Tag Archives: IRS

He Beat the IRS in Court, But They Still Won’t Make Him Whole

By George Leef

One of the most abhorrent current government practices is civil asset forfeiture. Turning the usual rules of due process upside-down, civil asset forfeiture enables local, state, or federal authorities to confiscate money and property from individuals merely on suspicion that the property was somehow involved in a criminal activity.

Once the property has been taken, it is necessary for the owner to go to court and prove his property’s innocence — or else lose it forever.

Only by enduring often protracted and costly legal proceedings can the person recover the seized property. Many innocent people just can’t fight the system and lose out entirely; others settle with the government, getting back a fraction of what was taken from them.

These seizures are highly lucrative for government bodies. Many police forces pad their budgets considerably with the proceeds from asset forfeitures.

In one of its worst decisions of the last century (tough competition!), the Supreme Court gave its blessing to civil asset forfeiture in Bennis v. Michigan. Former FEE president Don Boudreaux and law professor Adam Pritchard give a sharp analysis of this appalling 1996 decision here.

Several years after Bennis, Congress passed the Civil Asset Forfeiture Reform Act of 2000. Recognizing that these seizures were often wrongful and imposed unjust costs on people, the law provides for recovery of fees, costs, and interest by the “prevailing party.” Despite the clear intention to make people who have been harmed by unjustified seizures whole, the authorities often try to avoid paying people the rather small amounts of money they are entitled.

This churlish attitude is displayed in the ongoing case of Lyndon McLellan, the owner of a small convenience store in rural North Carolina.

In July 2014, IRS agents seized Mr. McLellan’s entire bank account, with $107,702.66 in it. The reason for the seizure? The feds thought that his frequent bank transactions involving cash amounts of just under $10,000 looked suspicious; he might be “structuring” his transactions to avoid the requirement of reporting transactions of $10,000.

That was enough for the IRS and, without any effort to find out why McLellan made these transactions or how he derived the funds, it took his money.

Lyndon was not about to just wave goodbye to his life savings, however. He retained an attorney and paid an accountant to try to prove that he had done nothing wrong and should get his money back.

With their help and an enormous pro bono assist from the Institute for Justice, the government has agreed to return all of his money to him. (For more about this outrageous case, see my Forbes article.)

But the government is still trying to avoid making McLellan whole under CAFRA. When the US attorney handling the case offered to return the money, he also tried to get him to sign a document waiving his rights to pursue full recompense — his lost interest and expenses for legal and accounting help. Lyndon declined to sign that document.

So the next day, the US attorney entered a motion in court to dismiss the case (officially named United States of America v. $107,702.66 in United States Currency Seized from Lumbee Guaranty Bank Account No. 82002495) “without prejudice.”

When a case is dismissed without prejudice by a court, the government is reserving the right to re-open it at a future time. In other words, it isn’t really conceding defeat but declaring that the case is still technically open. Asking that the case be dismissed without prejudice might seem strange here because the government’s change in policy last year — the IRS has officially abandoned the policy of seizing bank accounts unless it has evidence of criminal activity — forecloses any re-opening of it.

Ah, but there is a method in this madness. In a number of similar cases, the government has argued that because the seizure case was dismissed without prejudice, the plaintiff does not count as the “prevailing party” under CAFRA and therefore is not entitled to full recompense.

In his response to the government’s motion, Institute for Justice attorney Rob Johnson hit the nail on the head, writing, “The government’s gambit to evade its statutory obligations should not be rewarded. Having dragged Claimants into ten months of costly and unnecessary legal proceedings, the government should be required to make Claimants whole.” (That motion, incidentally, contains a wealth of further detail about the government’s ugly behavior throughout.)

This is not a new gambit, by the way. Sometimes judges have actually bought the argument, but in others, they have seen through the tactic. A good example is United States v. Ito, a 2012 decision by the Ninth Circuit.

The government tried its dismissal without prejudice trick and the district judge went along, but on appeal, the Ninth Circuit vacated that ruling on the grounds that such a dismissal would mean legal prejudice against the claimants who would lose their ability to seek attorney’s fees. The district court was instructed to dismiss with prejudice.

Lyndon McLellan’s case should similarly be dismissed with prejudice. Let us hope the judge so rules, foiling the government’s devious tactic.

The bigger question, though, is why the government, which every second wastes more money than is at stake here — the lost interest on the money plus professional fees McLellan incurred amount to around $15,000 — refuses to just pay for the damage it caused an innocent American.




Reprinted from FEE with permission under Creative Commons Attribution License

Judge: I Will Hold IRS Commissioner In Contempt

By Patrick Howley 

A federal judge is threatening to hold IRS commissioner John Koskinen in contempt for his agency’s failure to turn over emails sent by disgraced former IRS official Lois Lerner.

“I will haul into court the IRS Commissioner to hold him personally into contempt,” U.S. District Court Judge Emmett Sullivan said Wednesday in a hearing related to the nonprofit group Judicial Watch’s lawsuit against the IRS for Lerner’s emails.

Sullivan issued an order July 1 requiring the IRS and its legal representatives at the Department of Justice to brief his court with “status reports” on the search for Lerner’s emails. Though the IRS recently found more emails, the agency did not give Sullivan a status report.

Sullivan called the IRS’ inability to follow his order “indefensible, ridiculous, and absurd.”

Sullivan also threatened to hold Department of Justice attorneys in contempt.

The IRS claims that Lerner’s computer crashed, erasing her emails, during the period in which she was improperly targeting conservative groups. (RELATED: Justice Department Blocked Search for Lerner’s Emails). 

Lerner was already held in contempt by Congress, but still has not forked over her emails.

Republicans in Congress are currently calling for IRS commissioner John Koskinen’s firing — a sentiment echoed by GOP presidential contenders including Mike Huckabee.

Follow Howley on Twitter

New IRS Regulation Threatens Small Businesses With Fines For Helping Workers With Health Costs

A new regulation that went into effect on July 1 threatens small businesses with fines from the Internal Revenue Service of up to $36,500 a year per employee, if the businesses help their employees with health costs by reimbursing them for the cost of their healthcare premiums or by paying for their health costs directly.

The National Federation of Independent Business (NFIB) reported that the new regulation, which is not part of the Affordable Care Act, states that employers who compensate their employees for health costs, rather than offering a group health plan, “can be fined $100 per day, per employee,” which adds up to “$36,500 per employee up to $500,000 in total.”

