How you can resist funding the government →
about the IRS and U.S. tax law/policy →
how the government deals with tax resisters →
what won’t they seize (e.g. for hardship reasons)?
The IRS, when trying to collect unpaid taxes from people, intends to leave them enough to live on.
To this end, they have a set of standards for how much income and possessions they won’t steal from you.
This is based on your gross monthly income — meaning that if you’re already more fortunate income-wise, they’ll let you hold on to more (presumably because you’ve become accustomed to a higher-income lifestyle and it would be more of a hardship for you to lose more than it would be for someone not so fortunate).
It’s also partially based on your family size and the cost-of-living where you live.
If you are only bringing in enough money to make ends meet, by these standards, the IRS will not try to levy your income.
But you might be surprised at just how much that is:
[O]f the $247 billion in unpaid taxes owed as of , $23 billion, or almost 10 percent, is owed by tax debtors IRS has designated as being in financial hardship; therefore, IRS does not attempt to collect their outstanding tax debt.
IRS allows tax debtors earning up to $84,000 — almost twice the median income for all households in the United States — to be designated as being in financial hardship.
In total, IRS has placed tax debtors collectively owing over $6 billion in tax debt in its top financial hardship income threshold of between $76,000 and $84,000. Because they have been designated by IRS as being in financial hardship, although they are earning relatively high incomes, these tax debtors are excluded from the FPLP and do not face other tax collection action from IRS.
, IRS almost tripled the maximum amount it allows tax debtors to earn before being subject to collection action, far above the rate of inflation.
IRS could not provide us any data analysis that supported those increases.
As a result of those large increases, almost two-thirds of all tax debt IRS has designated as being in financial hardship is owed by tax debtors IRS allows to earn more than the national median household income before their unpaid tax debt again becomes subject to IRS collection action.
In contrast, in , no tax debtor with a financial hardship designation was allowed to earn more than the median household income without becoming subject to collection action.
Furthermore:
The effect of IRS’s collection policy regarding financial hardship tax debtors who accumulate new debt is essentially to both cease collection of old debt and not require tax debtors to pay the current taxes they owe.
Allowing such tax debtors to continually not pay current taxes without consequence appears to be giving tax debtors with financial hardship designations an additional exemption from paying current taxes as well as old tax debt and may contribute to the noncompliance of other taxpayers.
Because:
[E]ach tax debtor who is allowed to avoid filing required tax returns or paying current taxes, or who is perceived to live well while facing little tax collection consequence, represents not only less money for vital federal programs but one more advertisement for others to do the same.
If the IRS is collecting from you by seizing your assets or your paychecks, they’re supposed to leave you enough to live on.
they announced a major overhaul in how they calculate how much “enough to live on” is.
As the news just came out , I haven’t had a chance to really dig in to it.
One of the things that jumped out at me was that they’ve eliminated their weird method of calculating how much you get to live on based on how much you make.
The way they used to do it, if you had a high income, they’d assume you needed more money to keep up your rich lifestyle, so they’d let you keep more than they’d let a person with a lower income keep.
As I reported , this led to some kind of silly results, in which, for instance, “tax debtors earning up to $84,000 — almost twice the median income for all households in the United States — [were] designated as being in financial hardship” and thus immune from collection.
The new standards are based only on the number of people in the household, and not the standard of living to which they have become accustomed.
If the IRS is collecting from you and you’re making less than $1,667 per month, this is probably good news; if you’re making more than $2,500 per month, you may find that they take a bigger bite now.
A woman had a stake in a state retirement fund, but, as she was not yet
retired, she hadn’t started to withdraw from it. If she’d wanted to, she could
at any time have suspended her membership in the fund in exchange for a lump
sum payment.
The IRS
was trying to seize assets from her, and attempted to seize the retirement
account. When they did, the State said there was nothing to seize, as she
wasn’t retired yet and so didn’t qualify for payments. So the
IRS
wanted to tell the State to suspend the account and turn over the lump sum to
the agency.
