because the IRS may not discover everything. Placing someone on 10 years probation will weed out those who are just trying to delay, the IRS will have all the information they need at that point to proceed with harsh measures if they don't comply. Setting the percentages up front, prior to IRS contact, will allow people to make an informed decision. How many people would pay their back credit card bills if the card company said pay us 20% in good faith up front, no promises whatsoever, and we'll discuss whether or not we're going to cut you any slack. I suspect hardly any at all.

But be my guest support a boot in your face system that uses the fodder as examples. I think you'll see we're just going to financially destroy thousands of individuals and families for decades and spend millions imprisoning them at great cost. People who would have otherwise been contributing members of society providing jobs and production which we so badly need. The increase of revenue will be insignificant compared to what we lost.

Too bad reality seems to disagree with your conclusions.

[Pantherphil]

Observer, I have to disagree with your views on the OIC deposit requirement.

My "pro bono" legal work involves taking referrals from my State's low income tax assistance program. Many of my pro bono clients are homeless people living in shelters or mentally ill folks or alcoholics and substance abusers who have gotten into tax trouble, frequently for failure to file returns or failure to pay. Often the tax problem arises due to an employer who treats them as "independent contractors" and files 1099s without taking out withholding or payroll taxes. So the individual ends up getting dinged for both the income tax and the SE tax. I've had a couple of one time big earners (truck driver and real estate broker) who fell on hard times as a result of alcohol and drug abuse. Big tax debt from the big income years while living in the homeless shelter. One or two divorced women and widows living in reduced circumstances. I've had clients get into tax trouble as a result of cashing in IRA or 401(k) accounts to sustain themselves during financial hardship. I've had clients in trouble due to "debt forgiveness" income in foreclosures, repossessions, or credit card write offs.

Not unusual for this clientele to be subsisting on disability or welfare or sporadic part time work. Most have no real property, no tangibles other than clothes and old household belongings, no savings, and no investments. They live hand to mouth.

Sometimes we can solve the problem by going back and filing the delinquent returns. I've had a number of "happy endings" where filing the returns and claiming available exemptions, deductions, and credits turns a tax debt into a refund claim.

Even if we can't solve the problem through proper filings, for many of these clients the tax debt is modest-- not unusual for the tax exposure to be less than $3,000-- but the failure to file and failure to pay penalties plus interest balloon quickly. Not unusual for these folks to have other debts-- state taxes, credit cards, unpaid medical bills, delinquent child support, etc. I have even had several come in owing promissory notes to one of those TV "settle your tax debt for pennies on the dollar" charlatans.

Usually what brings these clients into the VITA office is a notice of intent to levy served on an employer or a levy on a Social Security payment or the diversion of a refund or a stimulus payment or a lien notice which prompts them to seek help in settling their tax debts.

For many of these clients, even under the old rules, there was simply no possibility that they could submit a qualifying installment payment agreement or offer in compromise. Very few of the clients in this demographic keep the kind of financial records that the OIC people required to process an offer. We could, occasionally, negotiate an understanding with the collection agent or persuade the collection office to suspend collection activity on the basis of poverty and hardship, but the problem with this approach is that the interest and penalties continue to accumulate.

The current OIC rules, of course, are impossible for a client in this demographic to satisfy. Even if they are working somewhat reguarly and could make a small monthly payment, they simply don't have the cash on hand to make a 20% "deposit." I've had clients who couldn't even afford the old "application fee."

Frankly, for most of these folks, once the IRS learns of their financial status, the case goes into "uncollectible" status and the IRS essentially gets nothing. Bad deal for the IRS and a bad deal for the client because the tax debt continues to hang out there accruing interest and penalties with a lien notice standing in the way of the client's ability to work out of the financial hole they are in.

I believe that the system could be greatly improved if the Collection Personnel and OIC office were given greater discretion to negotiate a true "compromise" based on financial hardship and a realistic assessment of the client's ability to pay. I have seen too many truly needy people fail to receive any assistance.

[ASITStands]

Observer, I have to disagree with your views on the OIC deposit requirement.

