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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 746122  
Subject: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 12:41 AM
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http://www.nytimes.com/2003/11/11/business/11tax.html?ex=1069131600&en=f21348a4ac217e2e&ei=5062&partner=GOOGLE

Congress gave retirement savers an attractive deal: put after-tax dollars into a Roth I.R.A. and withdraw all future investment gains and contributions without ever paying another penny of tax.

For some people, that is apparently not enough. They have sought to put in money on which they have never paid taxes, vastly exceed the annual contribution limit of up to $3,500 and reap much greater wealth.

The Internal Revenue Service, as part of a crackdown on abusive tax shelters, has been pressing an action against one of the country's biggest accounting firms, Grant Thornton, to force it to disclose the names of clients it advised to shelter millions of taxable dollars in Roth I.R.A.'s via shell corporations. How such a shelter worked and how it was promoted is vividly detailed in a lawsuit brought by a former Silicon Valley executive against Grant Thornton over the shelter he was sold.


I think I'd rather do business with the Mafia. What do you want to bet Grant Thornton sells out its clients to save its behind? <LOL>

intercst

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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132835 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 12:55 AM
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What do you want to bet Grant Thornton sells out its clients to save its behind?

According to gurdison on the Tax Strategies Board, the IRS will be more interested in the clients than in GT.

http://boards.fool.com/Message.asp?mid=19740821

An excerpt:

>>>>
He was a bit peterbed that the IRS was going after him much more forcefully than it was going after the ones who sold him the shelter. The position of the IRS was that it was the taxpayer who committed the fraud (you are after all required to sign it). They said if the taxpayer felt he was given bad advice, he had both the civil and criminal courts available to him to fight it.
<<<<

--fleg

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132836 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 1:11 AM
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fleg9bo posts,

What do you want to bet Grant Thornton sells out its clients to save its behind?

According to gurdison on the Tax Strategies Board, the IRS will be more interested in the clients than in GT.

http://boards.fool.com/Message.asp?mid=19740821

An excerpt:

>>>>
He was a bit peterbed that the IRS was going after him much more forcefully than it was going after the ones who sold him the shelter. The position of the IRS was that it was the taxpayer who committed the fraud (you are after all required to sign it). They said if the taxpayer felt he was given bad advice, he had both the civil and criminal courts available to him to fight it.
<<<<


It looks like that's changing, too.

http://www.nytimes.com/2003/11/11/business/11shelter.html?ex=1069131600&en=19c638c0842603fb&ei=5062&partner=GOOGLE

Senator Carl Levin, Democrat of Michigan, called yesterday for increased penalties against accounting firms that design and sell abusive tax shelters and announced Congressional hearings next week to spotlight the firms, their executives and their sales practices.

In a speech prepared for the Citizens Crime Commission of New York City, Mr. Levin said that a one-year Congressional investigation into tax shelters had found a significant and alarming change in sales practices. In previous years, Mr. Levin said in an interview before his speech, tax shelters were something that individuals and corporations entered into after seeking advice from their accountants or lawyers, but shelters today are more likely to be sold to individuals or companies using elaborate mass-marketing efforts "like late-night, cut-rate TV bargains."


Of course, it may require "regime change" to get any kind of investor-friendly protections inacted. <grin>

intercst







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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132837 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 2:02 AM
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Of course, it may require "regime change" to get any kind of investor-friendly protections inacted.

Like protection against us keeping too much of our own money?

--fleg

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Author: tngirl74 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132843 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 4:04 AM
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Of course, it may require "regime change" to get any kind of investor-friendly protections inacted. <grin>

I really don't see where this would make a difference. Hiring practices at the IRS demand that no one with an IQ above 80 be hired.

Ever tried to get a question answered? Ever tried to understand the person answering the question?

tngirl



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Author: Umm Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132885 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 1:49 PM
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"Like protection against us keeping too much of our own money?"

Under Bush's tax cuts you are not keeping more of your own money. You are just taking more of your children's (and grandchildren's) money.

You are enjoying all of the benefits of higher government spending, but you are just passing the bill on to future generations.

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Author: tngirl74 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132890 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 2:09 PM
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Under Bush's tax cuts you are not keeping more of your own money. You are just taking more of your children's (and grandchildren's) money.

Since I don't have any kids, it's definitely my money. The buck stops here.

tngirl


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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132891 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 2:13 PM
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Under Bush's tax cuts you are not keeping more of your own money. You are just taking more of your children's (and grandchildren's) money.


The tax cuts ought to pay for themselves via the stimulus they are providing for the economy which will result in more tax collections. You could just as easily look elsewhere for the cause of the deficit. Some things that come to mind are social programs (which would only get bigger faster under Dems), farm subsidies (shame on Bush), etc. Some Dems would cut and run from Iraq, which would save money but bequeath to future generations an emboldened enemy (see Somalia).

Singling out the tax cuts from all the things that contribute to the deficit, when they are perhaps the only thing helping to reduce the deficit long-term, doesn't make sense to me.

