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To Fight $5.2B In Identity Theft, IRS May Need To Change the Way You File Taxes
coondoggie writes: Based on preliminary analysis, the Internal Revenue Service (IRS) estimates it paid $5.2 billion in fraudulent identity theft refunds in filing season 2013 while preventing an additional $24.2 billion (based on what it could detect). As a result, the IRS needs to implement changes (PDF) in a system that apparently can't begin verifying refund information until July, months after the tax deadline. Such changes could impact legitimate taxpayers by delaying refunds, extending tax season and likely adding costs to the IRS.
Let's fix the corporate tax evasion first please.
Some people die at 25 and aren't buried until 75. -Benjamin Franklin
Sorry, it's going to be a long time before anyone believes anything the IRS says again.
Get rid of the IRS and the fraud in one fell swoop.
How about we simplify taxes so there's no need to issue refunds in the first place?
In exchange for bringing all deployed troops home, closing all foreign bases, ending all foreign aid, and ceasing all foreign military contracts. It costs about $1 trillion in annual lost revenue in exchange for saving about $1 trillion in annual expenses.
Or is inversion simply legal evasion?
End income tax.
No more tax returns. Only tax based on use (i.e. Sales Tax) Problem solved in one fell swoop.
Tax evasions now impossible and you encourage people to invest rather than spend.
Oh wait, that's right, we have an entire industry run by blood sucking vampires that need the current system to remain as confusing as possible.
I love how people actually think corporations pay taxes. Corporations write the check, yes, but pay taxes no. They either:
1) Raise their prices
2) Pass costs to their employees (less employees, less raises, less benefits,etc)
3) Reduce margins
4) Cut costs
#3 is last resort and many times not an option in tight margin markets
Corporate taxes are an indirect tax on everyone else
We don't need more rules, more laws, more agents (that cost a shit ton of money at work and in retirement), more jails.
Just banish most taxes, simplify the system to a low rate transaction tax, don't deal with deductions or deciding which charities or legit or not (tax would be too low to matter in individual cases), stop caring if business are on shore or offshore or if couples are married:
http://www.apttax.com/
Of course, by nature, bureacracy always has to build itself up, never deconstruct itself, so don't expect to see it short of in the face of a revolution.
The near perfect reason to have a flat percentage of income based tax with no deductions.
Instead of expanding the IRS we could nearly dismantle it, the only part of the IRS that would
be needed is the section that collects the payroll deductions.
No refunds so there is no refund fraud.
10% flat rate on net income for everybody, no matter how big or small you are. No deductions of any kind whatsoever either.
If 10% is good enough for God (tithes), it's good enough for the government too.
Make 3 tax brackets for personal and corporate taxes: 0%, 10%, 20%
Remove all deductions, all loop holes, etc.
Balance government budget to meet short-term revenue losses. (Across the board, same rate decrease for everyone)
While this sounds reasonable, it'll never happen without term limits. Stop voting for the same people over and over again!!!
10% across the board. Corperate,personal,investments, etc. no loopholes, no deductions, no exemptions. A fair tax. Something the rich utterly hate.
Do not look at laser with remaining good eye.
A slow system that might harm legitimate users? They're implementing DRM!
Feel free to mark this OT, it is. I'm just surprised by the mods on this thread. My comment was not meant to be offensive or trolling.
As an American, I find corporate tax evasion much more important ($337 billion a year).
Other comments further down are also modded very strangely, with people at -1 for saying the same exact thing as people with +3, +4, +5.
Some people die at 25 and aren't buried until 75. -Benjamin Franklin
The current IRS regulations effectively require people to overpay their income taxes, which results in nearly everyone getting a refund, which they want processed quickly, because somehow it's okay if the government is holding money you didn't actually owe, until you actually know how much they're holding. If, on the other hand, people have to mail in a check they don't care if it takes the IRS a few months to verify everything.
Simple solution: Eliminate the regulations that require overpayment, such as the regulation that penalizes you for underpaying if your withholdings are inadequate to cover your liabilities and aren't at lease as large as the prior year's withholdings. Some, perhaps many, people will still choose to overpay, as a sort of brain-dead savings plan, but many will reduce their withholdings, and those that still overpay will have no basis for complaint about a slower refund, since it was their choice.
But, then, I think the whole concept of mandatory withholdings is evil and wrong. It's just one of many ways that taxpayers are misled about how much they're paying. It's not the worst of such deceptions, but it's a significant one.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
We wouldn't have this problem if we filed our taxes online. Turbotax has prevented that, because they want to charge us for doing what the government could do free, as it does in less corrupt countries.
