How you can resist funding the government → about the IRS and U.S. tax law/policy → IRS incompetence → enforcement effort/results → corporate tax enforcement

The Transactional Records Access Clearinghouse has issued their findings on IRS enforcement efforts and joins the chorus of groups who have concluded that all of the IRS bluster about more aggressive audits and actions against tax evaders is a bunch of hot air. Their report looks in particular at enforcement efforts against corporations and other businesses.

I should emphasize that the tax “avoision” technique I’m using and that I’m promoting on this site is completely legal and above-board. If you’re using this method and you get audited, there’s no problem because you’ve done everything by-the-book. But if you want to use a different method, something sneaky and illegal that the IRS wouldn’t approve of (if they only knew) it looks to me like there’s no better time to try it.

The Transactional Records Access Clearinghouse is good about puncturing the IRS’s bluster about how it’s getting tough on tax enforcement. This time, they’ve taken a look at how much effort the IRS is putting in to auditing corporate tax returns — it turns out they’re spending 30% less time conducting 26% fewer audits in the six months between October 2003 and March 2004 than they were in a similar span the year before. The amount of extra taxes these audits are uncovering? Also down: by 36%.

You can find the report, and a summary of its findings, at the TRAC site, as: Corporate Audits Continue to Slump.

The IRS has just released its audit figures for last year. Audits are up across-the-board. This in spite of not having significantly more enforcement personnel or budget.

In the past, a closer look at the numbers has shown that they’ve accomplished this miracle by emphasizing “correspondence” audits over “field” audits. It looks like this is again the case. While about three-quarters of the total audits the IRS conducts are correspondence audits, more than 90% of the increase in audits this year comes from correspondence audits.

The agency also seems to be backing off on audits of large corporations. These have the potential to be big-bucks items, but they also take a lot of time and a lot of personnel — both of which can be redeployed to increase the numbers elsewhere. Indeed, the larger the large corporation, the stronger the drop-off in enforcement in recent years. Corporations in the $50–100 million asset range have seen their likelihood of an audit drop from 16.4% to 11.4%; those in the $100–250 million range have gone from 17.5% to 12.1%; those above $250 million have dropped from 44.1% to 27.2%.

The strategy may be a wise one. “Overall, enforcement revenue reached $59.2 billion, up from $48.7 billion in 2006 and nearly $34.1 billion in 2002.” On the other hand, this increase could reflect increased tax evasion rather than more effective enforcement — the same sized slice but of a larger pie.

Levies, liens, and seizures are all up over last year’s numbers. After last year’s leap over the previous year from 2,743,577 levies to 3,742,276, this year’s increase is much more modest: to 3,757,190.

The IRS did fewer audits and collected less money in its enforcement efforts last year than in the year before.

A new report says that with 2% fewer employees working on enforcement cases, the amount of money the agency collected in this way dropped by almost 5%. The rate of audits fell across the board for both businesses and individuals — following a recent trend, this auditing drop was most dramatic for wealthy individuals and big businesses.

While I was working my way through the Spanish Handbook of Economic Disobedience and trying my hand at some amateur translation, interesting links were accumulating in my bookmarks. I’ll share some of these today:

• A site called CommunityCurrenciesLaw.org has assembled a good collection of legal information about alternative currencies, including a page about the tax treatment of barter, swapping, and gifts.
• I’ve started a Twitter feed (@99Tactics) for my upcoming book, 99 Tactics of Successful Tax Resistance Campaigns. I’ll post updates there about ongoing tax resistance campaigns around the world, about the upcoming book release, and about workshops and other events associated with the book.
• The erosion of the IRS budget and the expansion of its responsibilities has led to a drop in revenue from its collections/enforcement branch. “Diminished enforcement could also affect voluntary compliance over time,” according to the Treasury Inspector General for Tax Administration report that revealed the numbers.

  In 2011, enforcement revenue dropped by more than $2 billion. Last year, it dropped by $5 billion more, to a little more than $50 billion. At the same time, the IRS is opening more delinquent taxpayer accounts than it is closing, the inspector general said…

  The IRS has shed about 8,000 jobs since 2010, the report said. It comes as the IRS is taking on big new responsibilities implementing President Barack Obama’s new health care law, with congressional Republicans wanting to cut the agency’s budget even more.