Gracie-Marie Turner, the founder of the Galen Institute and a contributor to Forbes, noted that this new regulation is more than “18 times greater than the $2,000 employer-mandate penalty under Obamacare for not providing qualifying health insurance for employees,” and while employers with fewer than 50 employees are exempt from the employer-mandate penalty under Obamacare, they are not exempt from this penalty from the IRS.

“The rule appears nowhere in the Affordable Care Act but was developed by the Obama administration’s regulation writers at the IRS,” Turner wrote. “The rule punishes small businesses for providing the only health insurance support many can afford – a contribution to help employees pay premiums for their individual or family health insurance policies or to help finance direct payment for medical services.”

Kevin Kuhlman, NFIB’s policy director, called the new regulations the “biggest penalty no one is talking about.”

“The penalty for compensating employees for healthcare-related expenses is enough to destroy most small businesses,” Kuhlman said. “Reimbursing employees for the cost of insurance or medical services is a way for small businesses to help their workers without the administrative headaches of setting up a costly group plan.”

In response to the regulation, Rep. Charles Boustany (R-La.) introduced H.R. 2911 in the House and Sen. Charles Grassley (R-Iowa) introduced S.1697 in the Senate. Both bills are labeled as “Small Business Healthcare Relief Acts” and are awaiting congressional action.

Rand Paul To Unveil Plan To Replace IRS Tax Code With ‘Fair and Flat Tax’

GOP presidential candidate Sen. Rand Paul (R-Ky.) announced that he will release a plan to repeal the entire IRS tax code, making more than $2 trillion in tax cuts and replacing the code with “The Fair and Flat Tax” of 14.5 percent on individuals and businesses.

In an editorial for the Wall Street Journal, Paul claimed that his plan will repeal the more than 70,000 pages that make up the Internal Revenue Service’s tax code and “eliminate nearly every special-interest loophole.”

Paul wrote that although President Obama has talked about “middle-class economics,” his policies have “led to rising income inequality and negative income gains for families.” In contrast, Paul proposes that his plan would help the middle class by eliminating “the payroll tax on workers and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and tariffs.

[quote_center]“The Fair and Flat Tax eliminates payroll taxes, which are seized by the IRS from a worker’s paychecks before a family ever sees the money,” Paul wrote. “This will boost the incentive for employers to hire more workers, and raise after-tax income by at least 15% over 10 years.”[/quote_center]

Paul wrote that there is a need to “blow up the tax code and start over,” because from 2001 to 2010, “there were at least 4,430 changes to tax laws—an average of one ‘fix’ a day—always promising more fairness, more simplicity or more growth stimulants.”

“Every year the Internal Revenue Code grows absurdly more incomprehensible, as if it were designed as a jobs program for accountants, IRS agents and tax attorneys,” Paul wrote. He went on to say that another “increasingly obvious danger of our current tax code” is the power the IRS has to “examine the most private financial and lifestyle information of every American citizen.”

[quote_center]“We now know that the IRS, through political hacks like former IRS official Lois Lerner, routinely abused its auditing power to build an enemies list and harass anyone who might be adversarial to President Obama’s policies,” wrote Paul. “A convoluted tax code enables these corrupt tactics.”[/quote_center]

Paul called his tax plan an “all-American solution,” because “everyone plays by the same rules,” and he argued that the US needs a smart tax system to “turbocharge the economy and pull America out of the slow-growth rut of the past decade.”

“We are already at least $2 trillion behind where we should be with a normal recovery; the growth gap widens every month,” wrote Paul. “Even Mr. Obama’s economic advisers tell him that the U.S. corporate tax code, which has the highest rates in the world (35%), is an economic drag.”

Paul concluded, writing that he intends for his “Fair and Flat Tax” to fix the “the rot in the system that is degrading our economy day after day,” and he sees that new tax as one that is “the boldest restoration of fairness to American taxpayers in over a century.”

For more news related to the 2016 Presidential election, click here.

The Income Tax is Immoral and Unconstitutional – and Not (Just) for the Reason You Think


I have just paid my biggest bill of the year. The invoice was for a cool 9% of my entire annual income – or my “Adjusted Gross Income” (AGI) as it appears on my tax returns, which have just been filed. And that invoice was from my accountant who just filed them for me.

I have a pretty modest income – so modest, in fact, that my AGI is of the order of a half of the median household income across the United States – the kind of income that triggers significant subsidies under the Affordable Care Act. Even the “top line” of my income falls short of that median: so it’s not as if I’m earning loads and deducting huge amounts.

My financial life last year was pretty simple: my earnings derived from a modest real estate portfolio and some freelance/consulting work. My income is earned through my small business, which, for those who know about these things, is an S-corporation. I have no employees. I do no payroll.

Yet, I have just paid my accountant more than a month’s worth of income to complete my tax returns.

How many pages of tax returns do you think that I, a single individual, and my S-corporation (a small business) had to file, bearing in mind the small amount of income in question?

Frankly, there’s no good reason the answer is not one or two. But you already know the answer is more than that, don’t you?

Ten? Try again.

Twenty? Keep going.

Surely not 50?

You’re still not close.

Did I hear you say 100 – you’re going for three digits now? Wow.

Still not there.

The answer, my fellow American tax victims, is 149.

Just take a moment to absorb that. A sub median-earning American taxpayer, engaged in simple business activities, has a 149 page tax return. And if he doesn’t get it right, his error is punishable. Of that 149, about 100 go to the Feds.

Completing 149 pages of tax forms/schedules/supporting statements is a lot of work. And I know exactly how much it is, because of that big invoice from the accountant that I already mentioned.

It’s $2000 of work – my aforementioned largest bill of the year. And it’s $2000 of work I in no way could have done myself.

I’m no high school drop-out. I have a first class degree in physics from one of the best universities in the world. I like numbers. I like logic. I like intellectual rigor. I even have a nerdy love of spreadsheets (which tells me, for example, exactly how much I spent on groceries this month five years ago ($173.41, as it happens. I’m low-maintenance)).

But I could not reverse engineer those 149 pages of tax returns if my life depended on it. And I would defy anyone without a CPA qualification to be able to do so.

I have no complaint about my accountant, who provided very good service this year, but even he couldn’t get it right first time. As I type this article, I am awaiting “corrected” state returns (which are no shorter).

Moreover, as any small businessman knows, my accountant can only generate those 149 pages of returns after I have compiled all the necessary numbers and data in neat spreadsheets, nicely itemized and comprehensively annotated (two or three days’ work, right there, perhaps?). I know for sure that most tax payers are not as proficient with Excel as I am – so my accountants have an easy time of it with me. (He even told me so.)