We've discussed this on Slashdot before. It's like keeping marijuana illegal because the prison guards' unions want to keep their jobs.
http://www.slate.com/blogs/mon...
The Sleazy PR Campaign to Prevent the IRS From Making Your Taxes Simpler
By Jordan Weissmann
Slate
April 14 2014 3:41 PM
Theoretically, it should be far easier for Americans with simple finances to file their tax returns. Instead of making tax filers putz around W-2s and tax prep software, the IRS could electronically prepopulate their paperwork with the information it already receives from banks and employers, and tell filers how much they owe. If the final figure looked about right, you’d have the option to file. As Matt Yglesias wrote here last year, the whole process could be a five-minute snap.
Theoretically. But for years now, Intuit, the maker of TurboTax, has fought tooth and nail to prevent automatic tax filing from becoming a reality, lobbying against bipartisan legislation to introduce it with the help of a powerful tech industry trade group and conservative anti-taxers like Grover Norquist. Intuit and its competitors in online tax prep don’t want the government cutting its market share. The tax-crusaders want to ensure that paying the government remains as much of a painful, resentment-generating slog as ever. And thus a potent alliance has been born.
http://www.propublica.org/arti...
How the Maker of TurboTax Fought Free, Simple Tax Filing
by Liz Day
ProPublica, March 26, 2013, 5 a.m.
So why hasn't it become a reality?
Well, for one thing, it doesn't help that it's been opposed for years by the company behind the most popular consumer tax software — Intuit, maker of TurboTax. Conservative tax activist Grover Norquist and an influential computer industry group also have fought return-free filing.
Intuit has spent about $11.5 million on federal lobbying in the past five years — more than Apple or Amazon. Although the lobbying spans a range of issues, Intuit's disclosures pointedly note that the company "opposes IRS government tax preparation."
The disclosures show that Intuit as recently as 2011 lobbied on two bills, both of which died, that would have allowed many taxpayers to file pre-filled returns for free. The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which includes the IRS, from initiating return-free filing.
Intuit argues that allowing the IRS to act as a tax preparer could result in taxpayers paying more money. It is also a member of the Computer & Communications Industry Association (CCIA), which sponsors a "STOP IRS TAKEOVER" campaign and a website calling return-free filing a "massive expansion of the U.S. government through a big government program."
Sounds good to me. If people want their money sooner, they should adjust their withholding.
I use TurboTax. I have for the last 10+ years.
I went to file my taxes this year. When I tried to e-file, the site hiccuped, and I tried to submit again. Then the site told me that I had already e-filed for this year, and could not submit a filing again. I thought at first maybe it went through the first time, but I logged out and logged in and it was showing my current filing as still unfiled.
I contacted TurboTax support. They informed me that someone had gained access to my account, and filed a return for me already, several days prior. I looked around in my TurboTax account, and could not find any evidence that it had been used to submit a filing this year.
I made extensive further inquiries, and eventually got the real story. Someone had stolen my ID and used it to create a new account with Turbo Tax. They never gained access to my real account. Turbo Tax just didn't block creation of a new account with my credentials.
I gave a talk about my experiences at Notacon 11 a few weeks after it happened.
https://www.youtube.com/watch?...
In the 1930's, the idea that a 9-digit ID number could remain a secret forever might have been plausible, but today it's quaintly broken. IRS absolutely does need to address this issue. The damage it does to individuals can be great. Institutions protect themselves and mitigating threats are a part of the cost of doing business for them, but for the individual victims who are affected by this, it can be a great inconvenience or even a life altering incident.
End the income tax and don't replace it with a sales tax. The US should revert back to the original taxing powers it had when the constitution was executed, and that is to tax the member states proportional to the population of that state. Then leave it up to each state to determine how to raise the revenue to pay the US. While we're at it abolish the 17th amendment, which allows the election of Senators and have them represent the state, or if people really can't get over that they aren't electing them, make it where they have to directly follow the edicts of the state legislatures. That restore the states to having the power to restrict the control of the US government over them.
They already have a simple and low cost solution for this problem. In fact it is currently being used for those that have had their tax refunds taken. All they have to do is mail a letter with a five digit pin code on it that links to your SSN. Different pin each year. Two factor authentication so simple anyone can do it with or without a computer. Don't complain about the cost of the mailing, because the big tax booklets were being mailed out for years and they just stopped that a few years ago due to the popularity of e-filing.
This problem with national systems being overly exploitable will only go away when every citizen of the United States has a unique ID that's impossible to fake.
This is sound reasoning and I'm inclined to agree.
Except if you actually pay attention to the tax code, it's already OK to underpay under normal circumstances:
1) Your underpayment is less then $1000
2) Your underpayment is greater than $1000 but your Adjusted Gross Income for the current year is greater than your AGI for the previous year.
