IRS Seeks Strategy to Change Noncompliance Culture

Some news on tax evasion from TaxWire:

The IRS’s efforts to shrink the tax gap — the difference in the amount of taxes owed and taxes paid — must improve significantly to preserve the public’s confidence in the tax system and help offset mounting deficits, panelists agreed on .

Speaking at the American Bar Association Section of Taxation’s midyear meeting in San Diego, National Taxpayer Advocate Nina Olson and copanelists David Cay Johnston, reporter for The New York Times, and Patrick Heck, Democratic chief tax counsel for the Senate Finance Committee, suggested that recent estimates of a $250 billion to $300 billion tax gap are probably not accurate — and are very likely too low.…

Olson also suggested that increasing compliance, and therefore reducing part of the tax gap, depends on changing social norms. She said the largest section of the tax gap — roughly 67 percent — results from nonreporting and underreporting by self-employed individuals, typically on income that is not subject to information reporting.

The social norm among that group is that it is all right not to report income, Olson said. “What kind or resources does it take to change the social norm?” she asked, suggesting that the IRS needs a nationwide strategy to clean up the “entire environment” of noncompliance.


And there are more loopholes where those came from:

Investors, entrepreneurs and landlords annually avoid paying at least $29 billion in taxes by overstating the price of stocks, businesses and real estate, two professors say in an article being published in Tax Notes, an influential tax policy journal… “An unpublicized problem of crisis proportions is plaguing the tax system, one that will cost the government at least $250 billion in ,” the professors wrote… The authors are two widely recognized authorities on little known ways of cheating by exploiting weaknesses in tax administration.

Dodge and Soled explain why inflated tax basis reporting is pervasive, estimating that this problem will cost the federal government $250 billion over and that the real figure could easily be much higher. And, unlike corporate tax shelters, this type of tax fraud is available to all taxpayers who engage in property transactions.


Balkinization has another informed and thorough reality check about the U.S. torture policy. In this episode, Marty Lederman tries to strike the killing blow to the undead “a few bad apples” theory of what’s been going on in Abu Ghraib, Gitmo, and just about everywhere else U.S. boots are landing these days.

And the tip of the iceberg keeps getting bigger:

That last one, from the Washington Post, is a particularly strange and awful read. U.S. troops are acting like some weird amalgam of the Gestapo, the Keystone Cops, and undergrads on a spring break beer riot.

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