--fleg


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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132894 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 2:47 PM
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Since I don't have any kids, it's definitely my money. The buck stops here.

I don't have kids either, but I plan on paying taxes for another good 30, 40 years (Godz willing). Already one the single largest items on the Federal budget is debt service. That cost doesn't build roads, edudcate kids, defend the country, feed the hungry, it doesn't do anything we need and ask the government to do, all it does it cost money, money that we as taxpayers ultimately provide.

We can collectively decide that we want to spend less on education or defense, or whatever, but we can never decide to spend less on the debt. The opportunity to use that money either personally in the form of lower taxes or as reinvestment through government (by building roads, say) is lost forever. In essesence, by borrowing the money to pay for the tax cuts, we permanently increased our taxes in the future by guaranteeing an permament increase in the amount of money required to the run the country.

I think we missed golden opporunity. The budget surpluses could have been used to pay down debt, thereby greatly reducing the amount of money required to run the government. Or it could have been used to privatize a portion of Socical Security, which would have greatly eased the upcomming crunch when the Boomers start to retire. Either way, higher taxes will now be a requirement.






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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132895 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 2:53 PM
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The tax cuts ought to pay for themselves via the stimulus they are providing for the economy which will result in more tax collections.

You're hoping for a miracle. If Plan A is to hope for a miracle, the your plan might as well read "And here we die."

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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132911 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 3:59 PM
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I think we missed golden opporunity. The budget surpluses could have been used to pay down debt, thereby greatly reducing the amount of money required to run the government.

Didn't the surpluses exist for only a few years and were unsustainable because they came from taxes on profits made by people selling insanely overvalued stock to the next greater fool? Once the Bubba Bubble burst, it was all over.

In any case, I agree that paying down the debt would have been a good thing to do with it while it lasted.

--fleg

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Author: gurdison Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132924 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 7:00 PM
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<Didn't the surpluses exist for only a few years and were unsustainable because they came from taxes on profits made by people selling insanely overvalued stock to the next greater fool? Once the Bubba Bubble burst, it was all over.>


Unfortunately, the federal government was not very different than the 50 state governments. During the time of big annual increases in revenue, there were very few states putting any of it away for the eventual rainy day. If revenues were up 20%, they spent it. Not only that they budgeted for the next year expecting another 20% increase. When they got away with that for a few years they were totally unprepared for flat revenues, let alone decreasing ones.

My guess is that there will not be very many lessons learned from the experience. Many states have resorted to selling bonds on their tobacco company settlements, taking a one time shot to the revenue side now in exchange for abandoning all of the things that the settlement was to fund on an annual basis for the next 20-25 years. One added bonus to this strategy (especially for us MO shareholders) is that it makes many states instant bed partners with the tobacco companies. They need the tobacco companies to remain profitable in order to fund the states bond payments on the monies they already spent. Pretty slick, huh? This type of thinking also explains why so many individuals fall down the same slippery slope. When the cheap and easy money for refinancing dries up a lot more will get clunked in the head. There are so many that live paycheck to paycheck for so long until that little bump in the road hits them harder than it should have.

Another point about both the deficit and the surpluses that preceeded it: they never quite used GAAP accounting. The surpluses were never really quite as big as stated since they included the surplus of SS monies collected over SS monies spent. Likewise the current deficit is really much higher than is publicly stated (by roughly 150+ Billion this past year) as the surplus from SS was used to make an even larger deficit look less menacing. The point that often gets overlooked is that not too far down the road those SS surplusses will disappear. We joked about the damn lock boxes, but they were never locked. Just like the states, there was no discipline to prepare for leaner times that we know are coming.

IMNSHO, this is why people with FI intentions will always be in the minority of the population. It is also why those of us who bring up the subject will often get some very strange looks from others, like there is something wrong with us. Of course there is something wrong with us.<grin>


BRG


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Author: FlyingCircus Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132931 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/11/2003 8:02 PM
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The budget surpluses could have been used to pay down debt, thereby greatly reducing the amount of money required to run the government. Or it could have been used to privatize a portion of Socical Security, which would have greatly eased the upcomming crunch when the Boomers start to retire. Either way, higher taxes will now be a requirement.

Hey, here's an idea. What about spending less money?

FC

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Author: HamletsMill Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132947 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/12/2003 12:46 AM
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Another point about both the deficit and the surpluses that preceeded it: they never quite used GAAP accounting.

I would like one small addendum to that: the Federal government – indeed all governmental institutions in the United States – does not distinguish between investments that build assets and expenses. All expenditures are considered expenses; the bridge, the road, the office building, built with government funds is marked as a cost with zero asset value.
Just as there is no formal accounting of all liabilities, there is no accounting of assets – just inflow in and spending out. Which, just as using SS funds to mask the degree of deficit spending, it hides the tangible increase in, if you will, the book value of the government – since we are at least nominally a democracy, our book value.

