COURT AFFIRMS IRS POWER IN CATCHING TIP CHEATING cheating

The Dallas Morning News (AP) | June 17, 2002

[MeneMeneTekelUpharsin]

Solution to loss of revenue for federal and state governments: Put a tax on illegal aliens. Everywhere local authorities find them, they would have the authority to put a head tax on them until the INS removed them from the country.

[MadRobotArtist]

If this is allowed, then who says the IRS will stop with just restraunt workers? What if the IRS starts to assess monies generated by lemonade stands, and yard sales? What if they start adding in their own assessment of what you REALLY made during the year? If they can do it to one group of people, they can do it to all peoples.

If the IRS really wanted to assess taxes, they'd start looking at companies like G.E. who haven't paid taxes for 30 years. They Should go after the companies who defraud the government by not paying taxes, because they have to import their own products. The IRS only harasses the public because it has power over a single person, and the ability to destroy a life. I watched them destroy a friend of mine with an audit. No governmental agency should be allowed to wield such power, over the people it relies upon for revenues.

[Barbara14]

Oh no, we can't do that! Illegal Aliens are becoming the next preferred group. Soon, when you go to the grocery store, youll see right next to the parking spot for "Future Mom's" a spot for "New Immigrants".

Its funny how our government will spend billions on catching a few tip cheaters while it allows japanese and other asian businesses to pay no taxes whatsoever through the use of a scheme that shuffels the books. 20/20 did a story on this not long ago. Many really big companies from asia pay no taxes at all. It must be too politically incorrect to go after asian companies, so we must bust the American who fails to reports couple of hundred dollars in tips.

[11th Earl of Mar]

The court said the IRS can estimate the amount of cash tips given to employees based on tips shown on credit card receipts.

I don't believe this would be very accurate. Many credit card payers are business clients, whose receipts are reimbursed by their company. I would have to believe that business clients who are reimbursed are more generous in their tipping than those who pay cash.

[MeneMeneTekelUpharsin]

Forgot the link:

Click here for Dallas Morning News Story.

[RicocheT]

The court said the IRS can estimate the amount of cash tips given to employees based on tips shown on credit card receipts. The estimate is used to determine taxes.

Those who pay by credit card tend to tip more as often it's a business card. Cash payors are a bit more stingy. The IRS estimate is going to take more taxes out, an unfair result.

[MeneMeneTekelUpharsin]

Its funny how our government will spend billions on catching a few tip cheaters while it allows japanese and other asian businesses to pay no taxes whatsoever through the use of a scheme that shuffels the books. 20/20 did a story on this not long ago. Many really big companies from asia pay no taxes at all. It must be too politically incorrect to go after asian companies, so we must bust the American who fails to reports couple of hundred dollars in tips.

Good post.

[Maceman]

Do you get a credit if a waiter can prove that Hillary Clinton was a frequent customer? Everyone knows that SHE never tips.

[Maceman]

Do you get a credit if a waiter can prove that Hillary Clinton was a frequent customer? Everyone knows that SHE never tips.

Sorry for the editing error. Should read: "Does a waitress get a credit if she can prove that Hillary Clinton was a frequent customer? . . ."

[thmiley]

Let the IRS keep turning the screws. People need to realize how crazy the IRS is. It's long past time for tax reform. Anyone for a flat tax? National sales tax?

[BOBWADE]

I don't see the problem with this. I see alot of people cheating on taxes by not reporting their tips. Usually its the liberal types that cry foul about the rich. Most tipped employees are required to report 8% of their sales for tax purposes. They rarely ever report the actual amount which is considerably higher. This should help make them feel the real tax burden and perhaps they will see the light. I also see where alot of these same tipped employees abuse public assitance by not reporting their actual income. I would only hope that this will make employers more willing to press their employees for accurate tip reporting. This should prove intersting.

[Ferris]

ALL earnings by everyone in America should go to the IRS FIRST!!!

That's right... ALL checks from every employer should be made to the INTERNAL REVENUE SERVICE in care of each and every worker...

The government should then determine how much money each individual should have to live on... The IRS would then cut a check to that individual for the amount of money the government thinks they should have... You know, 25% to 30% of the total check...

