Posted on 04/13/2005 11:42:59 AM PDT by LibWhacker
At tax time, lots of money under table From gambling to painting to child care, not all income gets shared with the IRS.
NEW YORK – Danielle L. teaches private swim lessons on Long Island. The $30 per 30 minutes she charges is just "a little extra" on the side. Bryan M. likes to play poker, and so far this year the student has made about $8,000. And painter Jack K. charges $600 in cash to brighten a room. It's more, however, if he gets paid by check.
What all three have in common is that none of them declares these earnings to the IRS. And they are not unusual.
As of midnight Friday, when most Americans will have filed their taxes, the IRS estimates there is a "tax gap" of over $300 billion a year, about 15 percent of total tax revenues - money that should be paid but is not finding its way to the US Treasury.
That's a lot of cash under the table, golf fees written off as expenses, and inflated charitable gifts. It's equal to 75 percent of the annual budget deficit, two-thirds of Defense Department spending, or what the US spends on Medicare in a year.
"The tax gap has two implications. First, the billions that don't come in that should come in further increase the nation's indebtedness and burdens future generations," Mark Everson, the IRS commissioner, says in an interview. "Secondly, you discourage compliance when someone else is getting away with it and breaking the law."
Tuesdsay, using new IRS data, the Economic Policy Institute released a study of tax cheating, or what it termed "Do-it yourself tax cuts." The Washington, D.C., group called the compliance problem "a crisis in US tax enforcement," and said closing the gap "is one of the best bargains available in economic policy."
The problem may only get worse, as an increasing number of Americans become subject to the Alternative Minimum Tax (AMT). Some projections suggest that 35 million people will be paying the AMT by 2010, according to Nina Olson, the National Taxpayer Advocate.
The AMT "discourages compliance," says Mr. Everson, "in the sense that people go through a calculation of their tax and at the end we say ... 'just kidding, you really owe $2,200 more.' "
The IRS "tax gap" estimates comes from a three year study called the National Research Program for tax year 2001. The tax agency audited 46,000 individual returns and then extrapolated how much money was not paid, on a national basis, for all 131 million Americans who file. In 2001, all taxpayers paid $1.767 trillion on time - or between 83.4 to 85 percent of the amount the IRS estimates was due. The tax gap, the IRS estimated, is between $312 billion and $353 billion
The IRS numbers show the bulk of the gap coming from underreporting of income, such as people working off the books, or taking too many deductions. A smaller portion was due to non-filing and underpayment. The tax most often underreported is the individual income tax.
The study was a wake-up call for the agency, which increased its spending on enforcement after a period of lower funding for IRS agents. Since 2001, it doubled its audits of those earning $100,000 or more and increased its overall audits 37 percent over 2001. And the audits have been successful: The IRS estimates that enforcement activities, plus late payments, recovered about $55 billion of the tax gap.
Some of the money recouped came from a crackdown on wealthy people using improper tax shelters. Last month, for example, the IRS announced it had collected $3.2 billion from a scheme it called "Son of Boss." One individual alone owed $100 million, and the average owed involving this scheme was $1 million. There are still 400 people who invested in the tax shelters who chose not to participate in the settlement and another 200 didn't qualify. The IRS estimates it will collect another $300 million from "Son of Boss."
More people may be feeling the hot breath of the tax collector on them soon. Congress appropriated $48 million for the IRS to use private collection firms in 2006. "All I can tell you is, we are extremely cognizant of the fact that we need to be attentive to taxpayer rights here,," Everson said at a recent Monitor Breakfast.
Many people just don't feel compelled to pay taxes. Even though the IRS is still analyzing the data, Everson believes the bulk of the tax gap is underreporting of income.
Danielle, for example, considers her swim lessons the same as babysitting. "A little kid selling lemonade on the street isn't going to fill-out a W2 form, and I'm not going to tell the government about the swim lessons," she says. "When I work as a lifeguard or swim team coach for a town I expect to be taxed because it's for an organization."
Some who underreport rationalize their actions as the right thing to do. For example, Bryan believes that since poker is not his primary source of income, he doesn't need to declare the money. "The high-up tournament players get audited sometimes and need to get receipts and recordings of their winnings, but I don't get nervous about the IRS or anything," he says.
(For the record, the IRS considers gambling winnings to be income as it does any other form of cash remuneration, which it says must be reported.)
Not reporting her income has made Stephanie P., who works "off the books" for $10 an hour at a real estate office in New York, feel guilty. "I feel a little hypocritical," says the college student, "because I favor a bigger government in terms of more spending on social programs and healthcare, but here I am not paying an income tax."
