HR 3962: IRS can disallow a perfectly legal tax deduction if they deem your motive is wrong

Select Democratic members of the 111th Congress ^ | 10/29/2009 | Committee of Secret Congress People

[RushingWater]

As

[RushingWater]

Source for the bill:

[RushingWater]

As Heritage Foundation blog translates:

Codification of the “Economic Substance Doctrine” (Page 349): Empowers the IRS to disallow a perfectly legal tax deduction or other tax relief merely because the IRS deems that the motive of the taxpayer was not primarily business-related.

[RushingWater]

Source for the bill:

HR 3962

[your local physicist]

I would think all these tax increases are DOA in the senate.

[Man50D]

The people can disallow HR3962 and the IRS by passing The Fair Tax Act(HR25/S296) that will replace all federal income taxes with a national sales and abolish the IRS! Fair Tax ping!

[concerned about politics]

IRS deems that the motive of the taxpayer

Oh great. That means Oboma gets to pick a mind reading Czar. Will the madness never end?

[Nachum]

The list, ping

[Graybeard58]

I would think all these tax increases are DOA in the senate.

Why would you think that? The rats are in charge of the senate too.

[goldstategop]

I think the massive taxes and public option just won't sit well with Senate moderates. The bill can pass the House but unless it gets a major rewrite, it won't pass the Senate. Dingy Harry doesn't have enough votes for cloture.

"Show me just what Mohammed brought that was new, and there you will find only things evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelogus

[Waryone]

Well illegal tax write offs become perfectly legal if a democrat uses them. See Charles Rangel.

[NonValueAdded]

"Do you really think we want those laws observed?" Said Dr. Ferris. We want them broken. You better get it straight that it's not a bunch of boy scouts you're up against - then you'll know this is not the age for beautiful gestures. We're after power and we mean it. You fellows were pikers, but we know the real trick and you'd better get wise to it. There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted and you create a nation of law-breakers - and then you cash in on guilt. Now, that's the system Mr. Reardon, that's the game, and once you understand it, you'll be much easier to deal with."

Ayn Rand, Atlas Shrugged, Part 2, Chapter 3, Page 404

[OneWingedShark]

>Codification of the “Economic Substance Doctrine” (Page 349): Empowers the IRS to disallow a perfectly legal tax deduction or other tax relief merely because the IRS deems that the motive of the taxpayer was not primarily business-related.

Sounds almost like a bill of attainder to me... but at the very least it is immoral and, honestly, should cause tax-collectors (IRS agents) to be shot and/or tar-and-feathered.

[businessprofessor]

Here is another gem in the bill:

Application of “More Likely Than Not” Rule (Page 357): Publicly-traded partnerships and corporations with annual gross receipts in excess of $100 million have raised standards on penalties. If there is a tax underpayment by these taxpayers, they must be able to prove that the estimated tax paid would have more likely than not been sufficient to cover final tax liability.

These firms will have to justify that some unlikely event caused estimated taxes to not be sufficient to cover tax liabilities. This provision is just an excuse for forcing companies to provide interest free loans to the government.

These provisions are bad news for capital formation. Capital flight and much lower private investment will be accelerating. Why should anyone invest here? The rats want to confiscate your profits and wealth.

[FredZarguna]

Always been the case, believe it or not. The IRS is not obligated to honor its own guidelines or interpretations, nor does it even honor anything like precedent the way real courts do. If today the IRS finds Dick is not in violation of tax law, they may turn around tomorrow and find Jane guilty under exactly the same circumstances, even if the same IRS employees are involved in both cases. Your sole remedy if you don't like that is to go all the way through the process and hope you can get to Federal Court. Most choose to "pay the $2."

[The Comedian]

My ancestors shot revenuers over much less.

There's much to be said for keeping tradition alive...

Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

[top 2 toe red]

Frightening , but funny!

[mo]

“My ancestors shot revenuers over much less...”

Mine helped overthrow a King for far less....