But the IRS Chief Counsel recently ruled that the agency would have been overstepping its authority in doing that.
In cases like this, the
IRS has
to seize “the taxpayer’s future rights to retirement benefits upon reaching
retirement age” and wait for the money “when benefits became payable to the
taxpayer under the terms of the retirement fund.”
The IRS has something called the Federal Payment Levy Program, which is designed to intercept payments coming from the federal government to people who have tax debts.
According to this report, “the bulk of FPLP levy payments have historically been related to Social Security benefits.”
At one point there was a hardship income threshold under which the government would not seize social security benefits to reclaim taxes, but the government phased this out and finally eliminated it at the beginning of .
The Taxpayer Advocate noted that this was further impoverishing some people on fixed-incomes who were already below the poverty line, and proposed a new filter.
The IRS has agreed to implement a “low income filter” that “will exclude taxpayers from the FPLP if their estimated income (based on internal IRS data) is less than 250 percent of the poverty level.”
This change is due to begin in .
The “internal IRS data” the report speaks of here it tries to explain in a footnote:
To compute the taxpayer’s income, where the taxpayer has filed a tax return for the most recent year or two, the IRS will use the greater of the total positive income from that return, or income based on payor documents filed with IRS for that year.
Where no such return was filed, the IRS will use payor documents for the most recent tax year.
To determine family size, which is a component of the federal poverty level computation, the IRS will use the family unit size claimed on the taxpayer’s most recent return filed for the last two years, or if no such return is filed, the IRS will assume a family unit size of one.
Although people with low-incomes may be saved from having their social security seized via FPLP in this way, the IRS may still use other collection techniques.
For instance, they may seize the bank account your social security payment is deposited into, thus saving you from a partial levy only to hit you with a 100% seizure.
Or they may file a “paper levy” to attach 100% of future social security payments until the unpaid tax is collected.
For low-income tax resisters, this will require vigilance.
Still, the Advocate predicts that this change “will protect hundreds of thousands of taxpayers from economic damage and unnecessary interaction with the IRS.”
According to the Advocate, “many of the collection policies and practices in place today have little empirical justification even as they violate the spirit, if not the letter, of the IRS Restructuring and Reform Act of and result in unnecessary harm to taxpayers.
For example, despite the fact that IRS levies and Notice of Federal Tax Lien filings increased by approximately 590 percent and 475 percent, respectively, [see The Picket Line, ], overall inflation-adjusted collection revenue declined by approximately 7.4 percent over the same period.”
The IRS appears to be systematically exaggerating the effectiveness of its collection efforts by attributing any revenue collected during the collection process, even things like subsequent tax refunds being automatically intercepted before they’re sent, as being attributable to the activities of collections personnel.
Also, “[t]here is an astonishing lack of transparency as to what is included in the revenue figures and how they are computed.”
The hardship standards that the IRS uses to determine whether a tax debt is collectible (that is, is there anything to seize, and will seizing it effectively throw the taxpayer onto government assistance, thus robbing Peter to pay Peter) don’t take into account things like credit card debt, school loans, and medical bills.
In many cases, they’re trying to get blood from a stone.
The IRS tends to file official lien notices haphazardly, without much regard for whether they are effective.
Their policy seems to be: when an account reaches a certain threshold of unpaid balance, file a a notice of federal tax lien.
This even though very little collection revenue comes from liens and though a lien notice like this can make it more difficult for delinquent taxpayers to get back on their feet financially.
(These notices make the “secret lien” filed against all delinquent taxpayers part of the public record, available to potential creditors and employers and landlords and such, and put the lien into effect so that the IRS can skim money, for instance if the taxpayer sells property or has accounts receivable.)
Taxpatriatism appears to be rife.
According to the report, “[i]t is estimated that more than seven million American citizens reside abroad.
Although U.S. citizens are required to file U.S. income tax returns regardless of their residency status, IRS data show that only 462,340 taxpayers (or 6.6 percent) filed returns from a foreign address in tax year 2007.”