Large movements of cash often do attract the IRS. But IRS scrutiny does not always result in a check to the Treasury.
For example, last June, a jury acquitted a south Florida couple accused of evading taxes on $10.1 million in income on their apartment painting business. The case started when the IRS was investigating a check-cashing business in Miami. The IRS observed a couple cashing millions of dollar in checks and began to look into their dealings. It decided they were cheating. But the jury determined that the couple were using the check cashing store legitimately to pay workers in New York City who were painting low-income apartment buildings.
Our founding documents state the belief that God gave us certain unalienable rights. Yes or no?
Yes that one document says that, it's just not scriptural.
You don't believe God created man to be free?
Absolutely not since it states right in the NT that we are all slaved either to Jesus or to sin. God implemented proper rules for having slaves for Israel. God saved Israel from the bondage of Egypt as a picture of Christian salvation. But where was Israel's God given right to be free for those 430 "to the day" years?
The government should make no money off these small odd jobs when the same people are paying a lion's share of taxes on their main sources of incomes. Not to mention taxes on materials, fuel, and other various taxes. I say we should commend them, not punish them. They are keeping some of the blood supply away from our cancerous tumor of a government.
You can't be arguing that God created us to be slaves to sin? A 'slave to Christ' is free, no man is his master. What our founding fathers stated is perfectly in line with this.
If you read it again you will see it is a dichotomy. We are slaves either way but that is spiritual. Regarding human servitude, there are abolutely no biblical promises of freedom. In fact it says if you are a slave, don't worry about it. In the scheme of eternity, being a slave to someone on earth doesn't even register.
For awhile, govt. pretty well operated in those constraints, yet always testing the boundaries. Around 1914, they decided to tax, we the people. Tarifs on "strangers" were out.
"Mat 17:25 He saith, Yes. And when he was come into the house, Jesus prevented him, saying, What thinkest thou, Simon? of whom do the kings of the earth take custom or tribute? of their own children, or of strangers?"
"Mat 17:26 Peter saith unto him, Of strangers. Jesus saith unto him, Then are the children free."
The free people were no longer free. The worthless servant (breaking the contract with restraints of limited govt. and declaring himself king)assured the no longer free people that it was temporary. This brings us to where we are today.
Interesting rant but pretty off the topic of the unscripturality of the statement "endowed by their creator with certain unalienable rights, ie life, liberty and the persuit of happiness".
No so. The topic is who is caesar. Our govt. have gone out of bounds, we are responsible.
God created our govt., according to this. Man has perverted it. Is that simple enough?
And good luck to them in getting the internet sites to agree to report winnings, seeing as how they're all currently located offshore.
I always interpreted the "render unto Caesar" to mean obey the government's laws as long as they don't conflict with God's law.
As for the slave thing, that's a bit more complicated, but not by much -- after all he did bring the Israelites out of Egypt. The idea was not that God or Jesus or even Paul thought slavery was just fine and dandy, but that the goal of becoming free from slavery (or any OTHER goal) should never supercede the spreading of the gospel.
It's conceivable that Jesus would want Slave X to stay under Master Y instead of starting a slave revolt because he wants slave X to preach the gospel and convert Master Y to Christianity who would then, among other good things, free his slaves voluntarily without bloodshed being necessary, assuming this was possible under the law of the land in question.
God may have other inscrutible reasons for wanting this or that slave or group of slaves to stay enslaved, the point being not that God is pro-slavery but that his mission/role for each individual and each nation comes before any political or social goals an individual or nation might believe in.
I wonder how many times a day two freepers have two different debates AT each other. I thought we were debating whether or not God had given us inalienable right to life liberty and the persuit of happiness.
Quite simple, wrong but simple.
Refute it.
Refute it!? I quote it all the time. It's a beautiful truth about how God is soverign over governments. That's why we are supposed to obey and pray for our governments. A lot of Freepers have a hard time with that and the fact that all governments were Created by Him and For Him. And yes Man screws up everything that he touches but that doesn't remove our responsibility to our God given rulers.
WE are the rulers. Why is that so hard to understand?
It's easy to understand, it's just wrong. Let's talk specifics. If you are right about prostitution being bad, can you go make it illegal? If you are right about socialism being wrong, can you get rid of it? If the majority is wrong about someone being guilty is he going to be found innocent?
What is a ruler? King David and President are rulers. We are not. People have always had imput even over Kings and dictators, but that doesn't mean they are their own rulers.
Let me put it this way. We are ultimately responsible. We are in charge.
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