My "pro bono" legal work involves taking referrals from my State's low income tax assistance program. Many of my pro bono clients are homeless people living in shelters or mentally ill folks or alcoholics and substance abusers who have gotten into tax trouble, frequently for failure to file returns or failure to pay. Often the tax problem arises due to an employer who treats them as "independent contractors" and files 1099s without taking out withholding or payroll taxes. So the individual ends up getting dinged for both the income tax and the SE tax. I've had a couple of one time big earners (truck driver and real estate broker) who fell on hard times as a result of alcohol and drug abuse. Big tax debt from the big income years while living in the homeless shelter. One or two divorced women and widows living in reduced circumstances. I've had clients get into tax trouble as a result of cashing in IRA or 401(k) accounts to sustain themselves during financial hardship. I've had clients in trouble due to "debt forgiveness" income in foreclosures, repossessions, or credit card write offs.

Not unusual for this clientele to be subsisting on disability or welfare or sporadic part time work. Most have no real property, no tangibles other than clothes and old household belongings, no savings, and no investments. They live hand to mouth.

Sometimes we can solve the problem by going back and filing the delinquent returns. I've had a number of "happy endings" where filing the returns and claiming available exemptions, deductions, and credits turns a tax debt into a refund claim.

Even if we can't solve the problem through proper filings, for many of these clients the tax debt is modest-- not unusual for the tax exposure to be less than $3,000-- but the failure to file and failure to pay penalties plus interest balloon quickly. Not unusual for these folks to have other debts-- state taxes, credit cards, unpaid medical bills, delinquent child support, etc. I have even had several come in owing promissory notes to one of those TV "settle your tax debt for pennies on the dollar" charlatans.

Usually what brings these clients into the VITA office is a notice of intent to levy served on an employer or a levy on a Social Security payment or the diversion of a refund or a stimulus payment or a lien notice which prompts them to seek help in settling their tax debts.

For many of these clients, even under the old rules, there was simply no possibility that they could submit a qualifying installment payment agreement or offer in compromise. Very few of the clients in this demographic keep the kind of financial records that the OIC people required to process an offer. We could, occasionally, negotiate an understanding with the collection agent or persuade the collection office to suspend collection activity on the basis of poverty and hardship, but the problem with this approach is that the interest and penalties continue to accumulate.

The current OIC rules, of course, are impossible for a client in this demographic to satisfy. Even if they are working somewhat reguarly and could make a small monthly payment, they simply don't have the cash on hand to make a 20% "deposit." I've had clients who couldn't even afford the old "application fee."

Frankly, for most of these folks, once the IRS learns of their financial status, the case goes into "uncollectible" status and the IRS essentially gets nothing. Bad deal for the IRS and a bad deal for the client because the tax debt continues to hang out there accruing interest and penalties with a lien notice standing in the way of the client's ability to work out of the financial hole they are in.

I believe that the system could be greatly improved if the Collection Personnel and OIC office were given greater discretion to negotiate a true "compromise" based on financial hardship and a realistic assessment of the client's ability to pay. I have seen too many truly needy people fail to receive any assistance.

This has been my experience as well. I've seen too much of it.

And, no one's mentioning Secretary Timothy Geithner not paying penalties!

For all the arguments we've made regarding direct and indirect taxation, it would seem that someone would champion the rule of uniformity in regard to penalties and additions to tax.

As you can tell, I'm a bit miffed by the whole Timothy Geithner affair.

[SteveSy]

For all the arguments we've made regarding direct and indirect taxation, it would seem that someone would champion the rule of uniformity in regard to penalties and additions to tax.

It is uniform, all people heading for office get the exemption therefore its uniform. Just like all people making over X amount are taxed at a higher rate. Get with the program.

[Judge Roy Bean]

Is anyone other than myself on this forum willing to admit that there is such a thing as the old boy network AND that it can provide protection from having to dodge irritating and inconvenient potholes in the road that the rest of the people have to deal with?

[The Observer]

20% maybe impossible for most...

,

For most? Mind providing some statistics for that assertion? Even if we were to accept your claim that "most" people can't afford the 20% , it ignores the fact that these people are allowed to file a waiver to exempt from the deposit requirement if they can show that they truly can't afford the fee. Your claim also doesn't take into account that the taxpayer can also make monthly payments on the deposit amount instead of the 20% up front.

And if they are really nervous about the offer not going through, they can make an offer based on what they think they can afford to risk. Twenty percent on a $5 dollar offer doesn't sound like financial trauma to me.

...and a serious risk considering there is no guarantee the IRS will compromise at all.

What risk? If their waiver for exemption demonstrates true financial hardship, then whatever monies they have put up front are refundable if the IRS does not accept the offer.

So what the IRS wastes time, credit card companies waste tons of time on OIC and they're making a crap load, or were prior to economic decline.