If your underpayment exceeds either of these, then yes, you have to pay a penalty based on the amount and duration of your underpayment, to the tune of 5% interest. 5% interest. No questions asked, no loan application... it's the best deal in lending you can get for small to modest sums of money.
This was struck down by a court decision about a hundred years ago, but that should be overturned: allow the Federal government to tax all taxing bodies under its jurisdiction. Want to incorporate a city and tax the people? Fine, pay a percentage of revenues. A taxing body would by definition keep good records of its tax revenues - so who better to tax? Little states and cities etc can do all kinds of tax arrangements, but would have to pay a percentage of that income to the Federal government who defends them and backs their charter. Then income tax could be repealed.
The IRS is a Treasonous organization only 100 years old, created and ran by the international banking cartel. It was created along with the treasonous federal reserve in order to enslave Americans to these international banking/global government interests.
The IRS was not the original way the founding fathers intended taxes to be levied. It was created without the best interest of the American people in mind.
And with the $500,000,000.00 the treasonous united states senate and congress just passed to Arm Syrian "rebels" against the "terrorists" the united states itself created. Again, taxes being used against the will of the people, taxation without representation. The terrorist propaganda videos that were the "reason" we are going into syria were completed fakes and disproven by many experts.
Now congress is taking a 7 week vacation? American people wake up, the revolution will be televised.
..and really all of the "simple" solutions. It seems like a good idea - just don't spend that $1 Trillion and we can drop our taxes by $1 Trilllion. Except that economies don't really work that way. You can't add or subtract a trillion dollars like that and expect things not to spiral out of control.
Remember the recession that freaked out the entire world? Remember the job losses, the stagnation of the economy, and the general feeling that the world would end? We lost 8.8 million jobs, most of them paying $14-21/hr (if wikipedia is to be believed). Do you know how many jobs $1 Trillion dollars pays for? About 18 Million - more than double what was lost in the great recession.
"But wait," I hear you cry, "that trillion dollars would still be spent by the people who wouldn't have been taxed!" Oh, that's partially true. Understand that 40% of that money would go to multi-millionaires who's purchasing habits generally are not affected by their income. The other 60% probably would be spent, but that 60% would be spent on goods and services in an economy which has almost zero overlap with the manpower which would be idled by the drop of $1T in defense spending. Those are soldiers, intelligence report creators, bomb makers - not really things you purchase in your every day life. And because you can't train and re-purpose people fast enough to build the TVs and tablets and cars and hotel staff to pick up the increase in demand, the prices for all those products would increase. And because of the numbers, dropping the US income tax would result in a net increase in take home pay of about 4%-5% for most people in the middle class (Say, $60-80,000 annual household income) or about $50 a week.
So you're magical tax-free utopia would end up with 18 Million people out of work and without the skills needed to change jobs, inflation in the disposable goods and discretionary services market, and a net effect of $50 a week in the pockets of the people who still have jobs.
Is it just my observation, or are there way too many stupid people in the world?
We need even bigger plutocrats like a hole in the head. They already bought most the law makers; go for all?
Table-ized A.I.
Total federal income taxes are about 1,000 billion per year
Therefore, the estimated ID theft is in the range of 0.5% (error in that estimate is large)
Class assignment:
1) is 0.5% significant ?
2) Compare this to the amount of money Presidential Candidate M Romney failed to pay on his income taxes
for this, you may consider underpriced illiquid assets placed in the magic bean IRA; failure to accurately list role as passive or active investor; writing off Rafalca as hobby loss (he didn't have a reasonable expectation of a profit, as rafalca is an old mare); and..there were a couple of others that I forget right now
Easy method - instead of taxing individuals, overcome the court case about a hundred years ago that banned the Federal government from taxing state and city etc governments. The sub governments get their tax authority and military protection from the Feds so it is only right the Feds should be able to tax all sub governing bodies (states, cities, etc). This would mean 100% accuracy as the sub bodies all live on tax revenue and good record keeping, would disincentive general tax abuses, and would leave crazy tax schemes up to cities and states where they can be viewed as the experiments they are. Then get rid of the Federal individual income tax and IRS as it would no longer be necessary.
The IRS could do a lot with a few simple checks:
It'll slow things down a bit when there's a problem, but it'll also let the effort be concentrated on returns with the highest chance of identity fraud.
And I mean, really. "Identity theft" is just a fancy new name for impersonating someone, and impersonation for the purposes of fraud is not new.
