Councilman
DP Veteran
- Joined
- Apr 25, 2009
- Messages
- 4,454
- Reaction score
- 1,657
- Location
- Riverside, County, CA.
- Gender
- Male
- Political Leaning
- Conservative
Chicago and Cook County residents aren’t the only ones about to get shocking tax news; the city is debuting a “tax whistle-blower” plan that could turn neighbor against neighbor in Chicago’s business community.
The folks at city hall will pay cash bounties to informants who turn in business tax cheats around the city. The reward would amount to some sort of percentage of the tax money that the city recovers.
"It's just another way of bringing people into compliance," Revenue Department spokesman Ed Walsh told the Sun-Times.
I don't understand all the outrage over this. It provides people with an incentive to report crimes. Are you similarly outraged at the organizations that provide rewards for people who turn in copkillers?
There are actual laws against killing people. There are no laws for paying taxes.
There are actual laws against killing people. There are no laws for paying taxes.
You're saying that there are no laws requiring businesses to pay taxes?
All they can do is audit you. Then you say, "oops, my bad, thougt I could deduct that".
There are laws saying that you have to pay taxes, but no laws saying that you can't play the system and pay as little taxes as possible. There's no law against cheating, only laws against outright evasion. Even those laws are weak, look at the Secretary of Treasury.
This will be short lived. There are going to be more lawsuits come out of this than you can shake a stick at. The extra revenue that the government gets will not be enough to pay for the lawsuits they get slapped with.
All they can do is audit you. Then you say, "oops, my bad, thougt I could deduct that"
I would think they're more after people who don't pay tax at all rather than those making up questionable deductions. From the article "It would probably be ... a business knowing that a competitor is not remitting a tax." So for example a business collecting sales tax and not sending it in. Perhaps by not reporting all of their sales, etc...
As far as the cost being more than their gains - collecting tax is nothing new to the IRS or the states. The concept of cost/benefit is not lost upon them. They're clearly not going to conduct massive audits of everyone reported through this program. Rather, they would focus their efforts where they expect the greatest payout. This just helps them identify that easier.
And, at the end of the day, all they're going to do is an audit. That's all.
Depending on the kind of business, the monthly tax reports are going to be made. You can't really cheat on sales tax, unless you make cash sales that aren't registered anywhere.
You can't cheat on payroll taxes, either, trust me, I've tried. It can't be done.
Therein lies the problem. Are we going to go after businesses, purely on the say-so of another person? Audits cost money. They cost the government money and they cost the citizens money. What will we create, when Joe the Grocer is fingered by who-the-hell-ever as a tax cheat, gets audited and is found to have perfect taxes? The government spent money for nothing and Joe the Grocer was forced to spend money for nothing, on the word of who-the-hell-ever.
At the end of the day, Joe has a nice, fat, juicy lawsuit against the government and the clown that invaded his privacy and wrongfully accused him of tax evasion; again, costing more money.
You can create labels to describe the distinctions all you want, but the fact remains that there are tax practices that are acceptable (i.e. legal) and those that are not (i.e. illegal). If someone is paying his employees under the table, that's obviously illegal. If someone is operating a cash business and underreporting their sales, that's obviously illegal.
I'm curious as to what you're basing this on - how exactly would it "create lawsuits" other than your general feeling that this is bad and that all bad things lead to lawsuits? Who would be suing who? On what grounds?
And if your story is obviously not believable, such as if you're paying people under the table or underreporting sales by $300k, then nobody will believe you and you will go to jail.
You seem to be under the impression that the purpose of this law is to get people to rat out their neighbors for taking a questionable $300 home office deduction. It's not.
You know that tax evasion is a criminal act, right? It's not "just an audit."
Yes, that's exactly how you cheat on the sales tax. You say this as if it's uncommon, when in reality it's how the vast majority of cash businesses that cheat on their taxes manage to do so.
Did you ever think of paying your employees under the table? That's a quick and easy way to cheat on payroll taxes.
Again, you seem to be assuming that the government will begin a massive investigation into someone based only on an anonymous tip. I think the program is a bit more nuanced than that.
And you're basing this on...?
And, if he gets audited, he'll have to account for that money. If he didn't do a good job of hiding it, then he's going to simply pay the amount, plus penalties and interest.
And, you know what? Then, the IRS is coming for the employee. So, this sorta thing must be thought through very carefully, because it might end up hurting all the wrong people.
Ultiamtely, what's, "illegal", and what the IRS can prove, are two different things.
Unless I blabbed to the whole world that that I outright cheated on my taxes, how would someone know? Think about it.
Look at the above post, when I talk about Joe the Grocer. Oh yeah, I can just see lawsuits popping up for unjustifiable audits.
Audits are just like criminal charges, you can't do them without some kind of probable cause.
You won't go to jail. Growup! They'll just make you pay the money you owe them, plus interest and penalties.
You know that they have to prove tax evasion, right?
