State vs. Federal tax enforcement

Practical and Practice issues for Professionals who practice in the area of taxation. Moral, social and economic issues relating to taxes, including international issues, the U.S. Internal Revenue Code, state tax issues, etc. Not for "tax protestor" issues, which should be posted in the "tax protestor" forum above. The advice or opinion given herein should not be relied on for any purpose whatsoever. Also examines cookie-cutter deals that have no economic substance but exist only to generate losses, as marketed by everybody from solo practitioner tax lawyers to the major accounting firms.
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Number Six
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State vs. Federal tax enforcement

Postby Number Six » Sat Aug 30, 2008 5:04 pm

I've noticed there is a huge range in enforcement for tax fraud, county by county and state by state. Witness the Brown's case last year and DOJ's tepid response to a mind-boggling case of tax fraud with thousands of tp/dbs tuned to the news with baited breath. Message: only the big $$ cases get government scrutiny. What would be necessary to create a more uniform system? A woman removes a price label from one slab of meat to put on a bigger slab, gets caught, may get jail time. A tp/db cashes a huge check without a whimper of law enforcement. What's wrong with this picture?
'There are two kinds of injustice: the first is found in those who do an injury, the second in those who fail to protect another from injury when they can.' (Roman. Cicero, De Off. I. vii)

'Choose loss rather than shameful gains.' (Chilon Fr. 10. Diels)

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Demosthenes
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Re: State vs. Federal tax enforcement

Postby Demosthenes » Sat Aug 30, 2008 5:39 pm

First of all, the DOJ doesn't initiate criminal tax cases, the IRS does, and the IRS only has 3,000 criminal investigators who focus on a lot of other things (money laundering investigations, offshore schemes, terrorism funding, traditional tax evasion cases etc.) besides tax protesters.

Secondly, the DOJ's resources to prosecute tax cases is *extremely* limited. They only have the resources to prosecute about 2,000 tax cases per year nationwide, and it's my guesstimate that less than 10% of those cases involve tax protesters.

My goal (and I'm been more active in this area than most) has been getting the government to focus on the right 200 cases - the promoters, the biggest mouths, the most influential ringleaders, even if the amounts they owe are small. My biggest issue right now is trying the get the DOJ to understand that prosecuting someone like Larken Rose or Sherry Jackson (tiny tax loss cases but influential leaders) is only helpful if DOJ publicizes the event. They didn't even issue a press release when Jackson was indicted, convicted, or sentenced. After I raised a holy stink, they finally announced Jackson's results by nestling the news into the PQI civil injunctions press releases.

And finally, you and I have no idea what will come of the Ed Brown idiots. A typical tax investigation takes anywhere between two and five years, and yes, I'm aware that time frame is absurd. One thing to keep in mind when you see tax protesters bragging about being tax free is that the people doing the bragging are very often lying through their teeth. One of the biggest mouths among the Brown supporters, for example, lives at home with his parents and they financially support him. He doesn't even owe any taxes to begin with so his bragging is a farce. The more you look into the Ed Brown supporters, the more you'll find that they often don't make enough income to meet the legal minimum required to file a return.
Demo.

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Number Six
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Location: Connecticut, "The Constitution State"

Re: State vs. Federal tax enforcement

Postby Number Six » Sat Aug 30, 2008 8:01 pm

Thank you for the thorough explanation. There are not, apparently, many state investigators, especially in the states that have no income tax. Let's hope that in the next administration the government gets the resources it needs to up the audits and the enforcement, not politically popular at this time. And on the non-filing, this nonsense about the voluntary nature of tax-filing and "if I filed I would get money back from the government" because I am using kids or parents as tax defiance shields, should be dealt with. I know their arguments and what they are saying to others. "We're out of the system", "to file taxes involves complicity with war and other injustices"; "it's paying tithes to Satan"; "If you file you become tribute to the Federal debt"; I'm sure there are venues to adress tax protesters in whatever guise. But probably not in this administration.
'There are two kinds of injustice: the first is found in those who do an injury, the second in those who fail to protect another from injury when they can.' (Roman. Cicero, De Off. I. vii)

'Choose loss rather than shameful gains.' (Chilon Fr. 10. Diels)

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Demosthenes
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Re: State vs. Federal tax enforcement

Postby Demosthenes » Sat Aug 30, 2008 9:03 pm

For the non-filers, a revamped reporting system will be needed.
Demo.


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