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Financial Planning / Tax Strategies


Subject:  Re: The Cost Basis Crisis Date:  7/1/2006  9:08 AM
Author:  bacon Number:  87635 of 127613

That said, IMO we'd benefit from another round of Taxpayer Compliance Measurement Program (TCMP) audits, a/k/a the audits from hell, in which the randomly selected victims have to prove everything.

Crap. I beg to differ. We're being accused of a crime--indirectly, to be sure, but it's an accusation, nonetheless. Such audits are nothing but a government fishing expedition. The government should have to prove we've done something illegal--and that includes having done this deliberately and not simply as a result of a mistake. And when we do successfully prove everything, or more likely, when our errors net out to close to zero, what do we get for our troubles? Nothing. Certainly not reimbursement for our costs. Deductability doesn't even begin to cover the costs.

To be sure, the technicalities of the law are on the government's side--the IRS is allowed to go on such fishing expeditions--but when the IRS gets into this sort of thing, just as when the police get into similar behaviors in their milieu, it's a velvet glove on an iron fist.

At least part of of the problem consists of two things--lack of enforcement and lack of information for the taxpayer--and additional government regulation can only redress one of these. If criminality is suspected, the case should move forward quickly, and the penalties for being a scofflaw should be more than the wrist slap (only in rare cases are serious penalties applied). The lack of information begins with the IRS--590, for instance, is an excellent pub, but it's still not easy to read, especially if one doesn't even know the terms so questions can be asked. Additionally, the IRS contacts may have become more courteous, but they're still ignorant and slow to respond, and the IRS still refuses to hold them accountable for their answers or the timeliness of them. And this doesn't even begin to address the rest of the overall problem that's the subject of this thread.

Want compliance and to close the tax gap? Simplify the tax code, simplify the collection and payment process, simplify the tax docs. Oh, yeah--and hold the tax man liable for a (short) history of being slow, wrong, and/or not specific and clear enough. No weasel-wordy, civil servant union excuses; the individual performs or s/he's out the door. Just like in a real (non-union) business. START (and I note, as an aside, with interest the prior use of this acronym), to pick just one, is only a complicator overlain on an already too complex package. If I designed such a pig at my simulation company, I'd be fired on the spot--and deservedly so.

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