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Financial Planning / Tax Strategies


Subject:  Re: The Cost Basis Crisis Date:  7/3/2006  9:32 AM
Author:  bacon Number:  87648 of 127613

The IRS has the right to verify the accuracy of a return that it receives.
Absolutely. If I've been unclear on this, then I apologize. I have a problem with the way the government goes about it, though.

An audit is an audit. It is not a criminal investigation, though in the right circumstances it can escalate into one.
It's this potential that makes keeping the government under control from the outset on an audit so important.

In both cases [civil and criminal], the burden of proof is on the party with the evidence to support its assertions.
No. In the criminal case, the burden of proof rests solely on the government. The defense need make no defense whatsoever beyond merely denying the charges.

(Which is really stupid [that the IRS is so badly underfunded], because it's the IRS that brings in the money to run the whole government, including itself. Resources for the IRS pay for themselves many times over.)
I absolutely agree with you. Like the police, we need to do a far better job of funding, equipping, and training than we do.

IRS does audit fewer returns, but they're selected more scientifically.
This would be good, if true, but:

It was an amended return [that resulted in a no-change letter], with some odd circumstances, that was practically asking for it.
This is the part, the "practically asking for it," in the whole thread that bothers me. You didn't intend this meaning, but this implies that, to keep the government from intruding too far, we have to hew very close to the norm. No differing behaviors allowed.

Again, if this were private enterprise, this would be a far smaller problem. Certainly, suspicious behavior is grounds for further investigation, but when it's suspicion on the part of a government that has a strong history of misbehaving, of overstepping its own bounds, of acting (wrongly, in the end) "for our own good," then there are grounds for worry and for keeping the reins especially tight.

Eric Hines
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