Ask the girl who deals with tax protesters everyday!

Miscellaneous and Personal Stuff I Must Share
21

Oh, and I figured this little anecdote can better explain why the IRS is shady (like I need to prove that fact to anyone).

I met with a husband and wife who had attempted to solve their IRS problems themselves. These were just general, working class folks that were confused by the tax code and got overwhelmed, causing them not to file for the last 15 years. I guess my point is that these people weren’t malicious at all and were definitely not tax protesters or the like.

Anywho, they had gone down to the IRS office to meet with an agent and the agent explained to them that she’d help them do their taxes right there in the office. She told them they needed to do each and every return, but she would sit right there with them helping them from line to line. They thought this was fabulous and that she was so incredibly nice to do that.

After doing the taxes and turning them in to find out that the balance due they owe for all of those years is about $150,000, they decided they’d come in for a free consultation with us just to see what we could do.

They were quite surprised when I explained to them that they’d been completely scammed by the IRS. There’s a 10 year Statute of Limitations from the original due date of the tax returns and after those 10 years pass, the IRS can no longer come after you for balances incurred during that time or SFRs (Substitute For Returns- it’s where they do the return for you in their office and decide you owe about 5 times more than you really do). Realistically though, the IRS will usually only pursue the last 6 years.

Of course, by doing those tax returns going back 15 years, the clients unknowingly restarted the period where the IRS can collect. They had no reason to do the 5 oldest years, but because they filed, the IRS now has 10 years from the filing date to collect. Naturally, the bulk of that $150,000 they owe is in those oldest 5 years (I want to say something like $130,000 of their balance was within those years).

So yeah, they thought they were being helped and doing the right thing, when in reality they were just being scammed by an unscrupulous agent. If they’d have hired us in the first place, they would have come out owing nothing to the IRS (when we redid their taxes, we found out they had refunds for the last 6 years, not balances due, as the agent told them).

22

Well, I ought to start by saying I know absolutely nothing about Canadian taxes, so I can only speak from the American perspective.

In the US though, personal income taxes will die with the individual. There are certain other cases where those debts can be passed through the estate, but it’s rare.

As far as them not pursuing older folks, you’d be wrong (at least here in the US). While they hardly put anyone in jail for tax evasion (there was something like 150 convictions last year in the entire country, if I remember. And even then, less than half saw jail time), you can bet your butt they’ll actively go after older folks. We have many clients that are on pensions and Social Security, barely able to pay for their bills and medical needs, getting their SS wages attached by the IRS. Legally, the IRS can only take 25% of your Social Security wages, but when you’re only getting $650 a month, that’s a ton of money.

And couple that with the fact that it takes forEVER to get SS levies off. Like, if you have a standard wage levy at your job, we can get it off the same. We’ll call the IRS, get the release, and fax it to your employer. With Social Security, the IRS has to send it to the SS Administration and it can take months for them to process the release.

23

They generally are happier if you turn yourself in, but it’s no guarantee that they will be fair, let alone lenient. If you do have back taxes, it’s definitely something to solve sooner rather than later though.

And you know, some people just slip under the radar. With a hundred and something million folks filing taxes, plus corporations, trusts, etc. it’s easy to see how someone with perhaps a smaller problem (smaller being >$100k) can shrink by. They will find you out eventually though, I mean, it’s inevitable. Eventually you’re going to want to do something that will flag them. For instance, we have a client who is 40 and has decided to go back to school. Sadly, you can’t get financial aid if you haven’t filed your taxes, so his application for aid set off the IRS.

24

Are you saying that if you don’t file a return, at the end of 10 years the IRS can’t collect? I don’t think that’s true.

25

You’re right, I apologize, I was typing while answering the phone. Disregard what I said before. Also IRS prepared returns don’t count for the Statute.

Those particular folks had a situation that was a big more specific that played around with the Statute, so that’s why it applied to them. And as I said, in our experience, they are more lenient about negotiating or forgiving older taxes because they know it’s harder to collect on.

Bah, I need to pay better attention while posting. See, THIS is why you shouldn’t take my advice. I warned every last one of you! heh

26

Ahhh, BUT, if you keep all of your money in your mattress, and pay for everything in cash there’s nothing for Canada Revenue to attach or levy! The case was slightly more complicated than him just never paying taxes. While CR did actively go after him, Frank firmly believed (and was proved correct) that he would die long before they ever managed to make him pay a penny. Further, I’m not sure they would have any access to the (literal) mattress full of money. As I said, he lived with a woman for about 50 years in rented accomodation - no way to prove who’s money it was, or something.

Anyway, I’m sure there was a tax assesser/auditor at CR that breathed a huge sigh of relief when Frank died. :slight_smile:

27

And, in your earlier post you said

I hope you keep on with your career goals. But don’t give out any more tax advice. :frowning:

28

My career goals don’t involve taxes whatsoever (hence my fields of study), so I suppose you have nothing to worry about.

At the same time though, this was never a tax advice thread, but rather an “Ask about experience with tax protesters thread,” so I suppose my mistake- which was really in me relating the story, as the clients are fine- is forgivable (particularly since I clearly stated my background and that I, personally, am nothing more than a college student).

29

What are some of the most egregious wrongs you’ve seen committed on the side of the IRS?