That's the only way we will stop those evil tax cheats from not paying their fair share that they owe to everyone else...

Remember, if the government gets ALL the money FIRST, then there can be no one cheating...

Because it is THE GOVERNMENT'S MONEY FIRST!!!

NOT the individual that earned it...

The government is much more important than any individual or free people, and the government should be funded at all costs, no matter what...

And then we will all live happily ever after...

[the]

I stick it to the man by paying the bill by credit
card with only a very small tip on the
credit card; then I leave the rest of the tip in cash.

I refuse to be jealous of my fellow tax-slaves.

[BOBWADE]

The national flat sales tax is the only fair way. How much untaxed cash income do believe is out there? Its a bunch and the only way to fairly tax everone is to tax everybody on whay they spend and stop penalizing those that save. Even the dope dealer would have to pay taxes when he forked out his 50 grand for his cadilac or his jewelry. No one would get around it. You spend money, you pay taxes.

[nothingnew]

DO NOT $UPPORT THE MORALLY UN$UPPORTABLE!

AWAY IRS!

FMCDH

[TheCPA]

This is a crazy ruling. How could the Chief Justice vote with the majority? Congress needs to pass a law to overturn this decision and pass laws to reduce the power of the IRS drastically. Some of the previous reforms were mostly just for show as any good tax practitioner knows. For example, in some cases in the U.S. Tax Court, a taxpayer may now shift the burden of proof to the IRS. However, to do so, the taxpayer must prove a number of things. Thus, for the most part, this change that politicians promoted as taxpayer friendly reform was mostly a farce. Despite the claims of estate tax repeal, it was actually repealed only for individuals who die in 2010. Congress also needs to stop its high level of spending and reduce our taxes significantly. We must take back the Senate and remove Daschle and company.

[RichardW]

I was really worried about this. These people are fleecing the taxpayers while the poor CEOs are getting beat up by the press, their phony tax shelters and golden parachutes they so richly deserve. We should have been after the real culprits. There should have "waiter's prison" for these dastardly people. Off with their heads!

[vrwconspiracist]

Note that this is a 6-3 decision. It could well be that the CJ voted with a true 5-4 majority in order to be able to designate the justice to write the opinion (better a narrow opinion than a broad, sweeping mandate).

[AntiScumbag]

they'd start looking at companies like G.E. who haven't paid taxes for 30 years

ahhh, you really ought to check your facts before spouting outright baloney

from note 7 in g.e.'s lastest 10-k annual s.e.c. filing for the year ended 12-31-00, a public document -

"Consolidated current tax expense includes amounts applicable to U.S. federal income taxes of $3,005 million, $1,632 million and $1,459 million in 2000, 1999 and 1998, respectively, and amounts applicable to non-U.S. jurisdictions of $1,246 million, $1,399 million and $1,335 million in 2000, 1999 and 1998, respectively."

g.e. paid about 6 BILLION to the u.s. and another 4 BILLION to foreign jurisdictions in '98, '99 and '00 (lastest data available, 2001 10-k not yet filed)

they also list their effective federal income tax rate for each of the last 3 years at about 31% (the statutory corporate maximum is 35%)

that said, while g.e. writes extremely large checks for federal income taxes, in reality g.e. pays no income taxes because every penny came from some individual, as businesses only pass along costs to actual people

mostly from their customers, with any balance from employees and shareholders who received less than they would have otherwise

the corporate income tax should be abolished, it only serves to hide the real tax burden on people, and contributes to silly bashing of "greedy corporations", mostly by goofy dummocraps, but also by some here

as for this ruling, most restaurant employees are notorious tax cheats, and exposing them to the heavy hand of the irs might gain more support for real tax reform of some kind

anything is better than the intrusive system we have now

[TheCPA]

A flat tax would do little to simplify the Internal Revenue Code or reduce the power of the IRS. It is often advocated by politicians or economists who have little understanding of the Internal Revenue Code. The reason the flat tax would not simplify the law very much is that a flat tax is still an income tax. Determining income is inherently complex. Applying rates to the tax base (taxable income as defined in Code Sec. 63) is the easy part. The income of wage earners is already rather simple. And many of them take the standard deduction. The law is most complex for businesses and investors.