On a somewhat related note, one of the simplest and perhaps very consequential acts the government could do is to simply issue an expenditure statement with each tax return. One that takes your tax payment and breaks it down to precisely how much of your taxes went to each Federal program. Not terribly difficult to do, a straightforward computerized form of a summary 10-K. In the past, and perhaps still now, some States did that for certain specific taxes collected. As an example, in California they used to have an annual inventory tax (now wisely abolished). A few months after the tax submission date, the State used to send a statement detailing where and how the monies collected were scheduled to be spent.
(A friend of mine who used to own a small chain of retail stores was always amused by the line listing how much of his taxes went to mosquito abatement -- a handful of dollars.)
Having taxpayers see, in reasonable detail, every year, exactly where their share of taxes were being spent might change the nature and tone of the various arguments about taxes and spending in general.

As James Madison said, "Knowledge will forever govern ignorance, and a people who mean to be their own governors must arm themselves with the power which knowledge gives."


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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132953 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/12/2003 2:55 AM
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You are enjoying all of the benefits of higher government spending, but you are just passing the bill on to future generations.

Tell ya what - I'll be happy to lose half of Bush's tax break, in exchange for REDUCING government spending - and the alleged benefits - by the same amount.

Note however that "reducing" does not mean "increasing, but not as much as some people would like". It means DECREASING. As in, LESS than before.


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Author: Kestrel2 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132954 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/12/2003 3:16 AM
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Tell ya what - I'll be happy to lose half of Bush's tax break, in exchange for REDUCING government spending - and the alleged benefits - by the same amount.

Note however that "reducing" does not mean "increasing, but not as much as some people would like". It means DECREASING. As in, LESS than before.


Works for me, I'd sign up for that deal too.

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Author: jrbill94 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132962 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/12/2003 10:34 AM
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Under Bush's tax cuts you are not keeping more of your own money. You are just taking more of your children's (and grandchildren's) money.

You are enjoying all of the benefits of higher government spending, but you are just passing the bill on to future generations.



Thank you for making me spit my coffee on my screen this morning because that first sentence is one of the most ridiculous things I have ever read. I did not know that when I paid my taxes that it was going towards a savings account for my children (and grandchildren). And that by increasing my take home pay I was doing the equivalent of breaking into my kid's room at night and raiding his piggybank.

I love the "It's for the chilren" phrase that is so often thrown around to argue against government policies. Because nobody wants to hurt their kids right?

In the late 1980's I was reading doom and gloom articles that by the year 2000 the interest on the national debt would be crushing. Essentially all taxes collected in the Eastern half of the country would be needed to service the debt. Well guess what, it didn't happen.

On the other hand, there are a heck of a lot of potential problems on the horizon. For example we have an idiotic Social Security system that maybe once served a purpose but now is obsolete. Increasing life expectancies and declining birth rates are a dangerous combination for SS. Just ask Europe. Better open the immigration flood gates to prop up the worker supply.

But allowing the government pig to gorge itself at the taxpayer trough is not a solution to the problem of spending that outpaces what the population can afford to bear.


I am not a bee
I do not live in a hive
I do not work for the sole purpose of supporting a hive
Congress is not the Queen Bee
So Congress, stop acting like it.



























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Author: golfwaymore Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132966 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/12/2003 10:57 AM
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In the late 1980's I was reading doom and gloom articles that by the year 2000 the interest on the national debt would be crushing. Essentially all taxes collected in the Eastern half of the country would be needed to service the debt. Well guess what, it didn't happen.

Using rough numbers, tax receipts last year were $1.4 Trillion.

The interest outlay to cover government debt was $220 Billion.

That's about 15%, so maybe just the eastern seabord and part of the Ohio River Valley.

We will pile on another $500 Billion in debt this year, and it's not interest free.

Feel relieved?

Golfwaymore



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Author: jrbill94 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132969 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/12/2003 11:51 AM
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That's about 15%, so maybe just the eastern seabord and part of the Ohio River Valley.

Everything east of the Mississippi, not just coastal.

Feel relieved?

Nope. That was earlier this morning if you need to know.

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 132979 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/12/2003 1:36 PM
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Hey, here's an idea. What about spending less money?

That's sort of my point. Right now we're increasing spending, and decreasing revenue, and making up the difference by borrowing.

If your fiscal policy is "spend now, pay later" you're going to regret it.

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Author: cursky Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 133359 of 746122
Subject: Re: IRS Cracks Down on Roth IRA Tax Scam Date: 11/15/2003 10:38 AM
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Is it possible that alot of this spending is a result of 9-11,and more demand for social programs .I believe as the population ages there will be more and more pressure to provide spending for health care from the Goverment instead of people taking care of themselves,when was the Government made resposible for taking care of our health.
As improvements have been made in medicine people have been able to live healthly lives ,but that is not good enought for some people ,they also want us to pay for it all,not just part of it.
Just my 2 cents.

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