Here’s the reality of the American tax system for modestly earning individuals who run small businesses:

My government has put me in a position where I must either pay 9% of my income to a professional just to enable me to avoid punishment, asset garnishment and even imprisonment. Supposedly, I can “do my own taxes”, but that is a joke. No one who has not gone to school for it could accurately complete those 149 pages with any honest degree of confidence – and I don’t care what software he’s using. Moreover, even if it were do-able, the time taken to learn how to do it and then do it properly would be measured in weeks, not hours. And we don’t get to invoice the IRS for our time.

Look in wonder, America, at the most regressive aspect of any taxation system in the world – its utter complexity to the point of Kafkaesque absurdity. And if you think it must be like that, literally a few days ago, the British chancellor announced the abolition of the annual tax return in the United Kingdom.

Can anyone, conservative or progressive, justify the need for self-employed individual to spend 9 percent of his income just to remain a free citizen in good standing or, should he not have the money to spare, to go to school to navigate his way through whichever of the 74,000 pages of the tax code apply to him?

If the tax code were sufficiently sensible that I could do my own taxes (which, as someone who likes money, spreadsheets and math, I’d be very happy to do), I could have paid the Feds double my actual tax bill – and still have been a thousand dollars better off on the money I’d have saved on tax preparation. Relative to the current situation, both I and the country would have been significantly better off.

It is established Constitutional Law (by Supreme Court precedent), basic morality and simple common sense that the government may not place an undue burden on a fundamental right – such as the right to stay out of prison even if one doesn’t have an accounting degree and the right not be forced to expend one’s property on anything other than actual taxes owed.

To quantify the absurdity, here’s a comparison I’ve never seen made before.

In the course of a year, my assets and non-business activities generate nine times as much tax (in the form chiefly of property taxes and sales taxes), as my end-of-year check to the IRS. The cost to me of compliance on that first nine-tenths of my tax burden is zero, while the cost to me of compliance with the other one tenth is about double the amount I actually owe.

You really can’t make it up.

Let me offer these thoughts, then, not as an article, but as an open letter to our government, the IRS and any Constitutional attorneys out there.

To the government, I am notifying you of the undue burden that you are placing on law-abiding citizens whose income, it happens, is deemed by recent legislation to be sufficiently modest that it wishes to subsidize my healthcare: the cost of this undue burden more than cancels out all such subsidies.

To the IRS, I ask this question. What will you do if I save my $2000 in preparation fees, pay you 50% more than I did this year, and I don’t complete those forms? A bonus to me of doing this would be that I don’t have to lie any more. Because we all know that you are forcing me to lie when I sign that paper saying “I declare that I have examined a copy of my electronic individual income tax return and accompanying schedules and statements for the tax year ending December 31, 2014, and to the best of my knowledge and belief, it is true, correct, and complete.”

… The real truth is that, “to the best of my knowledge and belief”, no person who is not trained, certified and engaged in daily work in the business of tax preparation, could possibly expect that he could generate a correct 149 pages of this stuff – regardless of how well he tried. And, moreover, the fact that he cannot is exactly why he can’t be expected to vouch for the work of the accountants whom he’d not have to hire if he did understand what on earth was going on in the first place.

Finally, and most importantly – to any Constitutional attorney: I can’t pay you (see above), but I have a tax return that will make your eyes bleed. Get me in front of a jury or, better yet, the Supreme Court, and let us ask 12 or nine reasonable people if the burden of completing this particular tax return – a requirement I must meet to retain my liberty and my property – is reasonable or not. And if just one of the jury or bench believes that a reasonably educated person could accurately complete my tax return in a reasonable period, I’ll be happily defeated – as long as he shows me how.

Otherwise, use me as a legal guinea pig to pull down this entire rotten structure that turns good people into unwilling law breakers or liars of both, reserving its very worst for those of us on modest means who wish to rise in the spirit of the American Dream, which our government and its agents seem all too willing to crush.

Our tax code is so complex that people our government deems too poor to buy their own health insurance must fork over nearly a tenth of their income just to comply with it. I cannot be the only one.
If I could reasonably compute my own tax – and it’s a matter of common law, surely, that a typical citizen must reasonably be able to meet all impositions of the state by his own means – I’d willingly pay double my current income tax because of all the money I’d save on compliance: I’d save enough to visit my family in England twice in a year; I’d save almost my entire year’s grocery bill; I’d save the cost of the roof over my head for two months.

I can afford my tax bill. I just cannot afford to calculate it. And as you can see from my short list, the complexity of this calculation has a very real impact on my life.

This complexity of our Federal tax system is crushingly regressive; it is impoverishing, and it is morally indefensible.

Simplifying the tax code would be simply the most immediately effective, progressive and moral low-hanging fruit Congress could pick. More importantly, the Constitutional requirement of not attaching undue burdens to our fundamental rights – whose protection, according to our Declaration of Independence, is the very justification of the existence of the state – legally and morally demands it.

CPAC Straw Poll Winner Rand Paul Battles The Bush Machine—Goldwater Style

WASHINGTON, February 28, 2015—As the winner of the past three Conservative Political Action Committee’s (CPAC) Straw Polls, Senator Rand Paul excels at generating meaningful political and economic discussions among college students and young professionals. The same generation that is known for speaking in bewildering acronyms continues to gather in force to ask and to answer difficult questions that are essential to the life and liberty of all Americans. Their answers will ultimately determine the future of the nation.

The Senator’s most recent economic stand will endear him to anyone who has ever interfaced with the Internal Revenue Service. He promised to introduce the largest tax cut in American history. In his speech to attendees of CPAC, he mentioned that he is poised to propose a tax plan “that would get the IRS out of our lives.” He indicated his intention to cut taxes “for everyone from the richest to the poorest.”

“It’s time for a new way predicated on opportunity and freedom!” said Paul to a wildly supportive crowd. The Senator attacked America’s indiscriminate foreign aid policies, especially the large sums of money sent without the permission of taxpayers to countries that consider The United States an enemy. “Not one penny more to these haters of America!” said Paul.

His speech had the tenor of a well-run, focused campaign and was eerily similar to comments made by Senator Barry Goldwater exactly 50 years ago on the campaign trail leading up to his landmark GOP presidential nomination. “You cannot stop a man who has vowed to bury you by handing him a shovel,” said Goldwater, “By feeding and clothing his friends, while denying your friends the means to help protect you!” Goldwater believed that removing foreign aid would ultimately prevent wars.