Corporations should handle 100% of tax liability. Stick with me here and I'll explain how it will be similar to what happens today. When income tax is withheld from your check what you have is the corporation paying it's money, that was set aside for wages, directly to the federal government. Except currently we have each individual do a separate tax form. Imagine there was only one tax form for the whole company. The company would still be paying it's money to the federal government instead of putting it in your paycheck except there wouldn't be this lie that it was ever owed to employees.
The result is a hyperbolic reduction in paperwork. Less paperwork, less burden on the IRS. Less overhead for the IRS would result in slightly lower taxes. Processing everything would be easier for everyone.
The amount of your take home salary could be the same but the corporation wouldn't have to lie about how much you were actually earning. There wouldn't be the silly tax bracket game for wage earners.
We could be honest about how much money it takes to run this country and we could be honest about who pays that burden.
Keep a stiff luxury tax for those who write their own paychecks.
Tax imports to encourage goods that are MADE IN THE USA. An extra tax could be applied to American companies that manufacture their goods overseas. This could lower the profit margin of outsourcing. That would create jobs and more tax money in America instead of paying the taxes of a foreign government.
Let's go back to feudalism!
Repeal the 16th Amendment (or just admit it was never legally ratified), reset the legal meaning of "income" from "money given in exchange for labor" back to "capital gains as a result of business profits," and BOOM!
Problem solved.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
This is just one more example of crime not only harming all of us but also an example of crime controlling the behavior of the innocent, What we have now is a situation in which people often feel entitled to commit crimes and then when caught expect some leniency and a chance to have a reasonably normal life. These types of people are well aware that they can commit many crimes before being caught for one crime. They also normally have no honest intention of not committing crimes as opportunities arise. So far nobody has come up with any reasonable way to deal with these people. My suggestion is that they be assigned to a minimum wage job working a full forty hour week long term or perhaps permanently. If they fail to remain employed at minimum wage then they spend jail time until assigned to the next employer. Jobs such as lawn maintenance or grave digging in a grave yard could be their life long assignment. A certain amount of humiliation accompanies the long term poverty that a minimum wage job assures. And it gives people like school teachers local examples of young people assigned to such jobs due to one crime committed.
Ok, the IRS says that they paid out $5 billion. And they _say_ that they avoided paying $24 billion. But is that truth? What's stopping them from lying?
Another name for corporate tax evasion is 'compliance'.
Engineer your taxes so you don't get refunds. I calculate my deductions so that I end up owing something under $1K to the feds and a couple hundred to the state. That way, I'm never inconvenienced by late refunds, and the bills are small enough so they're not a hardship to pay.
Overpaying your taxes is not a savings account; you don't get interest on your investment.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
As someone whom had their identify stolen and used to file a fraudulent tax return for 2013, I would suggest that the $5.2 billion paid in fraudulent returns might be used to tighten up the system.
Played very small part in the 2007 Financial Crisis, and I hope the FBI tackles this problem and goes after the perpetrators...
> The corporation has a profit margin or they would not be taxed.
FYI, that is factually false. Approximately half of all taxes on business re unrelated to profit, or margin. A few of the taxes I, as a small business person, pay each month or quarter:
Social Security and medicare ...)
Federal Unemployment tax
State unemployment tax
State training tax (in some states)
State workforce disability tax (in some states)
--Note all of the above are for hiring people. As the president has said, if you want people do less of something, put a tax on it.
Business personal property tax (Every year, I pay a tax for owning my 15 year old desk, my pens and pencils, my mouse pad
Franchise tax
Sales and use tax
Income taxes account for only 20% of tax revenue. 80% of the taxes paid are paid whether they bankrupt the business or not.
Call the IRS to report identity theft and they still tell you they're incapable of providing any information on people obviously using your SSN for illegal purposes due to the privacy rights of the criminal. Therefore, you are a slave to the system and the system should be destroyed and replaced in minimum favor of something that protects the law-abiding taxpayer first.
Repeal the 16th amendment and have the federal government bill the states on a population basis, leaving it up to each state as to how to cover their portion.
Oh no, the IRS paid 5.2 bil in fake monopoly bullshit Federal Reserve private bank notes, which are actually the SAME COLORS as their equivalent monopoly dollars now with the new bill designs, and so they want us to file differently?
Piss off, IRS.
If it takes the IRS six months to figure out last years refund, how is it even remotely possible they can provide any information to the ACA website for the purpose of determining subsidies?
It seems like about half the fraud could be stopped if the IRS just called the number on your last year's tax return and said someone just filed a tax return for you claiming a refund. Was that you? No? I guess we will do some investigation before cutting a check and sending it to a PO Box in the Cayman Islands. If the IRS was a company, they might at least try to stop the fraud because they would be losing their own money instead of the taxpayers.