The “offer in compromise” program — in which people with large tax debts they can’t pay off can enter into an agreement with the government to pay a portion of their debt, comply fully with the tax laws for five years, and have the remainder of their debt forgiven — has become useless for most people.
Now, in order to use this program, you have to pay a fee and submit a substantial down-payment along with your application (which involves “more than 100 steps in a 44-page package”) — and then your application may still be declined.
Weirdly, the IRS processes our 1040 forms before it processes the W-2s and 1099s that substantiate the income we report.
This makes it easy for fraudsters to understate their income and get refunds before the government knows anything is wrong.
“The IRS is experiencing high levels of new individual taxpayer payment delinquencies in categories that could produce high levels of subsequent noncompliance.”
Music to my ears.
Some bits and pieces from here and there:
The “National Taxpayer Advocate” (a sort of IRS ombudsman position) released her annual report on .
As was the case in her report last year, she complained that the IRS is overusing its enforcement techniques of levies and liens in ways that are cruel and, even from the perspective of government revenue, counterproductive — , the number of liens the IRS has filed each year has increased by 550%, but the amount of revenue collected through such enforcement efforts has not increased at all.
“By filing a lien against a taxpayer with no money and no assets, the IRS often collects nothing, yet it inflicts long-term harm on the taxpayer by making it harder for him to get back on his feet when he does get a job,” Taxpayer Advocate Nina Olson said.
“Absent data that show liens make a meaningful contribution to revenue collection and especially in this economy, I find it unacceptable that the IRS continues to torment financially struggling taxpayers in this way.”
The government of Romania is threatening to tax the nation’s witches, astrologers, and fortune tellers.
Curse them!
A dozen witches will hurl the poisonous mandrake plant into the Danube to put a hex on government officials “so evil will befall them,” said a witch named Alisia.
She identified herself with one name — customary among Romania’s witches.
Queen witch Bratara Buzea, 63, who was imprisoned in for witchcraft under Ceausescu’s repressive regime, is furious about the new law.
Sitting cross-legged in her villa in the lake resort of Mogosoaia, just north of Bucharest, she said she planned to cast a spell using a particularly effective concoction of cat excrement and a dead dog, along with a chorus of witches.
“We do harm to those who harm us,” she said.
“They want to take the country out of this crisis using us?
They should get us out of the crisis because they brought us into it.”
If the IRS levies your salary for back taxes, they are supposed to leave you enough to live on and not just take the whole paycheck.
They’ve recently published the table they use to calculate how much to take, which is based on how frequently you get paid, your filing status, and the number of exemptions claimed on your W-4.
[Güemes’s] appeal argues that the resister’s action is the expression of fundamental rights such as the freedom of belief, which doesn’t only cover forms of thinking based on deep convictions, but also the acts consistent with them, and sets limits on the power of the State.
Conscientious objection to the maintaining of armies by means of direct taxes would therefore be an expression of this freedom of belief.
The Constitution and international laws protect this right, whether or not there is legislation that covers it.
Furthermore, and more importantly, asserts the appeal, civil disobedience such as pacifist tax resistance, is also a guarantor of the collective political right to a just international order and peaceful international relations.
The same appeal makes explicit also that the resister is not merely seeking relief against an unjust administrative decision, but rather to follow an ethical imperative to help spread tax resistance, using his case as an amplifier for these ideas.
[H]e asked me my reasons for refusing, when I said conscientious objection to military taxation he started getting agitated, asking if I objected to paying for schools and hospitals as well — I said that I’d be pleased to pay for schools and hospitals if I could do so without paying for the military to kill people.
He then said that he’d met some nutters in his line of work, but I took the biscuit!
A new edition of More Than a Paycheck,
NWTRCC’s newsletter, is now on-line, and features the following:
A war tax resistance manifesto by Larry Rosenwald, and responses from Claire Schaeffer-Duffy, Karl Meyer, and Bill Glassmire.
(I’ll have more on this in a future Picket Line entry… stay tuned.)
