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Old 05-18-2011, 06:21 PM
Shakes Shakes is offline
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At what point does not paying your taxes = go to jail?

I was whatching 60 minutes the other day. They had some Loony-Tard on there who flat out admited to NOT paying taxes for quite some time. I kept thinking to myself: "Why is he not in jail?"

I've also heard stories of people getting their paycheck garnished up to 100%. That too is messed up. I mean, OK, people should pay there taxes, but if you're not going to send them to jail; garnishing their paycheck by a 100% is just going to make them homeless. Then uncle Sam gets nothing. It just doesn't make sense.
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  #2  
Old 05-18-2011, 06:33 PM
drachillix drachillix is offline
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Owner of a business refusing to pass on sales taxes collected.
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Old 05-18-2011, 06:34 PM
Lord Feldon Lord Feldon is offline
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Quote:
Originally Posted by Shakes View Post
I was whatching 60 minutes the other day. They had some Loony-Tard on there who flat out admited to NOT paying taxes for quite some time. I kept thinking to myself: "Why is he not in jail?"
If he was honest about his income and doesn't hide assets, he probably didn't commit a crime.

Last edited by Lord Feldon; 05-18-2011 at 06:35 PM..
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Old 05-18-2011, 06:54 PM
dracoi dracoi is offline
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The IRS and other tax-collecting agencies want you to pay. If they put you in jail, you can't pay. So they'll work very hard to set up payment plans, levy funds and otherwise collect from you without sending you to jail.

In any event, the getting sent to jail issue has to do with intent, not just ability to pay. It's the difference between negligence and outright fraud. Not paying is one thing; it is something entirely different to lie about your income, conceal the sources of your income, make false claims about deductions, etc. The people who get sent to jail worked at it.

Someone brought up sales tax. One of the interesting things (at least in Washington) is that sales tax is prosecuted as theft. By law, a business collects tax merely as a middleman between the consumer and the state, so failing to pay sales tax is literally a theft of the state's property.
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Old 05-18-2011, 07:19 PM
Shakes Shakes is offline
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Originally Posted by dracoi View Post
The IRS and other tax-collecting agencies want you to pay. If they put you in jail, you can't pay. So they'll work very hard to set up payment plans, levy funds and otherwise collect from you without sending you to jail.

In any event, the getting sent to jail issue has to do with intent, not just ability to pay. It's the difference between negligence and outright fraud. Not paying is one thing; it is something entirely different to lie about your income, conceal the sources of your income, make false claims about deductions, etc. The people who get sent to jail worked at it.

Someone brought up sales tax. One of the interesting things (at least in Washington) is that sales tax is prosecuted as theft. By law, a business collects tax merely as a middleman between the consumer and the state, so failing to pay sales tax is literally a theft of the state's property.
This is pretty much what I thought. But still, I can't wrap my mind around a 100% garnishment. Wouldn't that be detrimental to their end goal? Frankly, I don't see how that is even legal. (On the part of the IRS.)
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Old 05-18-2011, 07:29 PM
TriPolar TriPolar is offline
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You pretty much have to refuse or commit another crime like falsifying tax returns, or perjury before they throw you in jail. Remember, refusing to pay means you have the assets. If you have nothing, they'll take anything you eventually get. I think being sentenced to poverty is worse than going to jail.

Last edited by TriPolar; 05-18-2011 at 07:30 PM..
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  #7  
Old 05-18-2011, 07:52 PM
Simplicio Simplicio is offline
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Originally Posted by Shakes View Post
This is pretty much what I thought. But still, I can't wrap my mind around a 100% garnishment. Wouldn't that be detrimental to their end goal? Frankly, I don't see how that is even legal. (On the part of the IRS.)
Is there a cite that 100% garnishment actually happens? If it does, I imagine the point isn't so much to actually get the IRS their money as to force the person whose wages are being garnished to come in and work out a payment plan so that he can continue to get paid.