Not sure what you are trying to say here, but if you are claiming that credit card companies are making money by compromising on bad debt, you are only looking at half the picture - they base their business on ensuring that they have enough paying good customers to offset the losses and charging interest rates way above prime. If the government was to follow that business plan, they would be jacking up the tax rates on people like you and me who pay their taxes.

Yes, that's why credit card companies have collapsed under the pressure of offering to stop penalties and interest if the consumer would just pay the principal. T

And like I pointed out, they run a different business plan than the one the government does for taxation. So stop comparing apples to oranges.

I think it more often than not that people get behind and they're scared shitless that if they voluntarily offer the information under the current scheme the IRS will just smash them and its very likely it will. If Gottago's situation is valid, and I have no reason to believe its not, why would anyone go that route? They face just about the same situation if they hide and get caught, possibly better because the IRS may not discover everything.

They would have to provide that financial information in any event, whether they submitted an offer or not, once the IRS comes to deal with them - especially if the IRS summons them. Far better to submit it in an honest effort to resolve the liability rather than play the senseless hiding game that is only going to result in further enforcement action when the IRS gets the impression that the taxpayer is not going to cooperate.

Placing someone on 10 years probation will weed out those who are just trying to delay,..

The current offer terms only require 5 years of compliance - by upping the time period, you are only creating a bigger risk for the taxpayer to default.

the IRS will have all the information they need at that point to proceed with harsh measures if they don't comply

.

10 years is too great of a period of time for financial information to remain the same. Banks won't settle for financial statements that are older than 6 months or a year, why should the government?

Setting the percentages up front, prior to IRS contact, will allow people to make an informed decision. How many people would pay their back credit card bills if the card company said pay us 20% in good faith up front, no promises whatsoever, and we'll discuss whether or not we're going to cut you any slack. I suspect hardly any at all.

Which doesn't explain why the IRS is still currently backlogged on offers being submitted. Apparently there is quite a few people who think there is worth taking the risk.

But be my guest support a boot in your face system that uses the fodder as examples. I think you'll see we're just going to financially destroy thousands of individuals and families for decades and spend millions imprisoning them at great cost. People who would have otherwise been contributing members of society providing jobs and production which we so badly need. The increase of revenue will be insignificant compared to what we lost.

Steve, please cite anything that shows that thousands of taxpayers have been imprisoned for tax crimes during the last 5 years. This is just hyperbole on your part in trying to make an emotional argument for amnesty. And amnesty is precisely what an offer is not. An acceptable offer is for the taxpayer to submit an sum of money that will exceed what the IRS thinks it can collect during the remainder of the statutory period of collections. The IRS does not look at how much the the taxpayer owes, it does not consider the amount of penalties and interest. If the taxpayer has the ability to pay the liability over time, it makes no economic sense for the IRS to consider accepting less than full payment - especially if they know that they can get it.

[jcolvin2]

Steve, please cite anything that shows that thousands of taxpayers have been imprisoned for tax crimes during the last 5 years. This is just hyperbole on your part in trying to make an emotional argument for amnesty. And amnesty is precisely what an offer is not. An acceptable offer is for the taxpayer to submit an sum of money that will exceed what the IRS thinks it can collect during the remainder of the statutory period of collections. The IRS does not look at how much the the taxpayer owes, it does not consider the amount of penalties and interest. If the taxpayer has the ability to pay the liability over time, it makes no economic sense for the IRS to consider accepting less than full payment - especially if they know that they can get it.

The IRS statistics show that during the last three fiscal years, between 1950 and 2150 people were convicted of crimes in each year, and that approximately 80% of those were sent to prison.

http://www.irs.gov/compliance/enforceme ... 84,00.html

Granted, approximately a third of the pool were narcotics-related financial crimes, and another third may have been illegal source income cases (some tax and some other finanacial crimes):

See http://www.irs.gov/pub/irs-soi/05db18ci.xls

However, that still leaves approximately 600 people a year being incarcerated for legal source income tax crimes. (The IRS has been working on increasing the time and resources devoted to legal source income tax crimes since the Webster Report was issued in 1999 in order to combat "mission drift.") Over five years, that probably amounts to a total of about 3,000 people incarcerated who have committed only tax crimes.