Several members of the Young Jewish Conservatives attending CPAC this year specifically mentioned the foreign aid issue as a driving force behind their support for Rand Paul for president. Paul’s straight talk appeals to countless concerned Americans who are fed up with politics as usual, feel betrayed by the Party Machine, and fear that the United States is on an irreversible course similar to that of the Titanic—or Greece.

Two weeks prior to CPAC, the Students for Liberty (SFL) held its national conference in Washington, D.C. More than 1,700 students from across the world attended. The group was largely inspired by the ideas presented to them by Senator Paul’s father, Congressman Ron Paul. Now it is the fastest-growing political group on college campuses globally, and is surpassing both the College Democrats and College Republicans groups on American campuses.

Young Americans for Liberty (YAL) is another group inspired by the Paul family’s articulation of limited government principles. Many YAL members were active in the GOP for years before they understood the liberty message, realized how well it resonates, and committed to passionately fight to preserve it. The large presence of both SFL and YAL at CPAC is telling, and has seemingly eliminated the establishment hostilities doled out to them by fellow attendees when they were the minority at previous conferences. The young libertarians gladly swap testimonies of political enlightenment with a fervor nostalgic of a tent revival meeting. They are also getting elected to offices across the land, a clear sign that they are not going away anytime soon.

Freedom is popular, it seems, and the Bill of Rights is back en vogue with a new generation of American rebels. This energy threatens to change the go-along-to-get-along, aging Republican establishment, which is why the party profiteers are so quick to strike back at the resurgence of old school conservatism.

The same Rockefeller Republicans who sandbagged Goldwater after he won the GOP nomination from the floor are currently working financial and legal channels on behalf of Jeb Bush. The 2016 Republican nomination is seemingly fixed for the top fundraiser and his delegate-donors, a complete violation of the nominating process. Sources say Jeb Bush bussed hundreds of people to CPAC from their Washington offices just to fill seats during his speech and to presumably raise his standing in the straw poll. This effort did not succeed in preventing him from being handily booed every time his name was mentioned, including while he addressed the attendees who remained after a protest/walkout. His temporary seat-filling strategy was met with disdain by attendees who saved and spent their own money to attend the duration of the event and cast their ballots.

One of Paul’s leading critics is fellow Senator and former GOP nominee John McCain, a man who praises Goldwater with his lips while shunning everything he stood for by his actions.  Just two years ago, the 80-year-old McCain called Senators Paul and Cruz, as well as Congressman Justin Amash, “wacko birds.” He called their supporters, the Under 40 crowd that supports Paul’s limited government principles, “impressionable libertarian kids.”

Yet, the vibrant, liberty-leaning younger crowd that has wrestled its way into the GOP is the only fresh blood coursing through the Party’s very old veins. Perhaps the current Republican Party leadership is not the right body from which to expect kind words of “big tent” gratitude. The crowds who now stand with Rand don’t seem to care. Their vision is clear, and they know they will eventually outlive the generation that got the country into this mess in the first place. They seem to be ready to get to work.

800,000 Obamacare Customers Sent Incorrect Tax Information

Washington- The Obama administration acknowledged on Friday that about 800,000 Healthcare.gov customers received incorrect tax information from the federal government. Officials have advised that people who have received the wrong information should postpone filing their 2014 returns.

The errors were discovered on 1095-A forms sent to Healthcare.gov customers who had signed up in 2014 and received tax credits to compensate for the premium costs. Those statements are used to determine if people received an appropriate tax credit. Forbes reported that the incorrect 1095-A forms “included the monthly premium amount of the second lowest cost Silver plan for 2015 instead of 2014.”

According to Andy Slavitt, the administrator at the Centers for Medicare and Medicaid Services, as many as 20% of statements sent out contained the wrong local premium.

Officials estimate that about 50,000 people who received incorrect information have already filed their returns. The remainder of the recipients will be asked to wait until corrected statements are issued before filing their taxes.

California’s health exchange, Covered California, issued a statement on Thursday revealing a similar mistake in sending about 100,000 incorrect forms to people in the state. California appeared to know of the inaccuracies before issuing the forms to meet the February 2nd deadline; Covered California spokesman Dana Howard told news station KPIX 5 that “We did not want to hold up sending out the 1095s to everybody, so that we can correct those that we did have.”

The Health and Human Services Department also announced on Friday an extended health insurance enrollment period, stating that “This special enrollment period will allow those individuals and families who were unaware or didn’t understand the implications of this new requirement to enroll in 2015 health insurance coverage through the federally facilitated marketplace.” Between March 15th and April 30th, people previously uninsured will be able to sign up for insurance, but will be expected to affirm that they were unaware of the healthcare law’s requirement to have insurance or pay a fine when they filed their taxes.

IRS Seizes Nearly $19K From Widow Who Deposited Late Husband’s Savings In Increments

Dubuque, IA- The IRS has seized almost $19,000 from an Iowa woman’s bank account because she was depositing her late husband’s savings in increments under $10,000. Janet Malone, 68, is also facing a criminal misdemeanor charge alleging that she knew the deposits were violating federal law.

The Bank Secrecy Act, passed in 1970 to combat money laundering, requires banks to file reports to the federal government when customers make cash deposits over $10,000. Individuals making cash deposits that are close to meeting the threshold in order to bypass this requirement are considered to be committing a crime called “structuring” whether or not that money was legally or illegally obtained.

Ronald Malone, Janet Malone’s husband, had been visited by IRS agent Jeff McGuire in 2011 to investigate possible structuring. At that time, Ronald Malone was dying of cancer. According to the Associated Press, Mr. Malone acknowledged that the small deposits amounting to $35,500 could be considered structuring and signed a form confirming that he’d been warned about the practice. Janet Malone was at the home for part of that meeting between McGuire and Mr. Malone, but had not signed anything.

Mrs. Malone was reportedly told by her husband shortly before his death in October 2011 about a briefcase containing $180,000 in cash from investment income, gambling winnings and income from his career as an publishing executive. Mrs. Malone then made deposits ranging between $5,800 and $9,000. Prosecutors charged Janet Malone last week with a criminal misdemeanor accusing her of knowingly making small cash deposits from her husband’s savings after he died.

According to an IRS affidavit, Mrs. Malone said that she didn’t remember the details of McGuire’s 2011 visit with her husband because “she was in a state of despair over her husband’s health.”