[Lmo56]

IRS deems that the motive of the taxpayer Oh great. That means Oboma gets to pick a mind reading Czar. Will the madness never end? What about Karnak the Magnificent ??? I hear that Johnny Carson isn't doing very much these days ...

[ThomasThomas]

Is there any other motive other than to pay less taxes?

[USMA '71]

Right out of Charlie Rangel’s committee.

[bamahead]

So now the IRS claims to be able to read minds and determine intent?!? Charities will suffer.



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[dalereed]

There’s nothing fair about your fair tax, it’s a renaming of sales tax!!!

[PugetSoundSoldier]

Mine came here 100 years ago in search of a better life... Looks like I may need to permanently go back overseas in search of that life, yet again!

[mo]

Th question of a “reverse American diaspora” is interesting. america is extremely heterogenous..and traditionally has been held together by the promise of opportunity...based on ready and equal access to cheap energy and food. Our Congress and burocracy appears to be deliberately trying to bind us by eliminating both.

[Man50D]

There’s nothing fair about your fair tax, it’s a renaming of sales tax!!!

The concept it's a national sales tax has not exactly been hidden. Note my original post referring to it as a national sales tax.

[dalereed]

I think the idea of a sales tax stinks!

I’ll take the income tax with it’s thousands of ways to avoid taxes any day.

Anhyone doesn’t want to read the tax code and use its multitude of tax avoidance ways deseves to be burned!

[Tellurian]

Where do you find support for a “Fair Tax”? The baby boomers, with savings that has already been taxed, will get taxed again, so count them out as supporters. The younger generation, who aren’t yet in the upper tax brackets, would quickly be bumped up into the universal “fair” tax bracket and get burned. That leaves the middle third to maybe, just maybe, like the idea. I can’t see where you’ll get enough support.

[PugetSoundSoldier]

Th question of a “reverse American diaspora” is interesting. america is extremely heterogenous..and traditionally has been held together by the promise of opportunity...based on ready and equal access to cheap energy and food. Our Congress and burocracy appears to be deliberately trying to bind us by eliminating both.

Yep. The fact that some in this thread had their ancestors come here 400+ years ago, and others (like me) are 2nd generation Americans shows that "being American" isn't so much about race or history, but creed. And that is something that can transit to other countries as needed.

America isn't just a physical locality, for someone who's only been "inside" the US for 5 years can become an American (naturalized). It's an idea and a creed and approach to life. It will always exist, but perhaps not within the geographic bounds of the United States of America, if the current Administration and Congressional leadership have anything to do about it!

[Gondring]

So you like the government telling you how to spend your money and what to do with your life (since they’ll fine you—i.e., charge you more taxes—if you don’t do what they prefer)?

[Gondring]

Besides, with a "Progressive" income tax, the left can keep the little guy from having any chance at improving his lot.

A wealth-based tax is far more fair than an income-based tax.

[MediaMole]

The Rats are just going to wait out the Bush tax laws and let the rates go back where they were.

[dalereed]

The tax code before 1986 allowed me to not pay any taxes from 74-90 which were my highest income years, all above $100,000.

before the 86 “Tax Simplification Act” which wasn’t totally phased in until 1990, as far as i’m concerned the IRS tax code is 1800 pages telling you how not to pay income taxes.

The only reason that I paid taxes before 74 was I didn’t get totally pissed off until in 73 I had to write a check for $18,000 at the end of the year.

I took out the tax code and figured out how to not pay income taxes.

[steveab]

“I think the idea of a sales tax stinks!”
“I’ll take the income tax with it’s thousands of ways to avoid taxes any day.”

Interesting, very interesting indeed. Very time you spend a dollar, a portion of that dollar goes to pay all for payroll taxes, companies income taxes and other hidden taxes all the back to turning a natural resource into a product and all the service industries related to that product. That amounts to about $.50 on the dollar. If you want to avoid paying taxes, stop spending.

[dcwusmc]

Be wary of strong drink, for it can cause you to shoot at tax collectors-— and MISS...