(1) Our tax structure isn't going to change meaningfully anytime soon
(2) The IRS won't allow or enforce any sort of efile for everyone in the short-term
(3) The IRS does allow you to file Form 14039 which puts a flag on your account which will make it harder for someone to cheat you out of your refund because your account will go through extra checks (such as making sure that your address and other information hasn't changed from last year since most information breaches don't contain all of the information necessary to file your tax return) and will reject fraudulent looking returns
http://www.irs.gov/pub/irs-pdf...
(4) The IRS might decide to, upon filing form 14039 or if you have experienced a fraudulent return filed for you, a distinct PIN which is like a PIN for a credit freeze
Morale of the story if you're concerned about not getting your refund
-file form 8822 when you change address and notify your employees and other agencies which file forms on your behalf to have your current address so all filings point to the same physical address
-file form 14039 to have the identify theft flag added to your profile
-always try to arrange so you owe a little money come tax time (but not so much that you owe a penalty) so your refund is not in purgatory in the event of a fraudulent return filed on your behalf
-if you do indeed get a refund, try to file as early as possible to beat out a fraudster
The report wasn't clear on IDT detection measures, but I would think sending a refund to a new/different physical address or direct deposit account should be an easy red flag that could warrant an extra layer of screening.
A national sales tax could solve the problem too, except it would send the country into a depression from all the tax compliance related job losses.
I think before we worry about this we should worry about all the people jailed for not paying "income" tax. I put quotes around the word because the IRS lies about the meaning of income as defined by the Internal Revenue code. Technically, the definition hasn't been in the code for decades, it was removed long before we had things like the Internet to search it with. What is the proper definition of income when it comes to Title 26, the Internal Revenue Code, you ask?
It can be defined, at least partially, by the 4 words,"Foreigner's here, citizen's abroad." If a foreigner earns money in the US, at least part of that is income, and if an American citizen earns money from a foreign country, at least part of that is income. If an American earns money at a 9 to 5 job that is done here in America, NONE of that is income.
You ask,"Where's my proof?" The proof is in the code, which is searchable online. It is not fun to read the Internal Revenue Code, but understanding it isn't hard, especially when you have the critical thinking skills of most Slashdotters.
The government has lied to us all our lives, the 16th Amendment changed nothing, it is not an amendment of any sort. It's more like a weaselly worded smokescreen that the schoolteachers were then taught to lie about when they taught the school children about the US government. You think it's a coincidence that so few Americans can diagram a sentence? The 16th Amendment doesn't contradict any part of the Constitution that came before, it changed nothing.
The NSA is nothing compared to the crime against Americans from a misuse of of tax laws by the IRS. The IRS doesn't actually have any authority to tax an American citizen directly, they can't even track us directly if we're not willing to use a social security number, and social security numbers aren't required by law, that's a lie too.
Do the research, look at the code and see what you find.
There would be no identity theft when filing taxes if there was no IRS. The privately owned Federal Reserve bankrupted these united States in the 30's and we are still paying for it. Now, they're doing the same to the EU. GO BRICS!!!
The mind conceives, the body achieves, the spirit manifests.
What's a refund?
Let's abolish the personal income tax altogether, disband the IRS, and fund the government's very limited constitutional obligations by selling off the land that the federal government has no business owning in the first place.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
I'm sure commenters based in countries with a VAT can talk about all the shenanigans that are possible.
But based on my experience in California, Income tax loopholes are much more clear and well defined than the incredibly convoluted rules around sales tax.
Cold food served in a delicatessen is not taxes, hot food is. All food sold in a restaurant is taxed. No food sold in a supermarket is taxed.
Fruit trees are not taxes, shade trees are.
Downloaded software is not taxed, software sold on media is (transfer of tangible personal property: the disk)
Architect and Engineering services are not taxable, unless client gets ownership of the drawings (why the blueprints of your house most likely say "property of XYZ A&E firm") in which case the entire value of the engineering job is taxeable.
Distilled Water. When the label on a bottle of distilled water does not include a reference to intended use or indicates the water is only for non-food purposes, the distilled water should not be regarded as sold for human consumption and its sale is thus subject to tax. When the label indicates that the distilled water is for drinking only or includes references to both food and non-food uses, the sale of that bottle of distilled water qualifies for exemption from tax under section 6359.
Edible Flowers. Sales of edible flowers are taxable sales. Flowers are ordinarily used in gardens or for decoration and not as food for human consumption. Section 6359(b) specifically provides that food products include "vegetables and vegetable products" and "fruits and fruit products" but does not list edible flowers as a food product. The fact that an item is edible does not by itself make the item a food product
and it goes on and on..
