So the taxpayer wants a tax refund. He calls an IRS agent, who says she will look into it and call back. Impatient taxpayer calls the agent back five times and tells her she is being uncooperative, finally telling her to “put her money where her mouth is.” Taxpayer several days later sends the agent a letter telling her that she could issue the tax refund, but chooses not to, and demands the IRS submit some documents. The IRS schedules a meeting, and the taxpayer insists on the refund now. The taxpayer attempts to put a lien on the agent’s property for the balance due.
Naturally the taxpayer finds this doesn’t work, and gets hit with all sorts of penalties for this, right? No, the taxpayer gets off scot-free. Can you believe it?
Oops, I misspoke. I got the names backwards. The IRS was doing this to the taxpayer, and the courts this week refused to impose penalties on the agency for hounding a 71-year-old lady for back taxes on a failed like-kind exchange.
Sauce for the goose really ought to be sauce for the gander. The IRS has a lot more resources and a lot more ability to follow the law than the average taxpayer. Yet while the IRS and the courts routinely slap penalties on inadvertent or naive violations of a complex tax law, the courts rarely hold the powerful IRS to the same standards, and it almost never penalizes the agents for misbehavior towards taxpayers.
Stephen Olsen, IRS Not Liftin the Penalties — Fed Circuit Denies Taxpayer’s Reasonable Cause Argument (Procedurally Taxing) The courts stack the deck against the taxpayer a little more.
Don Boudreaux, “Damn! My Neighbor Swallowed Cyanide. I Guess I Gotta Swallow Cyanide, Too.” He’s talking about the crony subsidy Export-Import Bank, but his apt argument applies just as well to state “economic development” tax credits:
Subsidies and other economic privileges weaken the domestic economy. They do so because, in order to artificially bolster industries that excel at satisfying politicians, such privileges necessarily transfer resources away from industries that excel at satisfying consumers. Because Mr Summers (like nearly all economists) apparently accepts this sound argument, he especially should see that subsidies are not the economic equivalent of armaments: an armaments build-up does indeed strengthen the country militarily; subsidies, in contrast, weaken the country economically.
So when foreign governments subsidize industries (for example, through export credits of the sort doled out by the Ex-Im Bank), they themselves weaken their own countries’ economies relative to economies whose governments dispense no subsidies or other special privileges.
Taxing your existing taxpayers to lure and fund their competitors is a bad idea, even if Illinois is doing it too.
Jason Dinesen, ROBS Transactions – Be Very Careful of Using Retirement Funds to Start a Business. Jason discusses the unwisdom of having your IRA invest in your business. It can be a catastrophically expensive source of capital.
William Perez, Wage and Salary Income. How it’s taxed.
Kay Bell, Pot shop seeks Tax Court relief from cash tax payment penalty. You have to remit your taxes electronically. We won’t let you have a bank account to transmit it from. Understand?
Jim Maule’s Tax Myth series continues with “The IRS Gave Me a Refund.” ” I suppose that those who are concerned that the federal government or a state government might run out of money before the refund is paid are overjoyed when the refund arrives, but as a realistic, practical matter, simply getting one’s money back isn’t a joyous occasion.”
Robert W. Wood, Five Stages Of Grief, IRS Version. I see clients go through all five stages every April.
Kyle Pomerleau, Bonus Depreciation is a Bonus, but Full Expensing is Ideal (Tax Policy Blog) “An Ideal tax code would allow the full $100 cost of the oven to be deducted in the year in which it was purchased.”
Howard Gleckman, New TPC Analysis: What Dave Camp’s Tax Reform Plan Would Really Mean (TaxVox)
Kelly Davis, Tax Policy and the Race for the Governor’s Mansion: Kansas Edition (Tax Justice Blog). “This Kansas gubernatorial election is shaping up to be a referendum on Governor Sam Brownback’s tax cuts and supply-side economics generally.”
Jeremy Scott, Could EU Probe Signal the End of Sweetheart Tax Deals? (Tax Analysts Blog) “U.S. tax rules are clearly complicit in multinationals’ ability to lower their tax burden, but the European Union is now examining whether its member states are inappropriately aiding some companies through so-called sweetheart transfer pricing arrangements.”
Accounting Today has your Tax Fraud Blotter.
TaxProf, The IRS Scandal, Day 426
News from the Profession: Consultant Shares Secrets For Milking the Most Out of CPA Firm Staff (Adrienne Gonzalez, Going Concern).