Last October, the IRS had announced that the agency “will no longer pursue the seizure and forfeiture of funds associated solely with ‘legal source’ structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of field operations (D.F.O.) level.”  It is unclear if there are “exceptional circumstances” regarding Mrs. Malone’s deposits. Institute for Justice attorney Larry Salzman said that the government’s case against Mrs. Malone is “shocking because it demonstrates that prosecutors are not taking seriously the IRS’ alleged policy change not to prosecute legal source structuring.”

Restaurant owner Carole Hinders, also from Iowa, had nearly $33,000 seized in 2013 by the IRS for making frequent small cash deposits. Hinders maintained that she had been making small deposits from her cash-only restaurant at the same bank for decades and had never been warned by the bank that “I was making my deposits wrong.” The IRS later returned her money and dropped the case against her, but requested the authority to refile the case. Based on a plea agreement filed Monday, Janet Malone is expected to plead guilty next week and allow the government to keep the seized money. The charge is punishable by up to a year in jail and a $250,000 fine.

According to a review from the Institute for Justice, the IRS seized $242 million in 2,500 cases between 2005 and 2012. A third of those cases were simply cash transactions under $10,000. Nearly half was returned after challenges from owners disputing the seizures.

EXCLUSIVE: Sheriff Stands Up to IRS, Cancels Land Sale

WASHINGTON, February 7, 2015—New Mexico’s Eddy County Sheriff Scott London notified the Internal Revenue Service (IRS) via letter that the sale of county resident Kent Carter’s property is canceled until Carter receives due process of law and his appeal is heard. The certified letter dated February 4 received an immediate response from the Undersecretary of the Treasury’s office. According to the Treasury’s website, however, the public auction is still slated for February 19.

“Many officers have stood up over the years for the rights of citizens being victimized by the federal government,” said Sheriff Mack, founder of the Constitutional Sheriffs and Peace Officers Association, “But Sheriff London is the first one to stand up to the IRS since the early 1990s.” Mack said, “His actions show courage and humility. London is setting a good example for the rest of our sheriffs.”

Approximately ten days before Christmas, U.S. Marshals broke in the door of Carter’s rental property with their guns drawn. The tenant was a young mother with a new baby—home alone while her husband was at work. Sheriff London was called to the property to intervene. He advised the Marshals that Carter’s case was in appeal and he deserved due process. They threatened to arrest London, but he stood his ground and they backed off.

Carter has battled the IRS for decades over taxes on the earnings of his modest construction business. One court document listed his debt at $145,000, a figure Carter says an assessing agent “pulled out of thin air.” Every time he challenged them, his bill would shoot up a few hundred thousand dollars. His legal complaints state that the IRS failed to adhere to its own tax code, did not use proper accounting methods, and that the collection activity was unlawful because no notices of deficiency were given. Carter says his private and confidential information, including his social security number, was filed in public records and given to third parties. The IRS countered that it can publish and disperse the private information of Americans if it is trying to collect their money or property. A judge agreed.

Carter says the IRS is currently claiming he owes $890,000, a figure that “doubled with the stroke of a pen.”

The Taxation & Revenue Department ordered Carter to cease “engaging in business in New Mexico” until his arbitrary tax debt was paid. Carter appealed this injunction on the grounds that it was both unconstitutional and vague, as it deprived him of his right to make a living and also prohibited him from, “carrying on or causing to be carried on any activity with the purpose of direct or indirect benefit.”

“The IRS fabricates evidence against citizens by pulling numbers out of a hat and adding fees,” said Mack, “They wear people down emotionally and financially until they can’t take it anymore. No citizen should ever have to fight the IRS for decades in order to keep his land.”

“The IRS is a lie. The income tax is a lie,” said Carter. “Why should they be able to take anything? They’re worse than the mafia.”

The Carter properties have liens placed against them. A locksmith was instructed to change the locks. The IRS authorized the United States Marshal Service to arrest/evict anyone found on the premises. London, however, physically stood in front of Carter’s gate until the Marshals backed down. A public auction on the front steps of the Eddy County Courthouse is scheduled, but the local county sheriff—trained in the Constitution—resisted.

Carter voluntarily vacated his property and relocated his mobile home to an undisclosed location. “I chose to leave to keep it from escalating to something ugly—like Ruby Ridge, Idaho,” he said. Carter said he advised the Marshals and IRS Agents who publicly claimed he had armed friends on his land, “If there is going to be any violence, it is going to be you who starts it.”

Carter says 100% of his Social Security benefits is seized each month by the IRS, in addition to $2,800 the agency drained from his bank account. Legally, the IRS can take no more than 15% of Social Security benefits.

Mack says banking institutions quiver when faced with the IRS’ gestapo tactics and generally hand over customers’ personal banking information, including access to accounts, without requiring a warrant or even any documentation. He encourages county sheriffs to brief every bank in their jurisdiction to refer inquiries from IRS agents to them.

Sheriff Mack is calling for the IRS to start following the law, including no “random” audits without probable cause, as they violate the Fourth Amendment. He asks them to stop committing crimes and rewarding IRS employees with bonuses for cheating on their personal taxes. “I agree with Senator Ted Cruz and others who say the IRS should be abolished,” said Mack. “It’s time they got off the backs of the American people.”

Carter says he prays daily for wisdom, and that he is surviving to be able to look into his grandchildren’s eyes and tell them he fought for their future and for America.

London is the first Republican to ever be elected sheriff in Eddy County. He distributes Bibles on behalf of Gideon International and met his wife in choir practice.

Lois Lerner emails show DOJ and IRS were working together

The recovered emails Lois Lerner attempted to delete concerning the allegations against the IRS and their supposed targeting of conservative groups, show the Department of Justice was helping the IRS.

Some of the recovered emails show Lerner had met with the DOJ’s Election Crime Division about one month before the 2010 elections, according to Forbes.  This in and of itself isn’t damning, but this coupled with the DOJ’s refusal to show over 800 pages of documents concerning Lerner, citing “taxpayer privacy” and “deliberative privilege” as reason not to hand out the documents raises suspicions.

Even worse, a few internal DOJ documents were recovered which showed Lerner had discussed the possibility of prosecuting tax-exempt entities with the DOJ around the same time Lerner was meeting with DOJ officials.

According to the Examiner, other documents contained within the deleted emails show Lerner sent the DOJ a “1.1 million page database of information from 501(c)(4) tax exempt organizations,” which included various classified tax records.