Seriously. States that make this distinction end up maintaining databases of foods and medicines that merchants have to consult.
Best Slashdot Co
Being Black in Ferguson is taxed, as 70% of their budget comes from traffic tickets and court costs and draconian fines such as being 5 minutes late to your kangaroo court hearing.
Only tax based on use (i.e. Sales Tax) Problem solved in one fell swoop.
Not even remotely. First off, the richest people don't actually spend a lot of what they earn. Sales taxes are by their very nature regressive taxes so your proposal is basically a proposal to reduce taxes on the wealthy and increase them on the poor. Furthermore, going to a single taxation method is a recipe for problems. Sales tax revenue can fluctuate quite a bit depending on what is happening in the economy but the end use of tax revenue cannot fluctuate as quickly. People still need public services regardless of how well the economy is doing and generally speaking good public services require relatively stable funding. That is why we tax on multiple sources including property, sales, excise, income and others. This keeps the tax revenues relatively stable through diversification which is a good thing. While sales tax should be an important part of the equation, going to a sales tax only taxation program is Bad Policy. It sounds like a good idea on a first pass but once you really think about and understand the issues involved you'll realize it isn't so simple.
Tax evasions now impossible
HAHAHAHAHA... Wait.. you were serious weren't you? Going to a strict sales tax would in no way, shape or form eliminate tax evasion. It would only change the tactics used to avoid taxation. The simplest tactics are to just buy less stuff or to buy it from people who don't collect and report the sales tax to the government. Congratulations, you've simultaneously hurt the economy AND de-funded public services.
Using your logic we just leave the uncontrolled growth of this kind of spending go on indefinitely for the good of the country. I am sorry but a gradual approach would work. The fact that our politicians are lawyers and only see black or white is the problem. They could create a graduated scale of real reductions (not reductions in the growth as they usually do ) over let's say 20 years.
It is impossible.
You could not be more wrong. It is not only possible it happens all the time. You don't even have to do anything illegal to dodge a sales tax. It can be as easy as buying from another state or country. Most states have Use tax laws and those get widely ignored. It is nearly impossible to design a sales tax program with no loopholes of any kind even if you are trying to do so. And I assure you that some loopholes would be baked in on purpose. Any accountant worth his/her retainer would be able to tell you in less than a minute how to get around significant amounts of sales tax.
I am not aware of any merchants that dodge sales tax
Then you don't know very many merchants. Happens all the time. I'm an accountant and I've seen it with my own eyes. Plenty of sales tax simply does not get reported. You don't even need to take my word for it. 30 seconds on google will back up what I'm saying.
but if it is a problem start imposing fines on merchants and book them for tax evasion.
It is a problem, they already do impose fines and if you think solving the problem is simply a matter of imposing fines then you are quite naive.
It should be quite easy actually.
Easy? Not at all. First off having a Federal sales tax would require a change to the Constitution to even be legal. Right now only the States can impose a sales tax. How easy do you think it is to change the Constitution? Then even if you somehow manage that little trick, you have to have every merchant in the entire country would have to institute new processes for collection, processing and remittance of tax which is a HUGE expense and definitely not easy. Worse, you would have to basically re-engineer the IRS or create an entirely new federal department to handle the tax receipts that are no longer based on income. I'm telling you this because I'm one of the people who would have to take care of this issue. Even if it is the right thing to do (I don't think it is) if you think it is easy or trivial you have no idea what you are talking about.
Merchants already have systems that deal with sales tax (in most of the states atleast)
State and local tax. They have no system in place to deal with a Federal sales tax. Even if you piggyback on the existing systems they would require substantial retrofitting, training, new equipment and new procedures. This is NOT a trivial endeavor.
The problem with taxing states on population is that it would disproportionately place a burden on states like Arkansas and Mississippi, which have low tax and income per populace, in favor of states like California and New York which have high tax per populace. The idea of taxing the States and cities a fixed proportion of their tax revenues is friggin ingenious.
If you give a mooch a charity deduction he's going to want some EITC to go with it. When you give him the EITC he's going to complain that he needs a deduction for his mortgage. If the mooch has a mortgage he's going to want some power so you'd better include a deduction for installing green energy. If you give deductions for green energy you're going to have to pay for his smelly old car. If you've paid him for his smelly old car he's going to want a new car. If he gets a new car he's going to want to donate it to charity and when he donates he car to charity... he's gonna want a charity tax deduction.
I am stunned! The IRS requires employers to get our W2s to us by 30 Jan. each year, but not to them until July!?!! WTF! Just picking a number off the top of my head, there are at least 40 quick checks that could be made on an eFiled return to verify its bonafides, all from information the IRS already has!