Shooting tax collectors is an honorable American tradition. Pass it on to your children and grandchildren, unto the fifteenth generation!!!

(I think the first is Heinlein and the second started out as his til I modified it, filed off the serial numbers and claimed it for mine!)

[Man50D]

I’ll take the income tax with it’s thousands of ways to avoid taxes any day.

Karl Marx would be happy to hear you like a heavy progressive tax on income. It is one of the planks in his Communist Manifesto. He understood a gradual increase on taxing productivity will eventually discourage people from working and turn to the state for dependence.

Your overall tax burden will be less with The Fair Tax than the current income tax since all the embedded taxes in everything we buy will be eliminated not to mention more money in you paycheck.

[Man50D]

Where do you find support for a “Fair Tax”?

Click on either one of the Fair Tax icons in my first post to find out.

The baby boomers, with savings that has already been taxed, will get taxed again, so count them out as supporters.

You have it 180 degrees backwards. Baby boomers, along with everyone else, are being taxed multiple times with every purchase thanks to embedded corporate income taxes passed onto the consumer by businesses at each stage of production. The Fair Tax will remove those taxes by eliminating all federal income taxes and tax only once at the point of sale. Boomers will not be taxed on any investments or savings since income will not be taxed.

The younger generation, who aren’t yet in the upper tax brackets, would quickly be bumped up into the universal “fair” tax bracket and get burned.

There will be only one tax bracket with The Fair Tax. Everyone will have the same rate imposed at the point of sale.

I can’t see where you’ll get enough support.

Then you haven't been paying attention. More than a million people have signed petitions to support The Fair Tax. The American Farm Bureau and the National Tax Payers Union have endorsed The Fair Tax. The number of cosponsors has increased with each session of Congress since The Fair Tax was first introduced in 1999 to the point in the last session of Congress there were 76 cosponsors.

[MaxMax]

I cannot think of one reason for a deduction that could be deemed wrong.
This must be selective reasoning.

[indylindy]

One of the most difficult things to prove is intent. I can just imagine how easy it will now be for the IRS to prove intent.

There will be no end to this tyranny until DC is swept clean.

[Man50D]

Besides, with a "Progressive" income tax, the left can keep the little guy from having any chance at improving his lot.

You're ok with being controlled?

A wealth-based tax is far more fair than an income-based tax.

Wealth is a factor with The Fair Tax. People spend more as their income rises. The more they spend, the more they will pay in taxes. High income earners will be taxed the most since they tend to purchase more big ticket items than lower wage earners.

[FreedomPoster]

Also the first quote on my FR profile page.

[griswold3]

In response to FDR’s ‘witchhunt’....

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not
bound to choose that pattern which best pays the treasury. There is not even a patriotic
duty to increase one’s taxes. Over and over again the Courts have said that there is
nothing sinister in
so arranging affairs as to keep taxes as low as possible. Everyone does it,
rich and poor alike and all do right, for nobody owes any public duty to pay
more than the law demands.”

(US Appeals Court Justice the Honourable Learned Hand)

[Jersey Republican Biker Chick]

THOUGHT POLICE....PING!!!

[Slings and Arrows]

Couldn’t this be challenged under the 13th Amendment?

[MrB]

I cannot think of one reason for a deduction that could be deemed wrong.

Here's one - If you don't support democRats and 0bama, then your "motivation" for taking the tax deduction is wrong.

Clear enough?

[PugetSoundSoldier]

One of the most difficult things to prove is intent. I can just imagine how easy it will now be for the IRS to prove intent.

It's not about the IRS proving intent; it's about you proving you didn't have the intent they accuse you of!

[Gondring]

Your topic sentence isn't supported by the others. Do you not see the difference between wealth and income?

A hard-working person who tries to get ahead will have to purchase assets to get there, so he'll get whomped. Meanwhile, someone who inherits assets and is a lazy bum, not producing/earning much, gets taxed less.

People trying to get ahead shouldn't be the ones carrying the burden for those folks who "aleady have theirs," especially when those already having wealth have the most to lose if there were no governmental protections.