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Do YOU Still Underestimate the IRS?
declaredemer
Member Posts: 2,698
Regular people underestimate the power of the IRS.
How many people lost out of good federal gigs because of non-compliance with the Internal Revenue Code (Title 26 of the United States Code)?
HISTORY OF TAXES
A. Ancient History
Taxes are some of the oldest written records of civilization. Inscriptions made on the Rosetta Stone (200 B.C.) mention tax immunity for Egyptian temples. Jesus Christ famously said, "Render therefore unto Casear the things which are Caesar's and unto God the things that are God's." Taxes were ursed to pay for wars, expansion, enrich kings and aristrocarts, control imports and exports, and crush conquered peoples. Some ancient states used tax cuts to win favor, while others imposed taxes to create a strong military to become an empire.
B. Lady Godiva
Lady Godiva staged a tax protest in 11th century England. She rode naked through the streets of Coventry, England to oppose taxes. The name "peeping Tom" is derived from this event.
C. United States
1. Colonial America
Colonial governments used the poll (per-head) tax, property taxes and taxes on products. In 1643, colonists adopted a forerunner of the income tax called the faculty tax; it was applied to people according to their faculties (property that earned income or ability to earn income from, say, commerce or skilled trade). British Empire wanted to dominate the colonies through import taxes. "Taxation without representation is tyranny" is what many colonists said in the middle 1700s.
3. Early United States
The U.S. Constitution (1789) allowed taxation powers. The states agreed that the government could collect taxes "to pay the debts and provide for the common defense and general welfare of the United States." Under Washington and Adams, Congress enacted taxes on liquor, salt, sugar, snuff, etc. A tax on homes, land and slaves was finally added in 1798.
Thomas Jefferson, who championed the common man, opposed domestic taxes imposed on people during the Washington and Adams administrations. He sought, and did indeed repeal, many taxes.
4. The Income Tax - Abraham Lincoln (1862)
Lincoln signed the most sweeping U.S. revenue act ever, which was the income tax. Lincoln approved a 3% annual income tax on incomes between 600 and 10,000; and a 5% tax on higher incomes; and the rates then soon, of course, increased to 10% on incomes over 5,000. LESS THAN 1% OF THE POPULATION PAID INCOME TAX DURING THE CIVIL WAR. The income tax was repealed in 1872.
5. 1913 Tax
In 1895, the Supreme Court of the United States of America declared unconstitutional the corporate, personal (over 4,000), inheritance, and gift taxes. Taft, and Republican leaders, agreed in 1909 to the proposal of a cosntitutional amendment to permit a personal income tax. The vote for ratification occured in February of 1913, and we have adopted the 16th Amendment. Woodrow Wilson, a Democrat, signed a bill that enacted the modern income tax.
The 16th Amendment to the Constitution of the United States
The Congress shall have the power to lay and collect taxes, from whatever source derived, without apportionment among the serveral states, and without regard to any census or enumeration.
6. Modern Income Tax
The onset of World War I, income taxes soon became the mainstay of the federal revenue system. Income taxes are now a permanent part of American life, wars proving to be the chief catalys for income tax increases. Taxes were raised to pay for two world wars, the Korean War, and the Vietname War.
Social Security taxes are called FICA taxes for Federal Insurance Contributions Act. An employer and employee are supposed to pay equal amounts. Moreover, there is also a Medicare tax.
The USA government overwhelming derives its revenue from
- Income Tax (on wage-earners); 45.3%
- Social Security Taxes (on wage-earners); 33.9%
- Corporate Taxes; 14.4%
- Excise Taxes; 2.4%*
- Other Taxes; 3.9%
USA GOVERNMENT RECEIPTS FROM ORDINARY WAGE-EARNING PEOPLE AMOUNTS TO 94%
Source: White House Office of Management & Budget.
*Excise taxes are those on tobacco, alcohol, crude oil, guns, tires, fishing equipment, telephone services, and even airline tickets. The revenues from some excise taxes are placed in trust funds for highways, airports, and the clean up of hazardous chemical spills. The ATF (Bureau of Alcohol, Tobacco, and Firearms), not the IRS, collects the excise taxes on those items in its name.
Comments
Excellent write-up good sir. Have you ever considered writing articles for infowars.com? They are always in the market for people that have the facts and are in touch with reality. I'd do it myself, but I'm not a very good writer. But I bet you'd kick ass at it.
