IRS crackdown brings tax-evasion secrets to light

[kcshocker11]

http://www.usatoday.com/money/perfi/taxes/2009-10-13-ubs-tax-evasion_N.htm

Details of Chernick's tax evasion — along with similar court cases of other defendants and two Americans who discussed details of their offshore holdings in USA TODAY interviews — provide a look at secret dealings that cost the U.S. $100 billion in annual tax revenue, according to a 2008 Senate report.

It is a world of bank accounts held under corporate names in Switzerland, Hong Kong, the Cayman Islands and elsewhere. A place where wealthy U.S. clients meet their offshore bankers in furtive hotel conferences. And where foreign financial advisers and lawyers deter clients from disclosing assets to the IRS.

"For those still hiding in this shadowy world, it is time to come in and get right with your government or face stiff criminal and financial penalties," said IRS Commissioner Douglas Shulman when Chernick pleaded guilty.

PBO said he would go after these crooks and he is. :good: 8)

[Downtown Shocker Brown]

Constitutional say what?

[kcshocker11]

Constitutional say what?

Please explain how this is unconstitutional! 8)

Amendment XVI

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

or do you just support criminals in general? 8)

[RoyalShock]

What was the understood definition of "income" when the 16th was ratified?

[Downtown Shocker Brown]

According to law, but not the IRS, it is the income you make above what something cost you. You buy something for $1 and sell it for $2, your income is $1.

The IRS wants taxes on the $1 you paid for it, and the $2 you sold it for.

It is also the amount above what you put into something that you profit. You work for $8/hr doing manual labor, if you but in $8 worth of work per hour, your income is 0.

[RoyalShock]

You're close, DSB, but the SCOTUS has defined it more narrowly:

"Whatever difficulty there may be about a precise and scientific definition of 'income', it imports, as used here, something entirely distinct from principle or capital either as a subject of taxation or as a measure of the tax; conveying rather the idea of gain or increase arising from corporate activities."
Doyle v. Mitchell Brother, Co., 247 US 179 (1918)

Never were earnings for one's livelihood (the portion of federal income tax levied against your salary) constitutionally authorized.

This is a good (but long) read:

http://www.originalintent.org/edu/consttax.php

[Maggie]

What was the understood definition of "income" when the 16th was ratified?

I have been traveling and busy so I don’t have a ton of time. But I want to ask you for a favor -- why don’t you flesh that argument out a little more for my edification and hopefully others. Please.

Obviously, kc, I’m sure, would simply respond by writing: The income tax isn't unconstitutional — the 16th Amendment made it constitutional. Please see my prior post. 8)

You see, lots of conservatives and libertarians I know despise the income tax for all sorts of reasons – I’ll try to sum up: Some just don't like paying it. Others are constitutional purists, believing we shouldn't muck with it beyond the Bill of Rights. Others believe that the income tax is bad procedurally; it feeds the central government while starving local ones. This, in turn, makes it possible for the feds to use bribery as a tool of social policy (drinking ages and speed limits tied to highway funds are the most obvious example). And then there's the more straightforward moral argument: Taxation of earnings from labor is on a par with forced labor.

Where do you fit in, if at all?

[RoyalShock]

Where do I fit? If it is unconstitutional, it shouldn't be occurring. Beyond that, I don't like it for most of the reasons you suggest others don't like it.

Here's another opinion from the SCOTUS:

"The sixteenth [amendment] does not justify the taxation of persons or things (their property) previously immune . . .it does not extend taxing power to new or excepted citizens…it is intended only to remove all occasions from any apportionment of income taxes among the states. It does not authorize a tax on a salary." [emphasis added]
Evans v. Gore, 253 US 245 (1920)

Here is another good read from the same site regarding federal income tax:

http://www.originalintent.org/edu/fedincometax.php

[Maggie]

I’m sorry, I don’t have time to read the link right now but that case is from 1920 – can you reference anything more recent? Or explain the basic argument?

[RoyalShock]

I'll try to concisely explain my understanding.

The supreme court ruled that "income" must be consistently defined to eliminate confusion in the tax clauses/amendments of the Constitution. And they did just that by declaring what "income" refers to. Hence, the 16th amendment does not justify the federal individual income tax (that is, a tax on unprivileged compensation for labor).

