How you can resist funding the government → other tax resistance strategies → tax evasion / fraud → government evasion of its own taxes

Among the entities who aren’t paying the taxes the federal government says they owe to the federal government is… wait for it… the federal government.

“As of ,” according to TIGTA, “Federal Government entities owed approximately $45 million in delinquent employment taxes” (you can add to that another $254 million that state and local governments are neglecting to kick back to Washington).

The report adds: “It is critical to the image of the United States that Federal Government entities be held to the same standards as private employers.” However:

IRS policy prohibits the use of enforcement actions, such as the filing of liens or levies, against Federal entities. Thus, the ability of the IRS to enforce collection of delinquent taxes from Federal Government entities is limited.

And so it should not surprise you that somehow the “pay what the IRS says we owe” item keeps getting left out of these federal government agencies’ budgets (or, as the report puts it, “in general, Federal Government agencies cannot use current funding to satisfy debts properly chargeable to a prior year”):

[In o]ur review… 99 entities owing $5.8 million had been assigned for resolution for more than 1 year. More than $1 million of the $5.8 million related to tax years and earlier. As discussed previously, as of , 143 Federal Government entities still had not filed 750 required tax returns. Further, 466 (62 percent) of the 750 unfiled returns related to tax periods at least 3 years old. The continued existence of significantly aged delinquent Federal Government entity accounts, despite the IRS’ [sic] repeated attempts to secure repayment, raises the possibility that these entities may simply not have the funding available to satisfy these delinquencies.

The report recommends that “The Director, Collection, SB/SE Division, should continue ongoing efforts to develop a process for resolving aged delinquent Federal Government entity accounts.” When a recommendation includes a phrase like “should continue ongoing efforts to develop a process for resolving” you know it’s doomed.

As I mentioned a few days back, the IRS is eager to manufacture a public consensus that taxpaying is honorable and good and noble and, above all, normal. The most efficient way to enforce the tax laws is to create a compliance culture in which the citizens police themselves. But if people see their neighbors getting away with not paying their share, or perceive that people in high places are getting away with tax dodging, they’re much more likely to say “to hell with it!” A majority of Americans believe most members of Congress don’t pay all their taxes.

In other news: A new TIGTA report says that in tax year , the IRS issued $43.7 billion dollars via the Earned Income Tax Credit. $10–$12 billion of this was in error. That’s about 25%. The tax system is a mess.

Some bits and pieces from here and there:

  • The Los Angeles Times takes a look at tax troubles in Greece. People there feel like they’re being taxed more and more, while the government offers them less and less in return. Meanwhile the authorities are tying to crack down on tax evasion while at the same time cutting the salaries and benefits of the employees in the tax bureau, who respond with protests and strikes. An attempt to arrest a suspected sales tax evader in Hydra turned into a riot as hundreds of sympathizers surrounded the police station and cut off its power and water.
  • According to the Treasury Inspector General for Tax Administration, “As of , 70 Federal agencies with 126 delinquent tax accounts owed approximately $14 million in unpaid [federal] taxes. In addition, 18 Federal agencies had not filed or were delinquent in filing 39 employment tax returns.”

And, from the wayback machine:

Refuse To Pay Tax

Allahabad, India, —(CP)— Moslem leaguers refused today to pay a punitive tax of 10,000 rupees ($3,000) saying they did so on the orders of the league high command. The tax is imposed by the United Provinces government on Moslem residents for communal rioting.

In other news…

  • A writer at the Episcopal Peace Fellowship site recently shared her thoughts after attending a war tax resistance workshop in Rochester, New York. Excerpt:

    I had the opportunity to meet with folks who have been war tax resisters since WW2 and with folks just turning the idea over in their minds. It was a powerful experience for me. I have never understood the depth of calling that moves folks to civil disobedience. In Ithaca, I am surrounded by folks that have protested for years, many have been arrested for their beliefs and some have served time for civil disobedience. This weekend I saw with an open heart and with new eyes.

  • The Boston Globe has a good article on the epidemic of identity theft and how lucrative the IRS makes it for the thieves. Excerpts:

    All told, in just , 1.6 million taxpayers were affected by identity theft, compared with 271,000 for , according to a recent audit by the Treasury Department’s inspector general. While the IRS said it discovered many of the incidents, the cumulative thefts have resulted in billions of dollars in potentially fraudulent refunds, according to an array of government reports.

    “I’ve had a police chief tell me ‘street crime is down because everybody is now filing false IRS returns,’ ” IRS Commissioner John Koskinen, who took office last month, said in an interview.

    While Koskinen stressed that the IRS uses a series of “filters” that are increasingly successful in catching identity thefts before refunds are paid, he acknowledged that “this problem has exploded” and that the agency is in a constant race to keep its detection techniques a step ahead of the thieves. “It is,” he said, “a little like ‘Whac-a-Mole,’ knock them down here and they come up over there.”

    “We have seen drug dealers go into this because it is easy access to money. Gangs go into this because it is easy access to money. Or at least they perceive it that way,” [U.S. Assistant Attorney General for the tax division Kathryn] Keneally said, while adding: “Please, if you quote me on saying ‘It is easy access to money,’ include: ‘We are changing that equation and we are adding risk to that.’ ”

  • To your typical amateur, the tax law can often seem like it was designed to entrap the unwary. You take some common sense step, or think you’re following the law, only to find that some obscure provision somewhere unexpected ensnares you in some subordinate clause’s cross-reference to an unfamiliar acronym. So it’s hard not to react with a hearty har-har when you hear that when the IRS itself was audited, by the Treasury Inspector General for Tax Administration, the auditor found that for 39% of the money the agency paid out to its employees as relocation reimbursement it failed to record that money as taxable income as the law requires. The IRS executives who qualified for the reimbursements thought of them, naturally, as a tax-free perk — but that’s not how the law treats them.