A FOIA filed by the government watchdog group Judicial Watch also  revealed how the DOJ was involved in the IRS scandal.  Judicial Watch’s president, Tom Fitton, said it was outrageous that the DOJ’s Public Integrity Section, which is supposed to be investigating such abuses of power and authority, was shown to be involved in the IRS scandal as well.

“It is shameful how Establishment Washington has let slide by Obama’s abuse of the IRS and the Justice Department,” said Fitton according to Breitbart.  “Only as a result of Judicial Watch’s independent investigations did the American people learn about the IRS-DOJ prosecution discussions of Obama’s political enemies and how the IRS sent, in violation of law, confidential taxpayer information to the FBI and DOJ in 2010.”

Why Do Emails Between the IRS and the White House Contain Taxpayer Records?

Newly recovered emails show taxpayer records emailed between the White House and the IRS. Why won’t the agency release the documents to the public?

The Internal Revenue Service continues to be embroiled in scandals related to inappropriate access to taxpayer records and a lack of oversight that may lead all the way to the White House. In May 2013, the IRS revealed that between the 2010 and 2012 elections they had made “mistakes” by giving extra scrutiny to liberal, and conservative groups seeking to obtain 501(c)(4) status.

Groups were profiled for further review for use of the words “patriot”, “tea-party”,  “occupy”,  “9/12 Project”, “progressive,” “occupy,” “Israel,” “open source software,” “medical marijuana” and “occupied territory advocacy”. Initially the scandal was painted as a partisan issue, Republicans looking to take a shot at the Obama Administration and nothing more.

Since that time it has become obvious that there was illegal activity and zero transparency within the IRS and possibly White House officials. When the news first broke, Michael Macleod-Ball, chief of staff at the ACLU’s Washington legislative office, told CNN, “Even the appearance of playing partisan politics with the tax code is about as constitutionally troubling as it gets.”

Shortly after the revelations, the non-profit group Cause of Action began investigating the claims and whether or not the IRS had been sharing these taxpayer records with the White House. The group filed a Freedom of Information Act request seeking any communication between the IRS and the White House regarding tax returns. The IRS refused, Cause of Action sued and a judge forced the IRS to turn over all relevant documents.

At that point the U.S. Treasury Inspector General for Tax Administration (TIGTA) claimed that 2,043 pages of documents were available but could not be released because they would violate federal privacy laws since they contain confidential taxpayer information. The government is making the argument that the public cannot see the documents because of privacy, which in itself is an admission that taxpayer data was sent to the White House. The Department of Justice reportedly told Cause of Action some documents would be released on December 1st, with more to follow on December 15th.

The TIGTA also recently revealed that up to 30,000 missing emails sent by former IRS official Lois Lerner have been recovered. Over the summer the IRS had claimed the emails were lost forever when her Lerner’s computer crashed.  The TIGTA said the emails were found among “disaster recovery tapes” used to back up the IRS email system. Lerner has retired since news of the scandal broke and has refused to testify in front of Congress. In May the House voted to hold her in contempt for her refusal.

Since that time Lerner has increasingly become the focus of wrongdoing. Since the TIGTA’s May 2013 report first exposed Lerner’s role in the profiling more evidence has appeared which indicates she encouraged IRS employees to watch what they were saying through emails. An email sent April 9, 2013 between Lerner, Hooke, and IRS Director for Exempt Organizations Exam Unit Manager Nanette Downing, highlights Lerner’s efforts to put a lid on the controversy.

Most recently, Lerner has been connected to an email sent in September 2010 to an unnamed official from the Department of Justice. The Watchdog group Judicial Watch obtained the email following a Freedom of Information Act lawsuit against the IRS. Judicial Watch requested all relevant communications. The government sent two emails, claiming more than 800 pages were exempt.

The email shows Lerner referencing a meeting with attorneys from the election crimes unit of the Justice Department’s Public Integrity Section and the IRS to “discuss 501(c)(4) issues.” If the profiling took place between 2010 and 2012 the email fits the timeline. What was discussed at that meeting? Was the White House, maybe even President Obama aware of the existence of the program?

Despite the “mainstream” media attempt to paint the issue as nothing more than partisan bickering between the Republicans and Democrats, this incident is a scandal of the highest proportions that indicates an abundance of illegal, and likely unconstitutional, activity.

Tea Party lawsuits against the IRS thrown out of court

The courts have ruled in favor of the IRS Thursday after federal courts in DC threw-out lawsuits being brought against the agency by more than 40 conservative groups seeking compensation for the delays and scrutiny of their tax-exempt forms and applications.

Two cases involving the groups True the Vote and Linchpins of Liberty were deemed moot by Judge Reggie Walton of the US District Court of the District of Columbia, after it was made clear the IRS had granted the groups their desired tax-exempt status.  The case involving Linchpins of Liberty also involved the other 40 conservative groups who had banded together and polled their efforts for the case.

“After the plaintiff initiated this case, its application to the IRS for tax-exempt status was approved by the IRS,” said Judge Walton, according to Politico.  “The allegedly unconstitutional governmental conduct, which delayed the processing of the plaintiff’s tax exempt application and brought about this litigation, is no longer impacting the plaintiff.”

True the Vote founder, Catherine Engelbrecht, said she was very upset by the decision and feels the targeting and her and her group’s political views is a “reprehensible” act.  “The court acknowledges in its opinion that the IRS did in fact target True the Vote for our perceived political beliefs, but then it holds that neither the agency nor the individual IRS agents or officers are responsible for this unconstitutional conduct,” said Engelbrecht. 

“It’s a disappointing ruling,” Hans von Spakovsky, a senior legal fellow at the Heritage Foundation, told the Daily Signal.  “It basically leaves targets of bad behavior by the IRS without a remedy.”

The IRS has admitted it used inappropriate measures and criteria to single-out conservative groups, starting in 2010, in order to slow the process of holding the status of tax-exempt groups.  Two House committees are still carrying out their own investigations into the IRS on these claims, according to the Washington Times, and many top IRS officials, such as Louis Lerner, have already resigned from their positions.

Obama Administration takes action to prohibit companies from leaving America

WASHINGTON D.C. – September 24, 2014 – On Monday, the IRS and the Treasury took actions to reduce “and when possible, stop” tax inversions from occurring within the United States. Tax inversions have increasingly become an issue within the U.S. economy over the past several years, leading many central planners to seek action against free market options available to companies faced with incrementally higher tax demands.