Last edited by Simplicio; 05-18-2011 at 07:55 PM..
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Old 05-18-2011, 07:53 PM
dracoi dracoi is offline
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Originally Posted by Shakes View Post
This is pretty much what I thought. But still, I can't wrap my mind around a 100% garnishment. Wouldn't that be detrimental to their end goal? Frankly, I don't see how that is even legal. (On the part of the IRS.)
I don't know the details of that case, but I do know that the IRS takes into account your income and living expenses (including such things as medical insurance) before setting garnishments. For a 100% garnishment, I'd expect one of two scenarios:
1) There are sources of income elsewhere. Maybe he owns his own company and pays himself in dividends, since dividends aren't garnished.
2) The IRS sent him a whole lot of letters and he decided not to respond to any of them. There are plenty of opportunities to negotiate, but many people don't take them.
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Old 05-18-2011, 07:55 PM
TriPolar TriPolar is offline
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Originally Posted by Simplicio View Post
Is there a cite that 100% garnishment actually happens?
They'll garnish 100% of your paycheck if they can show you have other assets and means of support.

Last edited by TriPolar; 05-18-2011 at 07:56 PM.. Reason: what dracoi said
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  #10  
Old 05-18-2011, 09:40 PM
Little Nemo Little Nemo is online now
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If there's a 100% garnishment, I have to assume it's not ordinary employment income. If it was, you'd assume most people would just stop working. The garnishment must be something like disability, pension, or annuity payments where the person can't just turn off the money flow.
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Old 05-18-2011, 09:52 PM
samjones samjones is offline
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Originally Posted by Lord Feldon View Post
If he was honest about his income and doesn't hide assets, he probably didn't commit a crime.
There's a difference between "not filing a tax return" and "not paying taxes". Many, many people "don't file a tax return" and the IRS doesn't necessarily get too concerned about pursuing them....

Chances are pretty good the Loony Tard would have had a negative income tax. So the IRS probably isn't going to spend too much time trying to convince his to file a tax return so he can collect his money.
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Old 05-18-2011, 09:55 PM
Farmer Jane Farmer Jane is offline
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I think it took the IRS like ten years to finally tackle my dad and put him in jail. But then again...he owed the IRS a lot of cash by then. I'm sure they prioritize.
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  #13  
Old 05-19-2011, 09:48 AM
zoid zoid is online now
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Originally Posted by samjones View Post
There's a difference between "not filing a tax return" and "not paying taxes". Many, many people "don't file a tax return" and the IRS doesn't necessarily get too concerned about pursuing them....

Chances are pretty good the Loony Tard would have had a negative income tax. So the IRS probably isn't going to spend too much time trying to convince his to file a tax return so he can collect his money.
Not true. I know several people who did not file for a few years and were persued, hit with heavy fines and significant wage granishment. The IRS will NOT simply write you off as a loss if you don't file.
Now I suppose if you're a teenager mowing lawns in the summer they might figure it's not worth it, but if you have a job of any sort in which your employer reports your income to the IRS they're gonna find you eventually.

Last edited by zoid; 05-19-2011 at 09:49 AM..
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  #14  
Old 05-19-2011, 10:25 AM
gazpacho gazpacho is offline
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Originally Posted by zoid View Post
Not true. I know several people who did not file for a few years and were persued, hit with heavy fines and significant wage granishment. The IRS will NOT simply write you off as a loss if you don't file.
Now I suppose if you're a teenager mowing lawns in the summer they might figure it's not worth it, but if you have a job of any sort in which your employer reports your income to the IRS they're gonna find you eventually.
I think you are missing samjones point. If you are a normal working person you have taxes taken out automatically. A lot of people get tax refunds every year. If you are owed money by the IRS and don't file a return the IRS probably does not bump your paperwork to the front of the line.
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Old 05-19-2011, 10:54 AM
zoid zoid is online now
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I must have missed that part - but my point was that you can't assume you'll get away without filing.
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Old 05-19-2011, 11:12 AM
dracoi dracoi is offline
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Originally Posted by gazpacho View Post
I think you are missing samjones point. If you are a normal working person you have taxes taken out automatically. A lot of people get tax refunds every year. If you are owed money by the IRS and don't file a return the IRS probably does not bump your paperwork to the front of the line.
The IRS does sometimes send a letter saying "Our records indicate you may be due a refund of $x and you must file a return by this date to claim it."