One thing I would add to this topic is that if you don't pay the illegal slave tax (aka the Federal Income Tax), the Federal Reserve will send a SWAT team by your house and blow your head off. Which is why most people that know about the illegality of the income tax pay up anyway. Look what happened to the Brown family last year. An elderly couple that will never be heard from again, because they publicized the truth.
P.S. Federal Reserve should be spelled with capitals, as it is a privately owned and operated for profit corporation. You wouldn't say "federal express" of course, correctly it is Federal Express. Small point I guess...
Yea the US tax system sucks! We need a flat tax...straight up flat tax. Remove the income tax and social security and medi-caid and all the other BS tax and let us just pay a straight up flat sales tax.
Out of curiousity, who is the Brown family and what's their story?
"TO MICHAEL!"
or at least get some od damn consistency in taxes. believe me once you have had income in two different states, one with one withot income tax trying ton figure out your refund can get confusing.
if we eliminate or unify state income tax i would be much happier
98% of the teenage population does or has tried smoking pot. If you''re one of the 2% who hasn''t, copy & paste this in your signature.
Your conservatism is showing :P
I'm guessing Libertarian, cause even Republicians aren't as conservative as that.
Internal Revenue Service (IRS or Service)
A. Powers
Federal law places the burden of maintain tax records and filing an accurate return and paying tax on each taxpayer. The IRS has the right to see your tax-related records. If you refuse to provide them, the IRS may issue a summons ordering you or someone else to provide them. The IRS may impose civil penalities for failing to file a return, failing to pay tax on time, civil fraud, and negligence. The IRS has the right to seize assets of anyone who does not pay taxes they owe. The IRS must file procedural steps such as sending notices that give you time to challenge the tax bill in court.
1. Lien
IRS may file a notice of a lien on your property, which simply means that if your property is sold, IRS gets the first bite of the apple in taking profits.
2. Levy
The IRS may impose a level on your assets held by other parties such as bank accounts and stock held in brokerage accounts.
3. Distraint
Distraint is really a process whereby the IRS seizees a physical assets such as a person's car or home and sells it. The IRS keeps enough to pay the tax bill and you get the rest (if there is any left).
4. Jeapordy Assessment
The IRS can skip all administrative and court procedures and immediately seize your property if it believes that you are about to hide it for tax purposes.
B. IRS Crime Fighters
The IRS's special agent crime fighters, who carry guns, are among the best and most effective investigators in the county if not world. Criminals who gain income from crime activities such as money laundering or illegal gambling must file the earnings on their tax return or can be charged, and convicted, for evading taxes. My understanding, though criminal investigations are rare, the conviction rate is extremely high: 80%+.
i. Al Capone
Simply reminder that Al Capone was not convicted for murder, or anything else, but for tax evasion.
ii. Vice President Spiro Agnew
IRS special agents uncovered evidence that Vice President Spiro Agnew was evading taxes on bribes. The charges led to his resignation.
C. Audits (called "examination" by the IRS)
Audits are simply designed to verify that you reported ALL your income and that you are entitled to all dependency exemptions, deductions, and credits that you claimed. Auditors are not authorized to investigate outright criminal tax evasion (that is a different division), and they rarely turn a case over to a tax-crime investigator. If you ever are accosted by a "Special Agent" for the IRS, very politely mention that at this point you wish all communications to go through your attorney.
Three types of audits exist (1) office audit (at an IRS district or regional office); (2) correspondence audit (by mail); (3) field audit (at your place of business or home if that is your place of business).
1. Statute of Limitations
The IRS maust make any assessment of tax, penalities, or interest within three years from the due date for filing a tax return. If a return is filed after the due date, the three year-period stars on the date the return is filed.
If more than 25% of the income that you're rquired to report is not on your return, teh statue of limitations extends to six years.
i. Fraud
If a false or fraudulent return is filed, there is no time limit on when the government can assess additional tax. The same is true for not filing a return; there is not time limit.
D. What Triggers an Audit?
The IRS does not accuse you of cheating when it audits you, although it might do that later. The audit really means that there are items in your return that generated errors or require proof or perhaps even an explanation.
