Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for January 14th, 2004

Posted by taxguru on January 14, 2004

Creativity of elite cheaters costs taxpayers billions

Preparing for the tax preparer can make all the difference

Protesters: Tax prep firm is deceptive about loans – This really isn’t anything new. The quickie refund anticipation loans (RAL) that tax prep firms like H&R Block provide have always been aimed at the same lower intelligence crowd as the other legal loan sharking operations, such as cash advance services. These people don’t mind paying the fees and huge interest charges that work out to be effective interest rates in the hundreds of percent.

National Taxpayer Advocate Releases Report to Congress, Cites AMT as a Top Problem Facing Taxpayers – Interesting that even IRS is admitting that the insane AMT is ensnaring more and more people who were never intended to be its victims by our rulers, who continue to keep their heads in the sand in regard to any remedy.

This report also cites a tax gap of $132 billion. As I’ve explained before, this number is no more than a SWAG and cannot be backed up by IRS. They use big numbers like that in order to try to get more money for their own operating budget from our rulers in Congress. The bigger the amount of supposedly uncollected taxes, the more readily the money hungry politicians are to fund and allow increased collection actions by IRS. It’s too bad none of our rulers, nor anyone in the media, has the guts to challenge the official IRS statistics on something that, by definition, is impossible to measure; as I have been doing for several years. In all of my efforts to track down the official IRS calculations of the infamous widely cited tax gap, IRS personnel at very high levels have actually admitted to me that it is nothing but a SWAG (scientific wild ass guess). Their rationale is that since the actual amount is indeterminable, their SWAGs are as genuine as any other number anyone else may want to come up with.

I do dispute the size of the IRS’s imaginary tax gap because it has been my experience that most people overpay their taxes by not claiming all of the deductions to which they are legally entitled. This is most often due to lousy bookkeeping, as well as the use of tax preparers who think their job is to maximize the IRS’s take.

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