Have you ever seen the IRS folks basically say “what the hell… it’d be inhuman to push this issue with this taxpayer any longer, let’s just write it all off”?

A couple of years ago there was a book written by an IRS tax guy talking about some of the cases he had to push on. Some of the same sort of “tax protestors” stuff you mention, how he found the job somewhat dehumanizing, etc. I remember he wrote it under a pseudonym. Does that ring a bell? I actually read it but don’t recall the title. if you recall the book, did you ever read it?

My mom was a tax accountant but never had any wild stories to tell - of course she just dealt with people who wanted their taxes done right, and weren’t trying to play any scams. I imagine you get LOADS better tales in your line of work.

30

I’d say the most egregious wrong I’ve seen would have to be the case of one of our clients who is about 85, raising her 6 grandchildren (because her own children couldn’t handle the burden :rolleyes: ), living in the bad part of town, and living entirely off of Social Security and random payments from her kids for their kids (minimal at best). The IRS was attaching 25% of her Social Security check when she came in to have us help her out.

The taxes the claim she owed were well over 20 years old. In her case, she had filed the returns on time, just not paid the balances, so that is where the Statute of Limitations should have just zapped out her taxes. We were digging and digging and could not find why they were still saying they had authority to collect.

All until one day when she produced a paper she had signed some 10 years ago. It was a form typed up by some agent that said she gave up her rights and acknowledged that the IRS could collect indefinitely.

Luckily, the last chair of the Ways and Means Committee was from our town and we placed a call to him and he personally (not just his office, literally HE) had to step in. It actually almost went to a law suit because they were arguing that they can make you sign away your legal rights.

As far as them showing mercy, I do believe they are trained to not have hearts. That said, we do sometimes get people that are understanding and willing to work with us. There is such a thing as “Noncollectable Status”- if that happens, they don’t have to pay (either temporarily or perm. it just depends), but getting that designation is next to impossible.

And the book, are you talking about Confessions of a Tax Collector ? We have it on the shelf here, but I haven’t read it. My dad liked it, though.

For the most part our clients are just honest folks that got screwed up, but we do occasionally get some funny ones. Without fail, three or four times a tax season, clients will call and say, “So, how much do I have to deduct to not owe this year?” To which I say, “Even if I could just randomly come up with that number out of thin air- which I can’t, I can’t legally tell you how to avoid paying taxes. You need to deduct whatever your actual deductions are and pay the tax that goes with that amount.”

31

So what is the story with all the folks that seem to have this delusion that the IRS is unconstitutional? Are they all Schiff-dupes, or has this become some kind of underground industry, or a pervasive urban legend?

32

Thank you, Oh Great and Wise Cat Herder.

33

Re: the Schiff thing, see part C2 on this, I’m guessing this is the argument used, and it gives the reasons why it can’t be used.

34

I honestly don’t know if the ring leaders are genuine in their wacky beliefs or if they are just trying to sell snake oil to the gullible.

What’s interesting is that within the tax protesters, I see a pretty distinct 25%/75% split. 25% of the followers are incredibly blue collar, perhaps high school educated at best, working-class kind of folks. Maybe for those 25%, all of those big legal words and promising explanations of the complicated law sounded plausible.

The majority (in my experience, of course) though, they are very well educated and well off. Like I said, doctors, lawyers, even accountants and CPAs. People that are easily making six figures a year and that have gone through at least 4 years, if not more, of college. People that you’d assume would know better.

That 75% is comprised of people that are often incredibly difficult to deal with because they think they know the law inside and out ( when in fact, they are usually INCREDIBLY wrong). They second guess absolutely every move made (which they of course have a right to, but it can often slow our work down tremendously). Yes, we have to do your taxes. Yes, we have to put your SS number. No, we cannot put a fake address on there. Yes, you have to sign it. No, we are not IRS agents in disguise. No, we will not sell the IRS your information. No, we do not give them the asset and expense information you give us. No, we will not lie and say you closed your business. On and on.

35

The IRS actually has brochures they mail out to folks they suspect are involved with tax protester groups and the brochure pretty much sums up that document.

We have bunches sitting in the back of our office, brought in by clients. It’s kind of an ugly blue color with yellow print. The IRS should really work on making their stuff more visually appealing. :smiley:

36

Excellent link!

Actually, that document addresses my question more directly in Section D5:

37

So just to clarify?
A tax protestor is someone that decides they won’t pay taxes, for whatever reason, right? (Like the people in the link).

Is the same name used for people that you seem to represent. People that don’t pay taxes, but not becuase they object to them, but becuase of other problems listed?

38

Thank you, I stumbled across it a few months ago while looking for something unrelated, I also found this one (I didn’t actually read it, I just liked the title)

What’s Hot in Tax Forms, Publications and other tax products

39

Right. Tax Protesters choose not to pay because they see the system as unlawful (or something to that extent) in some way or another.

Our clients are generally dubbed as “non-filers” even by the IRS. If we were to call the IRS and refer to our client as a “tax protester,” all kinds of red flags would shoot up on their end. Our general clients aren’t protesting anything, they are just non-compliant for one reason or another.

40

What is the strangest, funniest, most insane reason that people have given to you to protest taxes?