A Pro-IRS Action Plan

[Number Six]

I've read David Cay Johnston's "Perfectly Legal" and Richard Yancey's "Confessions of a Tax Collector". I've argued with "patriot-types" with their position that income taxes are voluntary, and expect "representation without taxation". What would be a truly progressive income tax plan to deal with the widespread tax evasion in the US? A CPA told me that most low level labor-oriented businesses are forgoing paying employment taxes...Deposit customers check in bank account, then withdraw funds to pay workers cash, audit rates are so low, unlikely procedure will be caught. Foreign immigrants are savvy to tax evasion, but it wouldn't take many prosecutions on a state by state basis, to get the word out, "the party's over amigos". Are there any expert who have a recommended plan to deal with the multitudes who are filing but evading?

[Number Six]

Thanks for the reply. I intended a pro-irs enforcement action plan with the current income tax system. Go back to heavy law enforcement, etc. to deal with the cash economy? Focus on lower level tax fraud? As a low-income former non-filer, I have seen a lot of tax non-compliance. If I had been contacted by a revenue officer in a friendly way, I would have gotten into compliance. I eventually got into compliance on my own and pay the back taxes with interest and penalties.

[Quixote]

If I had been contacted by a revenue officer in a friendly way, I would have gotten into compliance.

But others would only come into compliance if faced with threats. I think some grad student could get a thesis out of a study of IRS letters, and the public's reaction to them, over the years. IRS letters have been criticized as being too harsh, too friendly, too long, too short, too technical, too informal, etc. Some people complain that the letters are too threatening. Others complain that the letters did not make it clear that enforcement action was imminent. Letters threatening all sorts of dire consequences occasionally have no effect on some taxpayers. Other taxpayers are moved to file amended returns in response to a letter stating that "it appears" that the taxpayer took an improper deduction. (I know of one taxpayer who filed an amended return to remove a perfectly valid and easily documented deduction in response to such a letter from the IRS.)

One size does not fit all.

[Number Six]

There are numerous categories of taxpayers--self-employed, employees, investment income, gift/inherited income, etc. We want an accountable government and citizens who are accountable. I have argued with non-filers why the current tax system has developed, it is not just about raising funds for government but also for regulating society. I can imagine a much worst system not based on "voluntary self-assessment" but upon distraint. Usually non-filers have reasons why they don't want to play by the rules, ideological, practical, or visceral. To hire sharp IRS workers who can sort through available information, call up the db/tp to ascertain what's going on, and then provide free accounting services is a solution. Audit rates need to go way up. If my experience is any indication, the level of tax fraud is huge. It may make bad press to enforce the laws against tax evasion on the lower levels, but it would go a long way toward getting the system back in order. When self-employed people game the system by taking their checks to the payee's bank to cash them and thus avoid taxes (no SS tracking) it undermines the system. I have never and never wish to profit off reporting accountant and taxpayer fraud. But if real fraud is reported, there needs to be a proper government remedy and venue for examining the fraud--the Fresno, CA IRS branch and relevant fraud reporting form is cumbersome and irrelevant to many cases.