[The Observer]

Many of my pro bono clients are homeless people living in shelters or mentally ill folks or alcoholics and substance abusers who have gotten into tax trouble, frequently for failure to file returns or failure to pay. [continued with a description of a number of people living in destitute situations

For many of these clients, even under the old rules, there was simply no possibility that they could submit a qualifying installment payment agreement or offer in compromise. Very few of the clients in this demographic keep the kind of financial records that the OIC people required to process an offer.

I am not sure what the issue is here in terms of being able to document their income level, especially if they are on welfare, disability, Social Security or the like. All of those types of payments are easy enough to secure documentation and for an agency like the IRS to verify internally. Expenses such as rent and current utilities are also relatively easy to document. If the IRS is asking for additional documentation, then it is either due to the fact that the taxpayer had earned a much larger income in the recent past and the IRS is wanting to make sure that the taxpayer will not be able to return to that income level after the taxes are compromised, or it is simply an issue where you as the representative needed to get more involved with the offer specialist and their manager to verify why the IRS needed this information. Even if you were unlucky enough to be involved with a hard-nosed employee in that situation, I would think requesting an appeal for the rejected offer would be the next course of action. Do you represent clients pro-bono for appeals?

We could, occasionally, negotiate an understanding with the collection agent or persuade the collection office to suspend collection activity on the basis of poverty and hardship, but the problem with this approach is that the interest and penalties continue to accumulate.

If you were able to arrange for an account to be reported uncollectible, that would be a very strong argument for an offer to be accepted. And it is irrelevant about how much penalty and interest are accumulating. The IRS does not consider the amount of liability when deciding whether to accept an offer or report a case uncollectible - those decisions are based on whehther the IRS thinks it can collect and if it can collect more than what is being offered.

The current OIC rules, of course, are impossible for a client in this demographic to satisfy. Even if they are working somewhat reguarly and could make a small monthly payment, they simply don't have the cash on hand to make a 20% "deposit." I've had clients who couldn't even afford the old "application fee."

If the clients are truly hardship, they are entitled to waive the deposit requirement and fee as shown on the 656-A. And hardship goes by the poverty definition as defined by HHS. Even if they could not meet the hardship qualification, I find it very hard to believe that they are having a hard time coming up with a deposit amount and fee. You mentioned that the average person owed less than $3,000 in taxes so I can't imagine they had a very high income situation to begin with. Even if they offered only $500, that is a deposit amount of $100 and they could arrange to make payments on that amount over time while the offer is being considered.

Frankly, for most of these folks, once the IRS learns of their financial status, the case goes into "uncollectible" status and the IRS essentially gets nothing. Bad deal for the IRS and a bad deal for the client because the tax debt continues to hang out there accruing interest and penalties with a lien notice standing in the way of the client's ability to work out of the financial hole they are in.

It doesn't necessarily mean that the IRS is ignoring the uncollectibles. But their procedures require that the offer investigation shows that the IRS will be unable to collect, over time, more than what the taxpayer is offering. A good offer package will be able to precisely show that. Your scenario(s) don't address issues in regards to the taxpayer's future ability to earn income, whether the IRS would be entitled to offset future EIC credits to the back liability, and other salient points that need to be considered.

I believe that the system could be greatly improved if the Collection Personnel and OIC office were given greater discretion to negotiate a true "compromise" based on financial hardship and a realistic assessment of the client's ability to pay. I have seen too many truly needy people fail to receive any assistance.

And too much discretion would result in the OIC program becoming an amnesty rather than a vehicle for maximizing the amount of taxes that can be collected. Your view of what "needy" is as subjective as my viewpoint of what "needy" is. And sympathy over a person's situation should not interfere with a business decision based on rules and standards - especially when a little more hard work would have had better results than the sympathetic feelings.

But in any event, this was released yesterday and if passed should make you feel better about the offer program - at least until you start wondering why your client's offers are not being worked and realize that the floodgates were opened with the "free" offer approach once again.

The Honorable John Lewis, Chairman of the Subcommittee on Oversight



FOR IMMEDIATE RELEASE

Contact: Matthew Beck (W&M) 202-225-8933

Brenda Jones (Lewis) 202-225-3801



May 12, 2009



Lewis, Boustany Introduce Bill to Assist Struggling Taxpayers

Legislation would make it easier for taxpayers to enter into offer-in-compromise agreements



WASHINGTON, DC — Ways and Means Oversight Subcommittee Chairman John Lewis (D-GA) and Ranking Member Charles W. Boustany, Jr. (R-LA), today introduced H.R. 2343, the Tax Compromise Improvement Act of 2009, legislation that would help struggling taxpayers enter into offer-in-compromise (OIC) agreements with the Internal Revenue Service (IRS). OIC agreements are an important collection alternative for the IRS and taxpayers. Many taxpayers seeking to enter into OIC agreements have recently lost jobs or are experiencing financial difficulties.

