“We’ll try to cooperate fully with the IRS, because, as citizens, we feel a strong patriotic duty not to go to jail.”
–Dave Barry
Several years ago, a private investigations agency found itself in serious trouble with the Internal Revenue Service (IRS).
One of its employees had suddenly quit the company–leaving behind a major financial disaster.
That employee–whom I’ll call Pete–had been tasked with sending payroll tax records to the IRS. The company’s owner, Bill, assumed he had carried out his assignment.
Until he learned from the IRS that they had never received the records.
Consider the potential consequences:
- Failing to timely and properly pay federal payroll taxes results in an automatic penalty of 2% to 10%.
- Similar state and local penalties apply.
- Failing to properly file monthly or quarterly returns may result in additional penalties.
- Failing to file W-2 Forms results in an automatic penalty of up to $50 per form not timely filed.
- A particularly severe penalty applies where federal income tax withholding and Social Security taxes are not paid to the IRS.
- The penalty of up to 100% of the amount not paid can be assessed against the employer entity as well as any person (such as a corporate officer) having control or custody of the funds from which payment should have been made.
About 70% of the annual revenue collected by the IRS comes from payroll taxes. Under-reported and unpaid employment taxes account for about $72 billion of the United States tax gap. So the IRS makes the collection of payroll taxes a high priority.
No doubt about it–Bill was facing serious trouble.
What to do?
Fortunately, Steve, one of Bill’s employees, had a B.A. in Communications and had worked as a newspaper reporter.
When Bill told him of the calamity he was facing, Steve offered his best advice: Immediately contest the charge that he had been delinquent in providing the records. And explain to the IRS–in writing–what had happened.
Bill agreed.
First, Steve interviewed him at length to make certain he fully understood the circumstances leading up to his present crisis.
Then Steve sat down and typed up a letter–on office letterhead stationery–to the IRS. Letterhead would give it an official appearance–and Steve wanted every advantage he could get.
Steve offered a straightforward presentation of what had happened: Pete, the number-two man in the company, had been entrusted with submitting payroll tax records to the IRS.
Apparently nursing a grudge against the company, he had, in fact, done nothing of the sort.
Instead, he had dumped the records in a box and stashed this in a locked filing cabinet.
Then he had given notice and left the company. Later, an investigation of his office computer revealed that it had often been used to access pornography.
Steve emphasized that Bill’s company had previously had an unblemished record for meeting its payroll tax obligations on time. And he stated that the newly-found records had been sent to the IRS by registered mail.
Finally, Steve wrote that Bill was prepared to fully meet his financial obligations to the IRS. But he asked that Bill not be penalized for the irresponsible actions of a single, malcontented employee.
The result?
Bill ended up paying only those monies that he legally owed. He was not forced to pay a penalty.
So what are the lessons to be learned from this episode?
- In dealing with an agency as powerful as the IRS, don’t ignore its letters and/or phone calls.
- You have nothing to gain by pretending it will go away. It won’t.
- If you owe money, don’t deny it.
- Remain calm, even if you feel angry or afraid.
- Don’t use profanity or insults.
- Don’t try to play tough-guy with the IRS. Even the Mafia fears this agency.
- If you have a legitimate reason for having missed a payment, say so.
- Remember that everything you say to the IRS–verbally or in writing–is considered evidence given under oath.
- If you lie and get caught, you can face perjury charges as well as those for failing to comply with tax laws.
- Offer to fully pay any monies that you legally owe.
- If these amount to more than you can meet in a single payment, say so. Ask the agency to set up a plan by which you can pay it off in installments.
- If the agency balks at cooperating with you, contact a veteran tax accountant or attorney.
- The best accountants or attorneys for dealing with the IRS are former agents now working in private practice. They not only know the tax laws; they know the best ways to short-circuit an IRS audit and/or penalties.
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PAY MORE TAXES, GET LESS FOR THEM
In Bureaucracy, Business, History, Law, Law Enforcement, Politics, Social commentary on November 1, 2016 at 6:20 amThe budget for the City and County of San Francisco for 2016-17 is $9.6 billion. Its proposed budget for 2017-18 is $9.7 billion.