What happens is that the IRS does a substitute return somewhere around the 2.5 year mark. They use only the information they have, which means the substitute return usually overstates tax by omitting deductions. The correspondence that follows depends a lot on whether that substitute shows an amount due or a refund.
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Old 05-19-2011, 11:27 AM
samjones samjones is offline
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Originally Posted by zoid View Post
I must have missed that part - but my point was that you can't assume you'll get away without filing.
No - you got my point just fine. "Paying your taxes" and "Filing your tax return" and "Having taxes withheld by your employer" are all 3 totally different things.

If you aren't employed or if you're marginally employed - like many, many, many people are then it is still illegal to not file a tax return. Since you may very well be eligible for EITC it's also probably dumb. But people don't. Many, many, many people and the IRS doesn't do anything.

It's also illegal - or at least goes against statute - to have your employer withhold way too little or to pay your taxes in a way not sanctioned by the IRS.

My point is that if you owe taxes and you try to defraud the IRS into thinking that you don't, won't, or can't - then you will likely be charged with "tax evasion" and the penalties for that can be very stiff - including a good likelihood of jail time. If you simply "don't file a return" because you have little or no tax liability then you haven't really evaded taxes. You just didn't file a return. If you file a tax return that grossly underestimates your income or grossly overstates your deductible then you have evaded taxes. "Not filing" and "tax evasion" are 2 totally different things.

Therefore, the Loony Tard who "hasn't paid taxes in many years" may very well not have committed any crime or may have committed an insignificant infraction of simply not filing. Maybe he survives on subsistence farming, barter, and the kindness of others.

YOU should not assume that YOU will get away with it. YOUR tax situation is probably not the same as his.
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  #18  
Old 05-19-2011, 04:51 PM
t-bonham@scc.net t-bonham@scc.net is online now
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Originally Posted by dracoi View Post
Someone brought up sales tax. One of the interesting things (at least in Washington) is that sales tax is prosecuted as theft. By law, a business collects tax merely as a middleman between the consumer and the state, so failing to pay sales tax is literally a theft of the state's property.
Similar for one of the more common dodges used by businesses in financial trouble: FICA (Social Security) taxes. The share that employees pay is withheld from their paychecks, and the business is supposed to send this along with the employers share in to the government -- but they don't. So that is theft from both the government and from your own employees!
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  #19  
Old 05-20-2011, 09:29 AM
gazpacho gazpacho is offline
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Originally Posted by t-bonham@scc.net View Post
Similar for one of the more common dodges used by businesses in financial trouble: FICA (Social Security) taxes. The share that employees pay is withheld from their paychecks, and the business is supposed to send this along with the employers share in to the government -- but they don't. So that is theft from both the government and from your own employees!
This seems tricky to get away with. You have to give your employees a w2 form. This same information is also sent to the IRS. Your employees will notice if you don't have the correct income on the W2. It seems to me you either have to bring your employees in on the scheme or hope the FICA people don't talk to the income tax people.
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Old 05-20-2011, 10:32 AM
Silver Tyger Silver Tyger is offline
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Originally Posted by gazpacho View Post
This seems tricky to get away with. You have to give your employees a w2 form. This same information is also sent to the IRS. Your employees will notice if you don't have the correct income on the W2. It seems to me you either have to bring your employees in on the scheme or hope the FICA people don't talk to the income tax people.
Not all places do however. One of my former employers stopped withholding when he stopped using a payroll company. He apparently decided we were all contractors, despite being obviously not (working hours set by him, using his equipment, etc.) I never pursued it, although in retrospective I half wish I had.
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  #21  
Old 05-20-2011, 03:58 PM
t-bonham@scc.net t-bonham@scc.net is online now
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Originally Posted by gazpacho View Post
This seems tricky to get away with. You have to give your employees a w2 form. This same information is also sent to the IRS. Your employees will notice if you don't have the correct income on the W2. It seems to me you either have to bring your employees in on the scheme or hope the FICA people don't talk to the income tax people.
The W-2 is given in the next year later, in January. By that time, companies in this shape have usually gone under (so the employees probably don't get a W-2 at all).
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