The 2nd link basically summarizes that most Americans are not considered "taxpayers" under the Constitution and are under no obligation to provide either a SSN or W-4 to a prospective employer for federal withholding. But due to many factors including ignorance, decades of government coercion and self-preservation, nearly everyone is under the assumption that if you work, you are a taxpayer and obligated to pay federal individual income taxes.

[Downtown Shocker Brown]

http://www.shreveporttimes.com/apps/...=2007707130321

A Shreveport attorney who has challenged the government for years on the legality of filing federal income taxes has been acquitted on charges he failed to file returns.
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A federal jury unanimously found Tommy Cryer not guilty this week on two misdemeanor counts of failure to file.

And according to Cryer, the prosecution dismissed two felony charges of tax evasion prior to trial.

Attempts by The Times on Thursday to reach U.S. Attorney Donald Washington or Bill Flanagan, first assistant U.S. attorney, were not successful. Calls made to the two were not immediately returned.

"The court could not find a law that makes me liable or makes my revenues taxable," Cryer said. "The Supreme Court has ruled that the government cannot impose an income tax on anything but the profits and gains. When you work for someone you give your service and labor in exchange for money, so everything you make is not profit or gain. You put something into it."

Cryer was indicted last year on two counts of tax evasion. The indictment alleged he evaded payment of $73,000 in income tax to the Internal Revenue Service during 2000 and 2001.

Cryer created a trust listing himself as the trustee, and received payments of dividends, interest and stock income to that trust, according to the indictment. He also was accused of concealing his receipt of the sources of income from the IRS by failing to file a tax return on behalf of that trust.

"I determined that my personal earnings were not 100 percent profits, some were income," Cryer said. "I refuse to file, I refuse to pay unless they can show me I have a lawful reason to pay."

"What I earned was my own personal labor. I am giving something in exchange. I'm giving my property and I don't belong to anyone else."

Cryer says he stopped filing returns more than 10 years ago after he investigated claims that income tax was a sham. He contends the law doesn't actually tax personal earning.

[Downtown Shocker Brown]

I'll try to concisely explain my understanding.

The supreme court ruled that "income" must be consistently defined to eliminate confusion in the tax clauses/amendments of the Constitution. And they did just that by declaring what "income" refers to. Hence, the 16th amendment does not justify the federal individual income tax (that is, a tax on unprivileged compensation for labor).

The 2nd link basically summarizes that most Americans are not considered "taxpayers" under the Constitution and are under no obligation to provide either a SSN or W-4 to a prospective employer for federal withholding. But due to many factors including ignorance, decades of government coercion and self-preservation, nearly everyone is under the assumption that if you work, you are a taxpayer and obligated to pay federal individual income taxes.

But also to my understanding, is that the States that do collect income tax do so with the understanding that even unprivileged labor would have to pay it. Which is fair. Each state should do as it's constituents want to support itself.

[RoyalShock]

To clarify, I'm only talking about federal taxes.

[Maggie]

Royal,

I follow you and I know you are only addressing income taxation at the federal level.

Now – correct me if I am wrong but it is my understanding (my wife is the go to TaxGal in my family) that income taxes had been imposed earlier in our history, and were upheld by the Supreme Court –before 1900 – in way back days. And that the 16th Amendment was enacted in response to a couple Supreme Court decisions, around the turn of the century, which created a barrier to a tax on incomes - I know there are some who think that those rulings were correct. Putting the 16th Amendment aside for a second – why is income tax unconstitutional? Do you believe that without the 16th Amendment we couldn't have an income tax?

I am certain that you would not hold that all Supreme Court rulings are by definition the same thing as the Constitution itself (as the Court itself likes to pretend). That is to say, why is it unreasonable to conclude that the 16th Amendment restored a constitutional status quo ante, a principle of the original Constitution that income taxes were a permissible subject of congressional legislation? In that sense, the amendment was not necessary in principle, only in practice—“necessary,” that is, if the object was to levy such a tax.

Look, I have not given this a lot of thought either way (and I hate tax law) and I am not taking a position – I’m just curious.