No ****! And, if there's no paper trail on the jack, guess what?
I never figured out where to hide the money.
It's called, "invasion of privacy". If you and your accountant are the only ones that see your books, then someone illegally snooped into your ****.
It's unethical for an accountant to rat out a client.
Good point, nobody ever goes to jail for tax fraud.
If a business owner is underreporting his sales, why would they go after the employees?
Of course. The problem is that you seem to think they're mutually exclusive.
"Unless I blabbed to the whole world that I [committed X crime], how would someone know? Think about it." - Famous last words of innumerable prisoners who were convinced that they were smarter than they actually were.
Use common sense - you don't think that anyone else could possibly find out that someone was paying his employees under the table or was cooking the books?
I don't doubt that you can, but that's because you don't really understand the law and just assume that whenever anything bad happens, you can sue.
I just don't know what to say to this. There are approximately 3,000 prosecutions brought each year for federal tax evasion. That doesn't count the thousands more that brought in state court. Furthermore, the point of this push is not just to put people in jail - it's to deter others from underreporting.
Then they don't bring charges. If there is, then they do. What's your point?
The point is, without probable cause, they can't do ****.
-Employee who handled the books and saw the underreporting
Ok, you got one.
-Employee who was getting paid under the table
An employee is going to admit to tax evasion on his part. Hmmmm!
-Disgruntled spouse who came across the books
Ok, two. Been there, done that.
-Competitor who found out from former employee that you were paying under the table
At which time, the competitor goes to prison for industrial espionage. A felony, by the way.
It's also unethical for an accountant to help you violate tax law. If they're willing to be unethical in that way to get your $2k payment each year, why would you think they'd hesitate to be unethical in this way to get 1/3 of your $500k in unreported sales taxx?
You're exactly right. That's why you only tell your accountant what they need to know. If an accountant ratted out a client, that accountant would not only lose his license, but his testimony in any court hearing would be inadmissable. It's the same style of ethics that prevents a lawyer from testifying against his client.
All they can do is audit you. Then you say, "oops, my bad, thougt I could deduct that".
An employee is going to admit to tax evasion on his part. Hmmmm!
You're exactly right. That's why you only tell your accountant what they need to know. If an accountant ratted out a client, that accountant would not only lose his license, but his testimony in any court hearing would be inadmissable. It's the same style of ethics that prevents a lawyer from testifying against his client.
Well, now you're talking about fraud. Big difference between fraud, evasion and cheating.
Leave the auditing and accounting to those with the knowledge. There's a sliding scale of certainty when it comes to deductions. If you take a large number of frivolous claims, you can be prosecuted for tax evasion. Furthermore, your accountant can be fined between 50% and 100% of the entire return amount. There are some real teeth behind the legislation regarding such deductions that has come out in the past five years.
Ignorance is no excuse in an audit.
This is patently false and you really outta stop talking about this subject. There is no such thing as an accountant-client relationship that prohibits the same actions as a lawyer-client relationship.
You are ignoring that accountants regularly get subpoenaed to testify. An accountant would lose their license for pushing illegal tax shelters and knowingly helping a client evade taxes. In fact, Circular 230 along with several other pieces of legislation and ethical guidelines requires an accountant to inform authorities of illegal actions by your client that your client refuses to cease. Auditors are legally required to inform the SEC of illegal actions that the board of directors will not fix. The law makes it mandatory to rat out a client that does not change their actions.
Not at all. Reporting that you made only X dollars on your return when you know you made Y is fraud. It is also tax evasion. Avoidance however, is another issue. Evasion and fraud are fundamentally the same thing.
That'll only happen when the frivilous deductions run into the millions.
At which time, you write a check for the difference and go on about your business. Been there, done that. Twice!
I'll say it again, the IRS knows that they'll never see their money, if they put you in jail.
But, again, it all boils down to what they can prove. They can't gig with assumptions.
I wrote off a ****ing shotgun one time and got away with it in an audit. If I can do that, I can do damn near anything.
Well, now you're talking about fraud. Big difference between fraud, evasion and cheating.
I didn't say anything about underreporting sales. I was referring to paying employees under the table. If the employer is paying his employees under the table, then the employees owe the government income taxes.
The burden of proof is on the IRS.
I understand that IRS audits are held to the same search and seizure laws as anything else. Like I said, the Constitution doesn't cease to apply, just because we're dealing with the IRS.
Compared to how many millions of tax payers?? Do you know that I have a greater chance of being wrongfully convicted of murder than being convicted of tax evasion?
The point is, without probable cause, they can't do ****.
An employee is going to admit to tax evasion on his part. Hmmmm!
At which time, the competitor goes to prison for industrial espionage. A felony, by the way.
You're exactly right. That's why you only tell your accountant what they need to know. If an accountant ratted out a client, that accountant would not only lose his license, but his testimony in any court hearing would be inadmissable. It's the same style of ethics that prevents a lawyer from testifying against his client.
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