You are also missing out on the idea that capital gains will be taxed at the same rate as income.
Capital gains behaves fundamentally different than regular income and it is bad policy to treat them as identical. You can (often) defer capital gains by simply not selling the asset. You (generally) cannot defer income. Even if the nominal rates are the same the effective rate on capital gains will be less because the (generally wealthy) people they most often affect don't need to realize the gains until it is convenient for them.
For example, allow a person to own one home tax free.
Most local governments are funded predominately by property taxes mostly on primary residences. How exactly do you propose to replace that funding?
I see lots of people here proposing various tax schemes that sound logical until you actually think through the second order effects. You cannot simply say don't tax homes until you've addressed what to do with the public services that are being funded by those taxes currently. Furthermore you have to work through what sort of incentives not taxing homes would have on people's behavior. Are you creating unintentional tax loop holes? Chances are very good that you are. The notion of not imposing a tax on your primary residence an ok idea by itself but there are a LOT of follow-on consequences to doing that that have to be considered.
If you make $24k a year, you don't pay income tax and most likely get a nice wad a cash courtesy of the U.S. Tax payers.
Many taxpayers don't pay federal income tax but they do pay state income tax, local income tax, sales tax, gasoline tax, property taxes, excise taxes, utility taxes (phones, electricity etc), sin taxes, payroll taxes (FICA, Social Security, Medicare), and quite a few more. Let's not pretend that poor people don't pay any taxes shall we?
And if you think the Earned Income Tax Credit is a "nice wad of cash" I think you don't know the meaning of the term. It's not a lot of money.
You can make consumption taxes just as progressive as you wish. The most trivially obvious measure you can take toward this end is to exempt clothing and food expenses. Most state sales taxes do at least some of this. Clothing and food you buy simply ring up as untaxed on the register.
That doesn't make the tax progressive. It just means that you are reducing how regressive it is. Unless it is a pure luxury tax, pretty much all general sales taxes are regressive to some degree. If you tax some items and not others that simply means that some items are not taxed and the remainder are taxed regressively.
You pay a small amount of sales tax during the year? You get a lot of it back. Maybe all of it. Perhaps, more than you paid.
Terrific. Who is going to keep track of all this? How do you plan to verify what people spent, where they spent it and on how much? That is a HUGE administrative burden and frankly most people cannot handle it. If you think people are going to suddenly keep super careful records of their retail purchases you are delusional. If you are going to the trouble to keep track of people's income levels to determine who gets a rebate then you might as well just tax the income directly like we already do.
You say rebates won't cut it because you have to pay now, and only get your rebates later? Fine. You can issue prebates.
If you give tax credits against the sales tax based on income you still aren't making the tax progressive. You are simply giving a really complicated refund based on income so you've essentially turned a sales tax into an income tax and you're right back where we are now with a lot of needless administrative burden along the way.
Look up "Fair Tax". This has all been long since figured out.
The "Fair Tax" idea is a delusional idea that would require a Constitutional amendment and a politically impossible complete overhaul of the tax system to even be legal. The tax incidence of such a system is incredibly unclear and proponents seem to support it more out of ideology rather than any unbiased analysis.
If everyone pays a flat sales tax rate, the people who spend more will bear most of the economic burden.
So you are creating an incentive for everyone to pay less and you think that will somehow help the economy? Curious bit of logic you have there.
by prioritising political / state security over information security - the costs of fraud and fraud prevention will continue to escalate
if "Faith" could be proved with facts - would it still be faith? So why does "Faith" try to present beliefs as fact? -
The problem is, you don't seem to understand what income and profit are, versus revenue, versus net worth.
Suppose you buy a TV on Craigslist for $400. Later, you decide you don't like it, so you sell it on Craigslist for $400. You have no income from the transaction, you have revenue, and a directly related, offsetting expense. You received the $400 only because you first spent the $400. You started out with $400, and ended up with $400. There's no increase, no net change.
Suppose you get a paycheck from Arby's for $400. You spend that $400 on a TV. You think you had no income, right, because you spent that $400? Where you're mistaken is this - through this scenario you started out with $0 and ended up with a $400 TV. That's an increase of $400, income of $400. It works the same whether it's a business, or you going to work and buying stuff on Craigslist.
Suppose someone hands you $4000 and spend it on a vacation. You started with zero and ended up having a very nice vacation. Your bank account may be back at zero, but you in fact benefitted from that pair of transactions - you got a $4000 vacation out of the deal. That's $4000 income. It's income whether you personally conduct the transaction or a business does so, because you didn't have to give up $4000 of existing money in order to get the vacation.