An economic environment created by the presidency of Barack Obama has encouraged many U.S. companies to seek tax inversions, a process by which an American based business purchases a foreign firm in order to relocate its headquarters to a lower-tax nation while maintaining its original operations.

Treasury Secretary Jack Lew said the Obama Administration is seeking congressional action before taking further action. Lew stated, “These first, targeted steps make substantial progress in constraining the creative techniques used to avoid U.S. taxes, both in terms of meaningfully reducing the economic benefits of inversions after the fact, and when possible, stopping them altogether”. 

According to the Treasury, Monday’s actions were designed to ensure that that economic incentives spurring the increase in tax inversions become less accessible and less appealing to companies. The Treasury, alongside the IRS, issued a formal notice declaring that the U.S. government “would prevent U.S. companies from accessing a foreign subsidiary’s earnings while deferring U.S. taxes through what it called ‘hopscotch’ loans.”

Among other measures, Monday’s notice would also prevent companies from transferring assets between the ‘controlled foreign corporation’ and the parent company, making is impossible for these businesses to avoid paying U.S. taxes on their overseas endeavors. Additionally, the new notice prevents a U.S. company from being able to restructure, and therefore access a foreign subsidiary’s earnings tax-free.

Finally, the Treasury said its actions would make it increasingly difficult for a U.S. entity to invert by fortifying the requirement that the previous owners of the U.S. company own less than 80% of the new combined business in such transactions.

A spokesman for the House Speaker John Boehner responded to the measures stating, “the answer is to simplify and reform our broken tax code to bring jobs home-and help grow our economy and create even more American jobs.”

These measures will take effect on all business deals not closed by this coming Monday.

Who is John Galt?

Follow Michael Lotfi on Facebook & Twitter.

IRS Tech Experts Claim That Lois Lerner’s Hard Drive Was Only “Scratched”

In a press release Tuesday, the Ways And Means Committee discovered through interviews with IRS technology experts that former IRS official Lois Lerner’s hard drive was scratched, but not unrecoverable. In addition to this discovery, the release stated that professionals within the agency had advised the IRS to seek independent assistance to retrieve the data, and this recommendation was ignored.

According to the press release, “investigators have now learned from interviews that the hard drive of former IRS Exempt Organizations Director Lois Lerner was ‘scratched’, but data was recoverable.”

Not only did the press release contradict previous testimony claiming that all efforts to recover Lerner’s hard drive had been exhausted, but it also stated that “a review of internal IRS IT tracking system documents revealed that Lerner’s computer was actually once described as ‘recovered.’” IRS IT employees were unable to clarify exactly what “recovered” meant.

Last month, IRS Commissioner John Koskinen had testified that Lerner’s hard drive was unrecoverable and had been “recycled”, or destroyed. Koskinen said he was unsure if the hard drive had been smashed or melted down, but he admitted that it was indeed physically destroyed.

In another twist, IRS Deputy Associate Chief Counsel Thomas Kane testified on July 17th that he was unsure if backup tapes of Lerner’s emails were actually recycled. IRS officials had previously claimed that all backup tapes of emails were recycled after six months.

Experts say the IRS should have documentation of the elimination of  Lerner’s hard drive, but proof of its destruction is still yet to be found.

“From a purely contractual standpoint, if you send something over to a contractor, you would have to get a statement back saying they actually completed the work to actually pay them … because then you would know that it was destroyed,said government tech official Karen Evans.

What began as an inquiry into allegations of the IRS unfairly targeting conservative groups applying for tax-exempt status has grown into a mystifying examination of the incompetence of the IRS in its inability to properly keep records.

“The Committee was told no data was recoverable and the physical drive was recycled and potentially shredded.  To now learn that the hard drive was only scratched, yet the IRS refused to utilize outside experts to recover the data, raises more questions about potential criminal wrong doing at the IRS,” said Ways and Means Committee Chairman Dave Camp (R-MI).

Rep. Elijah Cummings (D-MD) disagrees with the investigation, and sent a letter to House Oversight and Government Reform Chair Darrell Issa (R-CA) objecting to Koskinen being called to testify a third time, declaring it “public harassment of an agency head”.



Gary Johnson: “Imagine Life without Having To Deal with The IRS”

Following the latest letter released from former IRS official Lois Lerner, former Governor of New Mexico and 2012 Libertarian party presidential candidate, Gary Johnson, added his two cents regarding the controversy with the Internal Revenue Service in an interview with the New Mexico Watchdog.

As BenSwann.com previously reported, in Lerner’s e-mail she warned her colleagues, writing, “We need to be cautious about what we say in emails.”  This warning from Lerner came in the midst of the controversy over missing e-mails, and was followed by an order from a federal judge, demanding IRS officials explain, under oath, how Lerner’s emails disappeared.

Come on, loss of emails? Give me a break,” said Johnson in response to the Lerner debacle. “If that doesn’t outrage anybody who looks at this, then you’re out to lunch.”

Controversies such as the one involving Lois Lerner are no surprise to Gary Johnson, who said, “To a higher degree or a lesser degree this is what happens when you have bureaucrats in charge that can manipulate the system any way they so choose.”

Imagine life without having to deal with the IRS,” said Johnson, who told the New Mexico Watchdog that his ultimate solution would be to end the IRS altogether.

Let’s abolish the IRS, let’s eliminate income tax, let’s eliminate corporate tax, let’s balance the federal budget and if we need a tax, it can be one federal consumption tax,” Johnson proposed.

The federal consumption tax Johnson has in mind would work from a single point of purchase, taxing people only when they spend money on a certain item or service. “I think a great starting point for a debate and discussion over a national consumption tax is, let’s start with the Fair Tax, legislation that has been written up,” said Johnson.

While some may question whether such a change would ever take place, John said, “I believe it will take place because at some point all these smart people will actually get with it.”

Why would any company, anywhere in the world, locate anywhere but the United States, given zero corporate tax?” said Johnson. “The entire world will change their tax structure to emulate no income tax, no corporate tax, no more filing.

U.S. Archivist David Ferriero: the IRS “did not follow the law”


Rep. Trey Gowdy hammered IRS Commissioner John Koskinen when he said that he found the IRS of no wrong doing. Gowdy pressed Koskinen on how he knows there was no criminal wrongdoing when he hasn’t looked at criminal statutes.

Gowdy blasted Koskinen and shouted, “You don’t have any idea of criminal wrongdoing or not!”