Taxpayers can apply for an OIC agreement with the IRS to settle their unpaid taxes. Under current law, because of legislation passed in 2006, a taxpayer offering to settle a tax liability must make a partial payment with submission of an OIC application (e.g., a nonrefundable, 20-percent down payment). If the OIC application is turned down, the taxpayer’s down payment is not refunded. Under H.R. 2343, taxpayers would not be required to submit a partial payment with their applications. The legislation is consistent with the Administration's FY 2010 revenue proposal to eliminate the partial pay requirement.

The need to increase the usage of OIC agreements in situations of economic hardship was raised at a February hearing of the Ways and Means Subcommittee on Oversight examining IRS assistance to taxpayers during the economic downturn. At the hearing, National Taxpayer Advocate Nina E. Olson testified that the number of OICs received by the IRS fell by 21 percent from Fiscal Year 2006 to Fiscal Year 2007 as the down payment requirement took effect. Ms. Olson testified that the 21 percent decline is partly attributable to the difficulty taxpayers face in obtaining funds to make the 20 percent down payment prior to the acceptance of an offer. She also noted that less than one in four offers is actually accepted. As a result, federal taxes that could be collected are left unpaid.

[The Observer]

However, that still leaves approximately 600 people a year being incarcerated for legal source income tax crimes. (The IRS has been working on increasing the time and resources devoted to legal source income tax crimes since the Webster Report was issued in 1999 in order to combat "mission drift.") Over five years, that probably amounts to a total of about 3,000 people incarcerated who have committed only tax crimes.

Which shows that Steve's hyperbole is, as usual, a stretch. Now, how many of those 3,000 people actually deserved to be in prison due to the fact that they were convicted for evasion and/or fraud as opposed to be chased and hounded for non-payment? I think you well know that the only people that are going up on federal trials are those taxpayers who have jury appeal for conviction - meaning that they were living lavish and comfortable lifestyles, they had the ability and means to pay the taxes, and flagarantly committed willful actions of evasion and fraud in trying to hide income and assets. The US Attorney's Office is not prosecuting Bubba Jr. who has been living in his doublewide the last 15 years and decided to go exempt on his W-4s from the Piggly Wiggly this year in order to pay for a new set of dentures for his grandmother. But that is exactly the kind of crap Steve is trying to peddle in his attempt to paint the tax system in this country as totally unjust.

[Duke2Earl]

Is anyone other than myself on this forum willing to admit that there is such a thing as the old boy network AND that it can provide protection from having to dodge irritating and inconvenient potholes in the road that the rest of the people have to deal with?

Of course there is. There always has been and always will be. People always will do favors for their friends. And people will always keep score and collect in times of need. And if used within reason, this can be a good thing.

[webhick]

Is anyone other than myself on this forum willing to admit that there is such a thing as the old boy network AND that it can provide protection from having to dodge irritating and inconvenient potholes in the road that the rest of the people have to deal with?

I work (and practically live) in a town with a population of 5000. Plenty of the old boy network here.

[ASITStands]

Is anyone other than myself on this forum willing to admit that there is such a thing as the old boy network AND that it can provide protection from having to dodge irritating and inconvenient potholes in the road that the rest of the people have to deal with?

Of course there is. There always has been and always will be. People always will do favors for their friends. And people will always keep score and collect in times of need. And if used within reason, this can be a good thing.

So, does that explain why Timothy Geithner refused (and wasn't required) to pay penalties?

I believe that's the complaint to which the Judge was replying.

It's one thing to have a "good old boys" network. It's another to have it in the Secretary of the Treasury, who prescribes rules and regulations to enforce the income tax laws.

So, how's the ordinary person get in this "good old boys" network? Someone like 'gottago?'

How far does that "good old boys" network extend? Is it civil only or can someone escape criminal sanctions (or investigation) by being a part? Can someone escape censure?

Dirty, rotten, lousy politicians! Liars, thieves and crooks! Much like IRS Agents.

Ok. Ok. I'm getting into a rant, and really, most IRS Agents are not liars, thieves or crooks, just the ones I've dealt with (but that's another story). Argh! The Geithner case bothers me.