  Over the past two years, enforcement revenue has dropped by 13% and the number of agency personnel working on enforcement has dropped by 14%. Those effects took place before this year’s sequester, which forced furlough days and cancellations of bonuses on IRS employees, and also before the morale-sapping “IRS Scandals” that have made the news in recent months. They also preceded, of course, the so-called “government shutdown” which will also put most IRS enforcement on hold.
• Speaking of IRS scandals, the Republican politicians who have been piling-on to every whiff of agency impropriety went strangely silent when it was recently revealed that companies seeking rulings from the agency on their tax dodges of choice have been able to choose which IRS attorneys will process their requests — in essence, allowing them to choose the judge in their own cases.
• Dublin household and water charge strikers are fighting back against government attempts to install water meters that would enforce the new tax. This video demonstrates how resisters have poured concrete blocks to prevent the installation of the meters:
• War tax resister Ed Hedemann appeared on Breaking The Set to explain “how Americans can stop financially supporting the military industrial complex by withholding taxes”:

Some tabs that have slid across my browser in recent days:

International Tax Resistance

• International direct action against traffic-ticket-generating robots continues, with such machines being destroyed or disabled in Italy, France, and Germany; France and Italy; France and England (plus news that the new president of Brazil plans to discontinue use of the machines); and France and Saudi Arabia.
• Here’s some more information (in Spanish) about the two war tax resisters from Spain who had their fines overturned in court, including what looks to be some excerpts from the ruling (see ♇ 7 May 2019 for an English translation of a newspaper article on the case).
• You may remember that Indian Prime Minister Modi abruptly removed high-denomination bank notes from the ranks of legal tender in late 2016. This was meant to strike a knockout-blow at the underground economy by forcing people to use more legible, traceable economic transactions than anonymous cash. It doesn’t seem to have worked. Despite the significant short-term inconvenience and blow to the economy, the amount of cash currency in circulation quickly recovered to its previous levels and is now back on-trend to where it was before the experiment. You may have heard calls to eliminate the U.S. $100 bill, for similar motives. This experience may discourage such an effort.
• Farmers in Kurdistan who have refused to pay a “war tax” to what remains of the Islamic State (Daesh/ISIS) have suffered reprisals, such as having their fields burned down for their refusal.
• Ugandan legislator and entertainer Bobi Wine (Robert Kyagulanyi) has been arrested on charges relating to an anti-tax street protest he helped to organize last year.

War Tax Resistance in the U.S.

• The National War Tax Resistance Coordinating Committee held a national conference in Washington, D.C. this month. Here’s a write-up by one of the attendees. Unfortunately they got tangled up in ongoing actions by leftist activists who were trying to occupy the Venezualan embassy there on behalf of the brutal, disastrous Maduro regime. It has been a disappointing thing to see groups like NWTRCC, CodePink, Veterans for Peace, and United for Peace and Justice carrying water for the cruel Maduro tyranny as though that were the only way to oppose disingenuous U.S. machinations there. It puts a shameful stain on what’s left of the U.S. peace movement every time a group like this uses a phrase like “the legitimate democratic Maduro government of Venezuela”.
• Lincoln Rice and Sue Barnhart recently talked about war tax resistance on the Spirit in Action radio show, as did Ann Barron and Larry Bassett in a follow-up.
• The Greenfield Reporter profiles war tax resister Thomas Wilson, who died last year.

U.S. Taxpayer Morale

A number of items that have been in the news lately concern how the U.S. tax system has become increasingly corrupt and imbalanced in favor of wealthy tax evaders. Stories like this tend to damage what’s known in tax wonk circles as “taxpayer morale” — the willingness of citizens to pay their taxes without evasion or the necessity of harsh arm-twisting and draconian oversight. For example:

• Income tax audits of the Americans with the highest reported incomes have fallen dramatically. Just in the last year alone the rate fell by half.
• Income taxes on corporations represent the lowest percentage of federal revenue since at least 1960, with the burden increasingly resting instead on individuals.
• The New York Times pointed out that in California, local governments and corporations have rigged the sales tax system in such a way that a portion of the sales tax people pay is gifted to the same companies who collect it. In other words, the sales tax becomes a “bonus profit” to those companies, collected from consumers and enforced by law.
• Millions of former U.S. tax filers appear to have dropped out — not filing returns in the last filing season. One theory is that the tax reform legislation that came into effect last year caused some people to owe where they hadn’t before, or to owe more, and that they decided not to file as a result. Three million people who received refunds in 2018 didn’t file at all in 2019.
• Trump’s tariffs are on target to reverse the benefits of recent income tax cuts for low- and middle-income taxpayers by raising the prices of consumer goods.
• There’s been another report put out about the “tax gap” (the difference between what’s owed and what’s collected) in the U.S. However it still uses largely stale numbers, updating them largely based on estimates and trends rather than evidence.