>I question them because my own business does not pay any taxes, period
> My revenues have been $0,
With $0 in revenue, you probably don't have a business. You may have a hobby. Be aware, this is something the IRS watches for, falsely classifying hobby expenses as business expenses. The $35 you save in taxes may not be worth committing the federal crime of tax fraud. If it legitimately is a business, in most states you should be paying business personal property tax and many other taxes.
> So how does one write off the depreciation of assets like this TV? As an individual, I mean. I know how a business does it.
You could calculate it in precisely the same way that a business does. If you ever start working under whatever business structure you created, that business will probably lease office space from you personally. You will then personally have an income producing asset. You would then deduct the depreciation of that asset (your office) from the rent revenue to figure the income generated your house.
A TV in your living room probably does not produce revenue, so you don't calculate the income it generates, meaning there's no need to calculate the depreciation. Depreciation is an element of calculating the _income_ from an activity. Income = revenue - expenses, and deprecation is one of the expenses.
Maybe you don't understand, depreciation is an element of figuring out how much taxes the business has to pay for using that TV. You don't WANT to figure depreciation on the TV in your living room, because that would mean you were paying taxes for watching it. The depreciation would reduce the amount of taxes you pay for watching TV.
You could calculate it in precisely the same way that a business does.
And I'd claim it on my taxes the same way that a business does? That's a rhetorical question. No, I wouldn't, since individual taxes don't generally allow for deductions for depreciating assets. Otherwise, TurboTax would be asking people how many Xbox games they bought this year.
that business will probably lease office space from you personally.
My current lease prohibits subletting, so that wouldn't be legal.
You would then deduct the depreciation of that asset (your office) from the rent revenue to figure the income generated your house.
Depreciation of income-generating real estate is in a special category according to the IRS. Note that you can't deduct the depreciation of real estate that you don't rent out or otherwise use for business purposes. As a business, you can write off your office space. As a person, you cannot write off your living space.
A TV in your living room probably does not produce revenue, so you don't calculate the income it generates, meaning there's no need to calculate the depreciation. Depreciation is an element of calculating the _income_ from an activity. Income = revenue - expenses, and deprecation is one of the expenses.
But that's just it, that's my point. A TV in my living room doesn't produce revenue, so there's no "need" to calculate depreciation. A TV that a business buys, even if it gets shoved into a warehouse somewhere, never to see the light of day again, doesn't produce revenue either, but somehow the business can claim deductions from the depreciation for a few years. Depreciation is an element of calculating the _expense_ of capital purchases. Over time, the effect is such that the cost of the TV is subtracted from the business's revenue, and the business only pays taxes on profits, not revenues. This only holds true for businesses, as individuals have no right to claim depreciating assets on their tax forms.
Maybe you don't understand, depreciation is an element of figuring out how much taxes the business has to pay for using that TV. You don't WANT to figure depreciation on the TV in your living room, because that would mean you were paying taxes for watching it. The depreciation would reduce the amount of taxes you pay for watching TV.
My understanding is that depreciation is an element of figuring out how much taxes the business has to pay for the money they made minus the money they spent on the TV (spread over a few years). I do want to figure depreciation on the TV in my living room, since that's money the government taxes me on money I made, and it thinks I made that TV's-worth-of-money even after the TV is in the garbage ten years later. Thus, the $400 I spent on the TV got taxed as though it was income, despite me having spent it (not on the TV when I bought it, but on the TV after it is no longer worth anything, i.e. been fully depreciated). The depreciation would reduce the amount of taxes I pay for earning money that is subsquently spent, which, from a selfish point of view, would be a good thing for me.
Even if you disagree that depreciating assets for the purposes of tax avoidance is a desirable thing (I mean, if it's not desirable, then why does every business in existence seek to claim every expense possible to lower their [taxable] net income?), you at least seem to agree that individuals don't have the same rights as businesses when it comes to tax laws and purchase (and depreciation) of capital assets.
Chuuch. Preach. Tabernacle.
> you at least seem to agree that individuals don't have the same rights as businesses when it comes to tax laws and purchase (and depreciation) of capital assets.
The rules are _precisely_ the same, except there are certain restrictions (disadvantages) for very small businesses because of cheaters. The depreciation reduces the reportable income produced by the TV. As as individual, you're reporting zero income from the TV, and paying zero taxes on that zero income. You're wanting to pay less than zero? Well I guess that makes sense, you are a libtard, after all. You want me to pay more than 50%, so you can pay less than zero.
It's a good thing you didn't start re-routing your income through that shell business structure you created, because you're quite confused about some basic concepts and would end up getting yourself in trouble.
libtard
I see. I thought I was talking to a reasonable person. My mistake.
Chuuch. Preach. Tabernacle.