1. Discriminate Function System (DIF)
Most audits are based from a computer formula that analyzes entries on a return. The returns are scored for potential errors and false entries. The DIF standards are secret. If a return scores high, it goes to a human classifier who screens it and chooses the most "productive" return; those that have the best chance for collecting additional money.
2. Matching Programs
All returns are compared with reports on income and deductions from organizations such as banks, brokerage houses, mutual fund companies, etc. The documents the program checks include the W-2 and all 1099s. If there is a discrepancy, the IRS sends a notice called a CP-2000. The notice may bill for more tax and interest and even impoe a penalty.
List (incomplete) of matching documents:
i. Employers/wages (W-2)
ii. Gambling (W-2 G)
iii. Pensions/annuities (1099-R)
iv. Banks/interest (1099-INT)
3. Special Projects on Various Occupations or Professions
The IRS has routinely picked industries or professions such as lawyers, nurses, construsction workers, or mechanics and audits a large percentage of them. The IRS calls this the Market Segment Specialization Program (MSSP).
4. Information Tips
Informants can collect a percentage of the money from a deficient return.
5. Past Criminal Activity (drugs, gambling, prostitution)
The IRS can develop audit leads from simply reading a newspaper. Sources also include federal, state, and local law enforcement agencies.
6. Random
The IRS always chooses a random cross section of returns for audit (Taxpayer Compliance Measurement PRogram, TCMP). The audits are, make no doubt, exhausative; and they require proof for every entry, line by line.
The IRS also conducts a National Research Program (NRP) tax compliance audits and are more intrusive than a "regular" audit.
7. Past Audits
The IRS likes to pick on taxpayers who had the misfortunre to be audited int he past and had to pay additional tax. The IRS routinely performs follow-up audits to ensure compliance.
E. Who Polices the IRS?
The House Ways and Means Committee and Senate Finance Committee, who rely on the Government Accountability Office (GAO) reports. I am not sure of the House and Senate subcommittees, to be honest, and I should look into that.
Pamphlets to help you:
Free File
Hire Help
Tax Forms
Reduce Taxes Using Retirement Accounts
Young people should take advantage of this, and the sooner the better for them. As J. Paul Getty said, whose book I read, "if you get up early, work late, and pay your taxes, you will get ahead - if you strike oil." If you want to get ahead, you need serious retirement planning, when you are 18. Wealthy individuals hae the advantage becaue their parents begin the retirement, education, and other planning early - often before the child is born.
OK. I am bored, and I have an early meeting, and hoping writing these things will tire me out.
Your opening line seams out of touch with reality. Most of the regular people I know that are sane fear the IRS. Well unless you are a lawmaker or running for a position on Obama's team.
3d Mech MMORPG
I think the tax system and federal government needs sweeping changes. For me its too much of a granny state.
The Fed right now gets $2.4 Trillion from taxes (19.5% of GDP just like it has been ever since the income tax was enacted) $1.1 Trillion is from Income taxes.
When you take out social security, the Fed earns $1.6 Trillion, and only needs $800 Billion to operate at the size dictated by the constitution. If we completely get rid of Income tax and replace it with a 4% sales tax, our government can run at minimum size with a slight surplus.
This is why I don't like the size of the fed right now and think all extra programs should be dropped and given to the state. The state having greater power to tax.
Be careful what you wish for.
The so-called Tax Reform Act (TRA) during the Reagan administration made the Internal Revenue Code (1) more complex and (2) shifted income UP.
PERSONAL/INDIVIDUAL
Pre TRA
0 to 29k 15%
Post TRA
0 to 17k 15%
18k to 43k 28%
Pre Reagan Administration, if you made, say, 20,000 per year, you paid only 15% income tax. Post TRA, however, you paid 28%. That is a whopping tax INCREASE.
However, this is where the tax DECREASE occurred:
Pre TRA
71k to 149k 33%
Over 149k 28%
Post TRA
43 to 100k 33%
Over 100k 28%
The lower income paid paid for the tax decreases on those making over 100k. People in the higher income brackets received tax DECREASES while those in the lower income brackets received tax INCREASES.
It is why so many elite Republicans love Reagan and so many "ordinary" Republicans love Reagan beacuse of his appearance, persona, and acting skills.
Worse, small businesses saw tax INCREASES as a result of the "retorm" while corporations basically were getting subsidies (actually getting USA taxpayer money).
excellent writing
WRONG!!!
