Every so often I come across a news story that’s more enjoyable to read when I add a vindictive “ha ha ha ha ha” after each sentence. For example:
Rich Americans who have evaded taxes by hiding foreign holdings have about a week to turn themselves in to an Internal Revenue Service amnesty program or gamble they will not be caught.
Ha ha ha ha ha!
In fact, most of this news article is enhanced with a little maniacal laughter. That is, unless you’ve been in the habit of hiding money you owe the IRS in a Swiss bank account maintained by UBS AG. And since hiding money from the IRS is equivalent to stealing from your fellow citizens (in the form of, for example, making sure the bridges you all use never get the maintenance they need, and schools are using outdated books, etc.), I’m thrilled to see this moving forward.
It would’ve been better if we’d managed to get the names of all of the American cheaters hiding the needed pothole-fixing money in Switzerland (the original stated goal was to get the names of 52,000 account owners), but I won’t let that get me down. I never thought I’d see even this much go-get-em attitude from the IRS. (I should point out that this isn’t a Democratic or Republican plan – it started under Bush and Obama is simply continuing it.)
The fun part now is that nobody is saying yet who is on the list of about 4,400 account holders that will be turned over to the IRS, so the IRS started an “amnesty” program for volunteers who are willing to come forward now, instead of risking a worse punishment later.
The IRS said that, in one week of July, about 400 individuals turned themselves in under the amnesty program. That was four times higher than the number of tax evaders who stepped forward in all of 2008, according to the agency.
The risk of not joining in the amnesty program now is paying much more than you owe and possibly criminal prosecution. The deadline is September 23, 2009. Here’s the amnesty program Q&A page on the IRS web site, in case you think you might need it.
By the way:
At the same time, IRS officials have said other foreign banks are being queried for possibly helping the wealthy evade taxes, although they have declined to be specific.
Ha ha ha ha ha!
Tax evaders rush to beat amnesty deadline, Kim Dixon, Reuters, Sep. 24, 2009
Image credit: zolierdos
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{ 8 comments… read them below or add one }
First, let me say that I agree that all people who illegally evade taxes should be caught and punished.
Second, let me say that this article is pointed towards the UBS AG offenders and that’s only part of the deal. I’m a CPA/Planner and serve high net worth (rich) clients. We’ve had a ridiculously complicated time figuring out what the Treasury wants (it’s the Treasury who’s imposing this directly and who the forms are filed with, they’re not using the sub-unit IRS for this, which the article missed). For example, a lot of our clients have UBS AG accounts and have paid tax on the income they received (they get 1099’s just like the rest of us), and we’ve also filed the required disclosure form (FBAR) every year. Now, however, the Treasury is saying that partnership investments (or partnerships invested in by partnerships that you have an interest in, or any iteration of that situation) need to have FBAR forms filed for them as well. The problem is, it’s not very readily knowable what a partnership invests in always. It’s akin to saying to non-rich people (like you and me), “If a mutual fund you own has invested in such and such fund, you need to file a form or we’ll penalize you.” How are you going to find out that information? You can do it, but it’s complex, is what I’m saying.
By the way, this isn’t just referring to Switzerland, the Caymans, or Luxembourg…this is Canada, Mexico, etc. If you have an account in another country, you fall under these rules as well and the fines are HEFTY for non-reporting… as an FYI to any of you out there that need to file an FBAR form by next week!
So, my point is, rather than make non-tax evaders pay the price by making it complicated for everyone else, they need to create a program that makes compliance simpler and find a way to punish evaders and no one else. But doesn’t that apply to the tax code/system in general?
@ Eric
The above comment is a clear example of the complexity of the tax code. For average Americans (the bottom 50% who pay virtually NO income tax (but do pay payroll taxes)), the tax code can be complicated. For those of us who have made a significant contribution to society in the form of investment and capital, the tax code is a cudgel against which they are constantly defending themselves. Don’t get me wrong, I think everyone should pay the taxes they owe, but the tax code is jerry-rigged to make it nearly impossible.
However, call the IRS and ask them a question about your taxes. Now call them again. And again. In fact, call them 50 times, and you’ll get 50 different answers. Which speaks not to the expertise or dedication of our IRS professionals, but to the complexity of the code itself.
There are over 3.7 MILLION words in the tax code. No one person could ever read it in its entirety and understand it enough to provide coherent advice on how to comply. To wit, taxpayers spend 5.4 BILLIONS hours trying to comply, and they still get audited, fined and penalized for non-compliance.
All this points to the need for a simpler, tax code that can be filed by any taxpayer on one piece of paper.
If it were simpler, maybe we’d have more compliance, and, as a consequence, more revenue to the Treasury to pay off the incredible debt we’re amassing.
Is that for real? How is it that 50% of Americans don’t pay income tax? I don’t think I ever had a job where my taxes ended up being 0%.
I don’t know the exact number, but I do know it’s around 50%, and you’d probably be surprised to know how many people have a negative tax rate, meaning they get all taxes withheld returned to them and then get a check in addition. The reason is refundable credits. The Earned Income Credit is near the top of the list (if not the top) as a reason why that is. With the standard deduction and the personal exemptions, a married couple can make $20K or so and have a zero tax liability. Add in other credits/deductions/gov’t stimulus and you capture about half the population that pays zero or very little <3% income tax each year.
Factcheck says that its actually about 43%:
http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2277
A lot of those people would have had minimal tax liability but are getting tax credits for one thing or another.
Say for example you are a family of 4 and make $42k a year have $25k in deductions and end up owing $1700 in taxes but you’ve got 2 kids so you get child tax credits of $2k and end up with a $300 refund.
I find it really amusing (ouch!) listening to the sponsors of various
right wing talk shows (and liberal talk shows, though there aren’t as
many) advertising ways to get out of what you owe, be it taxes or
credit card bills….and amen on making tax law simpler, though if
lawyers and CPAs have their way, it’ll never happen. I think people like Eric
love complexity, it drives business their way. ;)
I support both – the Fair Tax or a national sales tax. This will catch all the tax evaders and abolish the IRS thugs in one swift punch. I am tired of paying for the people living off the system (rich and poor alike) who don’t pay their fair share. Only groceries and the 1st $100,000 off your primary home should be exempt. Let the drug pushers, illegals, people in line for welfare while listening to their IPods, and the CEO’s pay with those of us who make an honest living.
I can’t say I am for the fair tax (not so fair), but I do think the current tax code needs some simplification.
I am not a tax professional so I am not sure about specifics, but something tells me we can make our current system work… but still trim the fat.
And YAY for getting those tax-evading d-bags!