San Francisco occupies 46.87 miles and has a population of 837,442.
Roughly half of the budget goes toward city-related business operations–such as the Port, the bus line, the Airport and the Public Utilities Commission.
The other half of the budget goes toward such public services as Public Health, Police and Fire Services, Recreation and Parks.
As the November 8 election quickly approaches, the most controversial issue on the city ballot is Proposition V.
Specifically, this calls for a tax of one cent per ounce from the distributors of sugar-sweetened beverages.
Currently, San Francisco does not impose a tax on the distribution of sugar-sweetened beverage.
The initiative defines “a sugar-sweetened beverage” as “a beverage that contains added sugar and 25 or more calories per 12 ounces.
“These include some soft drinks, sports drinks, iced tea, juice drinks and energy drinks. The tax would also apply to syrups and powders that can be made into sugar-sweetened beverages, for example, fountain drinks from beverage-dispensing machines.”
Supporters of the initiative are trying to sell it via the “save our kids” argument. The Vote Yes on V campaign states:
“On November 8th, the health of children in San Francisco relies on us.
“Proposition V will tax distributors of soda and other sugary drinks that have direct links to obesity and chronic diseases such as diabetes, heart and liver disease.”
Left unsaid is how putting more money into city coffers would lead children to show more restraint in buying “sugar-sweetened beverages.”
Perhaps the real reason why many city officials enthusiastically back this measure can be found in a statement by the San Francisco Controller:
“Should this ordinance be approved, in my opinion, it would result in an annual tax revenue increase to the City of approximately $7.5 million in fiscal year (FY) 2017–2018 and $15 million in FY 2018–19. The tax is a general tax and proceeds would be deposited into the General Fund.”
San Francisco Controller’s Office
San Francisco takes in more than $9 billion in taxes every year. But for many San Francisco officials this just isn’t enough.
Yet for many San Francisco residents, it is. In 2014, they defeated a similar soda tax.
Opponents of the tax have attacked it as a “grocery tax.” They argue that grocers–especially those running the mom-and-pop stores popular in San Francisco–will pass on the costs to their customers by raising prices on groceries altogether.
Proposition V supporters claim this is a lie. Rebecca Kaplan, a member of the Oakland Council, told the Huffington Post: “People worry about having to pay for their groceries. To threaten that their groceries are going to be taxed when it’s not true is a totally despicable tactic from the soda industry.”
Actually, there is nothing in the measure to prevent grocers from passing the tax on to consumers.
Meanwhile, what are San Franciscans getting for the $9 billion in taxes City Hall collects?
Call even 9-1-1 and the odds are great that you’ll get the same message. And if you complain to a city official about it, you’ll likely be told: “Well, we have only so many operators.”
The last thing someone calling police or the fire department in a crisis wants to hear is: “We’ll get back to you when we feel like it.”
You’ll find its red-brick blocks filled with stinking, disease-ridden, drug- or alcohol-addicted, often psychotic men and women whom city officials politely call “the homeless.”
In 2016, the city spent $241 million on “homeless” services. But the population surges between 7,000 and 10,000. Of these, 3,000 to 5,000 refuse shelter.
City officials admit that San Francisco ranks second to New York in homelessness. What they won’t admit is that they are largely responsible for it.
The city’s mild climate and social programs that dole out cash payments to virtually anyone with no residency requirement draw rootless, unstable persons like a magnet.
In 2002, the San Francisco Chronicle found that the city’s violent criminals had a better chance of escaping punishment than predators in any other large American city.
The SFPD had the lowest violent crime “clearance rate” among the nation’s 20 largest cities. Among Federal law enforcement agencies like the FBI and the U.S. Marshals Service, the SFPD is considered a joke.
From 2004 to 2011, Kamala Harris served as the city’s District Attorney. In total defiance of the law, she set up a secret unit to keep even convicted illegal aliens out of prison.
Kamala Harris
Her program, called Back on Track, trained them for jobs they could not legally hold. This was a flagrant violation of Federal immigration law. It is not the duty of local law enforcement, she said, to enforce Federal immigration laws.
In San Francisco, you don’t necessarily get what you pay for.
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