12%
Carter's Revunue Act of 1978, Reagan's Tax Equity and Fiscal Responsibility Act of 1982.
Bush Senior lowered them to a rate not seen since the 1920's.
Right.
Reagain's Tax Equity and Fiscal Responsibility Act (TEFRA) has been described by libertarian writers as, "the largest tax increase in American history."* Excise taxes were doubled, and in some areas tripled.
According to the Department of Treasury, Reagan's TEFRA "raised taxes by almost 1 percent of the gross domestic product, making it the largest peacetime tax increase in American history.**
Many "elite" conservatives love Reagan for his ability to shift the burden of taxation DOWN and the benefits of taxation UP. Ronald Reagan was a "supply-side" economist, as was our most former President. We finally "recovered" from supply-side economics during the Clinton "demand-side" economic years. Now we will have to wait years, some say as long as a decade, to recover from Bush "supply-side" economics.
Edit: TEFRA is besides the point, because I was referring to Reagan's Tax Reform Act (TRA) of 1986; I was not interested in Reagan's other tax increase acts during his tenure as President.
*Source: The Sad Legacy of Ronald Reagan, Sheldon L. Richman, The Free Market, Volume VI, No. 10, www.mises.org/freemarket_detail.aspx.
**Source: A Taxing Experience, Bruce Barlett, National Review, www.nationalreview.com/nrof_bartlett/bartlett200310290853.asp.
Right.
Reagain's Tax Equity and Fiscal Responsibility Act (TEFRA) has been described by libertarian writers as, "the largest tax increase in American history."* Excise taxes were doubled, and in some areas tripled.
According to the Department of Treasury, Reagan's TEFRA "raised taxes by almost 1 percent of the gross domestic product, making it the largest peacetime tax increase in American history.**
Many "elite" conservatives love Reagan for his ability to shift the burden of taxation DOWN and the benefits of taxation UP. Ronald Reagan was a "supply-side" economist, as was our most former President. We finally "recovered" from supply-side economics during the Clinton "demand-side" economic years. Now we will have to wait years, some say as long as a decade, to recover from Bush "supply-side" economics.
Edit: TEFRA is besides the point, because I was referring to Reagan's Tax Reform Act (TRA) of 1986; I was not interested in Reagan's other tax increase acts during his tenure as President.
*Source: The Sad Legacy of Ronald Reagan, Sheldon L. Richman, The Free Market, Volume VI, No. 10, www.mises.org/freemarket_detail.aspx.
**Source: A Taxing Experience, Bruce Barlett, National Review, www.nationalreview.com/nrof_bartlett/bartlett200310290853.asp.
Yup, once again we see that even "conservatives" like Reagan are on the left. Republican or Democrat -- it's more of the same, which is why we are in the situation we are in. American socialism is a catastrophic failure.
No one wants to vote for real change. They just keep voting for tweedle dum and tweedle dumber, as the parasitic nature of our the socialism polluting our economy and our freedom bankrupts us -- which they respond to by adding MORE socialism (Obama's supposed "stumulus" package).
However, at least conservatives claim to be for small government. Liberals are actively on the wrong side of this. So, if one wants to vote major party -- one must choose between hypocrites and those who are openly dedicated to destruction of liberty. It's a tough call.
We have to get these socialists out of power. Government is the problem, freedom is the solution.
fishermage.blogspot.com
You are exactly right.
The sad, scary, and devastatingly expensive truth is we have money pits:
My theory is a simple one: this is not sustainable, could lead to a depression, to have so many feeding off of regular (private-sector) wage-earners. GDP private sector would have to grow at like 20% a year to keep pace with (1) government growth and (2) monetary growth (inflation).
Accountant or Economist? Politician
No matter how we approach the policies, from an accountant's or economist's perspective, we have some serious causes for concern. When you live in a bubble (Washington, D.C.) and you source economic policy (at least monetary policy) to the Federal Reserve and you get automatic cost-of-living increases, you can get out of touch with reality.
People's in McCain's campaign said, literally, we were in a "recession in our minds." Many powerful people do not understand, comprehend, or even care about the suffering many Americans are experiencing right now.
Worse, their policies --see TARP (Troubled Asset Relief Program-- could create a DEPRESSION.