Some notes on recent trends in tax enforcement, including frivolous fines, wage garnishment, audit rates of the poor, state-and-local tax deduction limits, and cooperation between tax enforcers in the U.S. and Canada.
According to the details of the newish law concerning passports and tax
scofflaws, when the amount of someone’s overdue taxes rises above a certain
threshold ($52,000 last I checked), the
IRS
must notify the State Department, whereupon the State Department
must not issue a new passport to that scofflaw or renew their existing
passport (unless the scofflaw is taking certain specified steps to pay up or
contest the tax debt), and may revoke any existing passport that
person has.
That’s all the law allows for. It does not specify under what circumstances the
State Department should revoke existing passports, or even mandate that they do
so at all. It is merely an option. Now it emerges that the
IRS hopes
to put more teeth into that provision on its own initiative. It plans to send
requests to the State Department, on a case-by-case basis, asking State to
revoke the passports from people the
IRS
believes might thereby be prodded into paying what they owe.
This process is not something that was explicitly authorized by the law, but
TIGTA
didn’t seem to think that was a problem. “There is no law or regulation that
directly authorizes the
IRS to
prioritize taxpayers to be referred to the State Department for revocation;
however, we believe it is reasonable for the
IRS to
provide the State Department with taxpayers for possible revocation to comply
with the law.”
In other news:
One of the tools the
IRS
uses against tax scofflaws like myself is to file a federal tax lien in the
local court system of the scofflaw. This puts creditors and the local legal
system on notice that the
IRS
intends to step in and assert its rights to seize money. This can make it
difficult to get credit, and also makes it easier for the feds to seize
anything awarded by the courts in lawsuits, probate resolution,
etc. However
(and this is where it gets interesting and newsworthy), filing a lien costs
money. And the
IRS
thinks several California counties are charging them too much, and so they
have started to refuse to pay. In response, some counties are refusing to
process the
IRS
liens. Alas, this filing fee, and the standoff between the bureaucracies,
also applies to paperwork to release a previously-filed lien. So
this doesn’t always work in the scofflaw’s favor. Here’s some news
coverage:
War tax resister Larry Bassett was interviewed on the Parallax Views podcast.
Bassett is the subject of the recent documentary film
The Pacifist and is responsible for the largest
known individual act of war tax resistance, in terms of the amount of
dollars resisted at once.
Another Treasury Inspector General for Tax Administration report points out
that reduced IRS
resources means collapsing tax enforcement capability.
“As more taxpayers experience little to no consequences for non-filing, the
long-term impacts may include potential erosion of the voluntary compliance
rate.”
The IRS
issued an update to its estimate of the “tax gap” (the difference between how much tax people are supposed to pay and how much they do pay).
The upshot is that they think little has changed: people pay about 84% of
what the agency believes they owe. However, the last time I looked at the
details of one of these “tax gap”
reports, I noticed a lot of hand-waving, guesswork, and extrapolation, and
only a little empirical data collection, so I would recommend taking these
numbers with a grain of salt.
More attacks on traffic ticket issuing radar cameras — in France & Italy; Mexico, Germany, and France; and France again.
Revenue from the cameras is only half of what the government had hoped for
and budgeted for in France this year, and the government has had to divert
some of that money to installing more heavily-fortified cameras.