Buyer Beware, a poem on military spending by Marge Piercy
The IRS has gotten in the habit of sending out “frivolous filing” notices to anyone who writes them a letter explaining their reasons for tax resistance (or even in response to letters from non-resisters who are just paying under protest). These notices are accompanied by a $5,000 fine — a fine that, by law, must be paid before it can be appealed. The IRS is only authorized to assess such fines in response to a tax filing that is incomplete, inaccurate, and that involves some frivolous legal stance, so it is pretty clearly overstepping its bounds here: but because a resister must pay the fine in order to appeal it, and most war tax resisters are unwilling to do so, this puts them in a bind. One resister, Steve Leeds, got such a frivolous filing notice and then, instead of paying the fine and formally appealing it, he complained to his congressional representatives about the IRS’s abuse of the law. One of his representatives then contacted the IRS, which then caved — sending Leeds an apology.
If the IRS attaches a levy to your salary, it will leave you some portion of your salary to live on while it sucks away the rest. How does it determine how much to take? Is it based on your base salary, or on what’s left over in your check after deductions for 401(k) contributions, insurance premiums, commuter checks, or what have you? Turns out the answer is the latter, but only if those deductions were already in effect at the time the levy was received by the employer.
A book review of The Green Zone by Clare Hanrahan — this book looks at the environmental impact of the U.S. military, which is exempt from laws and treaties designed to protect the environment, and, according to the author, is “the largest single polluter of any single agency or organization in the world.”
War tax resistance ideas and actions, featuring a penny poll in Oregon, a protest in Washington D.C., and the upcoming New England gathering of war tax resisters.
NWTRCC News — a behind the scenes look into operations at NWTRCC headquarters.
There was a focus at this gathering on exploring the connections between war tax resistance and other struggles in the peace-and-justice milieu: the back-room antidemocratic negotiations for the TransPacific Partnership, the criminalization of immigration, the war on drugs, the militarization of schools, and so forth.
We heard from several local activists who are concentrating on various of these facets.
We also discussed our own experiences as war tax resisters and various challenges we were encountering.
One woman talked of being targeted by an unusually zealous IRS agent who succeeded in attaching 50% of her social security (it is more typical for the IRS to seize 15% from recipients who have tax debts).
There was concern that some obscure language slipped into a recent farm bill might have eliminated the statute of limitations that has prevented the IRS from going after the tax debt of many war tax resisters when it has remained uncollected for ten years (the bill’s language is difficult to interpret, but in any case we haven’t seen evidence of any IRS policy change in this regard yet).
NWTRCC’s social media consultant Erica Weiland shows us how to spread the word about tax resistance using social media tools
We talked about the new challenges associated with Obamacare.
For example, those resisters who have been refusing to file tax returns as part of their resistance are thereby locked out of the insurance premium subsidy program and find it harder to participate in the insurance marketplace.
Also, those resisters who are married filing separately as a way of partially shielding their non-resisting spouses from the consequences of their resistance, are also finding that this locks out both spouses from the program.
One resister spoke of the difficulties he was having in finding an accountant or tax advisor who was capable of understanding the particular concerns and goals of a tax resisting client.
Peter Smith gave us an update on the newly-revitalized War Tax Resisters Penalty Fund, which just completed its first appeal, which achieved a 79% reimbursement of penalties and interest for three resisters in one month.
The new policy of the Fund puts a one-month deadline on appeal responses, but carries over any unreimbursed amount to the following appeal, so resisters who apply to the fund for reimbursement of penalties and interest can expect to eventually have the full amount reimbursed.
We also talked about a number of NWTRCC-internal projects: a report from our strategy and message retooling subcommittees, a look at a new crowdfunding project that the fundraising team will be pursuing shortly, and a new initiative to make sure our group is better-represented at conferences and gatherings of allied organizations and movements.
Counseling Notes, including an early warning on those transportation bill provisions, news that the IRS will no longer levy SSA disability insurance benefits, notes on what happens when the IRS disputes the numbers on your W-4 form, and what happens when the IRS sends a notice to an address you no longer live at.
