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Monday, August 4, 2014

Real IRS Scandal Overlooked

Real IRS Scandal Overlooked
For those who did not know, I was a government auditor for 16 years. In that time, the single biggest argument, not disagreement but a real argument, I had with the bureaucracy to invalidate the tax laws was the haphazard manner in which they were applied. To me, tax laws must be applied equitably or they are completely invalid for any republic to maintain its' status.
Today, most every American is aware of the Internal Revenue Service 'scandal' involving targeting of specific Administration-opposed groups. The mass media has been all over this story like bees on sugar water. But there is a larger, more insidious scandal in the agency that receives little or no attention. This scandal involves the letter of the law being applied to those the agency doesn't care for while those that have its blessings are apparently still exempt from assessment.
Enter Defense Department contractors for part one of the scandal. Early last week a Washington Post story emerged about defense workers with national security clearances owing millions in unpaid taxes. The Defense Department was in error in granting more than 3 in 10 of these contractors security clearance as they already had tax bills outstanding when the clearances were granted but the IRS only enhanced the problem.
Some 80,000 workers/contractors at Defense owe a collective $730 million in back taxes. That's more than $9,000 per entity. The Post story noted Justice is all over this one claiming USIS located in Virginia "dumped" 665,000 applications without doing the diligence required in background checks. That's the pot calling the kettle. Justice has its own scandals that are unaddressed but it is sufficient to note entities on the public payroll in Defense are tax dodgers and apparently are not being assessed against their paychecks or benefits taxpayers are providing.
Let's go to Part Two. This one, surprise, surprise! occurs with entities that have working agreements with. . .the IRS!!!
As bad as Part One was, this one is even more shocking. Only 1,168 entities are involved here (as of July 2012) but collectively they had an outstanding tax debt balance of $589 million. That figures out to an average of more than $504,000 per entity. It should be noted 50 of those were making payments to the IRS.
Would it be a stunner to learn that most of those entities are in the financial sector? Would it be surprising to learn the IRS routinely uses these services and pays for them but claims it can do "nothing" to remedy the situation as to obtain information to assess individual taxpayers or companies the agency must pay these delinquent entities to provide requested information?
Uh, Mr. John Koskinen (IRS Director) would it subject me to an audit to ask an obvious question here? If you have the names of those who owe back taxes and must deal with them, why not garnish the due amount to be applied against back taxes like any ordinary citizen would have done to their income?
The report noted "only" 863 of the delinquent contractors fell into this sector. The law does allow the IRS to withhold payments to any entity that owes back taxes but, in this case, the law is being disregarded. Why?
Part Three is where the rubber meets the road. The Treasury Department has seized $75 million for debts that have been delinquent for more than 10 years, including withholding money from people who did not incur the debt but had an unpaid debt incurred by a family member.  Over the past three years the government has collected $174 million in this manner. The move is allowed because of a clause included in the federal farm bill!!!
As an extra thought, how many of the dunderheads we elect who "don't read the bill" even knew this clause was hidden in a farm bill?
But here's the traction point. The $174 million has been collected from 400,000 otherwise respectable taxpayers. That figures out to a massive $435 per taxpayer.
Now the government spends the time and effort to track down and assess people who may have collected an extra Social Security benefit or two while they were children but they can't do one thing to collect the $1.32 BILLION from entities still collecting paychecks from the government? It is this kind of stupidity that has us more than $17 trillion in acknowledged debt. 
That's where my argument from over three decades past comes in. Then it was an major oil company who had a mistake that should have cost it $1.3 million in additional taxes for an expense mistake. The oil company sent a corporate attorney to argue its case and the exalted Commission who reviewed the case stated in its report "While we find the Examiner was correct in interpreting the statutes in order to get the assessment, IN THIS CASE (emphasis added) we will drop the item from the assessment due to a misunderstanding of the tax code as written and applied."
Just three short months later, because of this ruling, the same decision had to be made on a Mom-and-Pop business in a scrub oil field. The amount was just under $500 but Mom-and-Pop had to pay. They didn't have a fancy lawyer on staff and to hire one would have cost them more than the assessment, so they got stuck with a bill the big boy didn't for the same exact item.
So I made a field decision to follow the Honorable Commission's decision in the first case and not apply it in the second case though I note my action and the reason for it in the audit report. I was severely reprimanded for this awful transgression of "altering the law."
Things haven't changed for the better but have gotten worse and that's the real scandal in the tax arena. Political favors are considered and the code is bent to suit. Political consequences are considered and the code is bent to suit. The average "nobodies" pay in full for paltry sums that cost more to chase and collect than they are worth while those are on inside get away without paying taxes at all or to a greatly reduced amount.
Lois Lerner is not the scandal but a symptom. Targeting non-traditional 501(c)3's is not the scandal but a symptom. The fact our government has a tax-collecting agency that is totally politicized when it should be the blindest of all judges, is the scandal.
Isn't funny how the news media was all over about Lois Lerner's indiscretions but the committees holding the hearings on Capitol Hill have missed this one?
I'll make a lethal charge here. It is not funny, the news media has abrogated the rights of a 'free press'. It is not funny but a reflection of the depravity that passes for "Honorable" in this country today. And you, Mr. or Ms. Taxpayer, are the ones too far removed from the cesspool that is the District of Corruption to matter. Forget Right or Wrong, just pass me your wallet and your government will take what it feels is your "fair" share.
"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson

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