November 12, 2009

What is Tax Terrorism?

Terrorist attacks are not uncommon in our world today. You always hope you never find yourself anywhere near the vicinity of a terrorist attack. But have you heard of a terrorist attack right in your home or business? It comes in the form of a tax terrorist attack.

Terrorism is the act of striking terror or fear into the heart of victims. When terrorism comes in the form of taxes, it is defined as tax terrorism. It uses the possibility of being taxed as a means to strike terror or fear into your heart.

According to some tax experts, the recent IRS UBS tax settlement is a form of tax terrorism. Why? Because the entire episode is designed to instill fear into taxpayers, not only the tax cheats hiding their money in UBS bank accounts. It is also intended to make the ordinary taxpayer cringe in terror. Columbia University's law professor John Coffee stated that in his opinion, the IRS UBS agreement was less about the bank than about scaring US taxpayers into the IRS' Voluntary Disclosure program. Furthermore, it is also a more cost effective measure compared to taking each tax evader to court. The tax department of the US Justice Department simply cannot handle thousands of tax cases in any one year.

Dr. Bradford DeLong, economic professor at the University of California Berkeley who once held the position of Deputy Assistant Secretary of the US Treasury for Economic Policy from 1993 to 1995 agrees with Professor Coffee's assertion. According to Dr. DeLong, the IRS uses 'random terror' to solicit US taxpayers' compliance with tax codes, especially the relatively rich.

The IRS has the ignominious reputation of being a tax Gestapo that ruthlessly goes about intimidating the US public with its high handed scare tactics. To the IRS, it appears as though you are guilty unless you prove yourself innocent. Imagine how you would feel if you received an IRS audit notice. They charge you in court, raid your home or office for documents and turn people out of their homes often without much accountability to any governing authority.

Besides the fear factor inherent in the IRS UBS settlement, just trying to make sense of US tax codes is terrifying in itself bearing in mind a wrong interpretation that leads to a wrong action brings about penalties, interest charges and even possible prosecution. In 1913, the entire Internal Revenue Code was a slim 173 page document. Today, it is a massive 20,000 page monstrosity of laws, regulations, rules and advisories. And these do not include thousands of pages more of forms, instructions, orders and notices.

Indeed, the motto of the IRS might as well be 'Be afraid, be very afraid'.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

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