Gowdy, a former persecutor, told Koskinen that there is a “negative inference” because of the inability of the IRS to retrieve the Lerner emails that the IRS claim were destroyed.

It turns out though the IRS did break the law according to U.S. Archivist David Ferriero.

According to FreeBeacon.com, U.S. Archivist David Ferriero of the National Archives and Records Administration told Rep. Tim Walberg (R., Mich.) that the IRS “did not follow the law” when they failed to notify his administration that they had lost Lois Lerner’s email records.

Watch the testimony below:

Paul Ryan to IRS Commissioner: “I just, I don’t believe it. That’s your problem, nobody believes you.”


Americans are outraged over the IRS’ claim that a “computer glitch” erased the hard drives of all incriminating evidence of Lois Lerner’s emails. 

Congressman Paul Ryan (R-Wis) made a statement to IRS Commissioner John Koskinen today calling him out for an obvious political cover-up.

“This is unbelievable,” said Ryan. “I am sitting here listening to this testimony… I  just, I don’t believe it. That’s your problem, nobody believes you.”

“You are the Internal Revenue Service. You can reach into the lives of hard-working taxpayers and with a phone call, an email, or a letter you can turn their lives upside-down. You ask taxpayers to hang on to seven years of their personal tax information in case they are ever audited, and you can’t keep six months’ worth of employee emails?”

Many Americans feel the same anger and frustration Ryan voiced today, but will Ryan do anything about it? Will Ryan try to eliminate the IRS completely?

Congressman Steve Stockman (R-TX) said, “The United States was founded on the belief government is subservient and accountable to the people.  Taxpayers shouldn’t be expected to follow laws the Obama administration refuses to follow themselves,” said Stockman.  “Taxpayers should be allowed to offer the same flimsy, obviously made-up excuses the Obama administration uses.”

Stockman’s bill, “The Dog Ate My Tax Receipts Act,” will allow taxpayers to offer the same lame excuses as the IRS did today.
The full text of the resolution follows:

The resolution may be cited as the “Dog Ate My Tax Receipts Resolution.”

Expressing the sense of the House of Representatives that the Internal Revenue Service (IRS) must allow taxpayers the same lame excuses for missing documentation that the IRS itself is currently proffering

Whereas, the IRS claims that convenient, unexplained, miscellaneous computer malfunction is sufficient justification not to produce specific, critical documentation; and,

Whereas, fairness and Due Process demand that the American taxpayer be granted no less latitude than we afford the bureaucrats employed presently at the IRS;

Now, therefore, be it resolved that it is the sense of the House of Representatives that unless and until the Internal Revenue Service produces all documentation demanded by subpoena or otherwise by the House of Representatives, or produces an excuse that passes the red face test,

All taxpayers shall be given the benefit of the doubt when not producing critical documentation, so long as the taxpayer’s excuse therefore falls into one of the following categories:

1.         The dog ate my tax receipts
2.         Convenient, unexplained, miscellaneous computer malfunction
3.         Traded documents for five terrorists
4.         Burned for warmth while lost in the Yukon
5.         Left on table in Hillary’s Book Room
6.         Received water damage in the trunk of Ted Kennedy’s car
7.         Forgot in gun case sold to Mexican drug lords
8.         Forced to recycle by municipal Green Czar
9.         Was short on toilet paper while camping
10.       At this point, what difference does it make?

In any case, IRS can see the NSA for a good, high quality copy.

Congressman Stockman introduces bill to grant taxpayers same excuse as IRS

WASHINGTON, June 20, 2014– Can’t do your taxes because the dog ate your hard drive? No problem! According to a press release from Congressman Steve Stockman (R- Texas), taxpayers who do not produce documents for the Internal Revenue Service will be able to offer a variety of dubious excuses under new legislation he introduced a week after the IRS offered an incredibly dubious excuse for its failure to turn documents over to House investigators.

“The United States was founded on the belief government is subservient and accountable to the people.  Taxpayers shouldn’t be expected to follow laws the Obama administration refuses to follow themselves,” said Stockman.  “Taxpayers should be allowed to offer the same flimsy, obviously made-up excuses the Obama administration uses.”

Under Stockman’s bill, “The Dog Ate My Tax Receipts Act,” taxpayers who do not provide documents requested by the IRS can claim one of the following reasons:

1.         The dog ate my tax receipts
2.         Convenient, unexplained, miscellaneous computer malfunction
3.         Traded documents for five terrorists
4.         Burned for warmth while lost in the Yukon
5.         Left on table in Hillary’s Book Room
6.         Received water damage in the trunk of Ted Kennedy’s car
7.         Forgot in gun case sold to Mexican drug lords
8.         Forced to recycle by municipal Green Czar
9.         Was short on toilet paper while camping
10.       At this point, what difference does it make?

Stockman’s bill comes a week after the IRS refused to turn over to House investigators emails from former Exempt Organizations Divison director Lois Lerner that would implicate agency personnel in illegal targeting of citizens critical of President Barack Obama.

The IRS claimed a “computer glitch” has erased the hard drives of all incriminating evidence.  The IRS further claimed the hard drives are not available for forensic investigation as they had just been destroyed for recycling.

The full text of the resolution follows:

The resolution may be cited as the “Dog Ate My Tax Receipts Resolution.”

Expressing the sense of the House of Representatives that the Internal Revenue Service (IRS) must allow taxpayers the same lame excuses for missing documentation that the IRS itself is currently proffering

Whereas, the IRS claims that convenient, unexplained, miscellaneous computer malfunction is sufficient justification not to produce specific, critical documentation; and,

Whereas, fairness and Due Process demand that the American taxpayer be granted no less latitude than we afford the bureaucrats employed presently at the IRS;

Now, therefore, be it resolved that it is the sense of the House of Representatives that unless and until the Internal Revenue Service produces all documentation demanded by subpoena or otherwise by the House of Representatives, or produces an excuse that passes the red face test,

All taxpayers shall be given the benefit of the doubt when not producing critical documentation, so long as the taxpayer’s excuse therefore falls into one of the following categories:

1.         The dog ate my tax receipts
2.         Convenient, unexplained, miscellaneous computer malfunction
3.         Traded documents for five terrorists
4.         Burned for warmth while lost in the Yukon
5.         Left on table in Hillary’s Book Room
6.         Received water damage in the trunk of Ted Kennedy’s car
7.         Forgot in gun case sold to Mexican drug lords
8.         Forced to recycle by municipal Green Czar
9.         Was short on toilet paper while camping
10.       At this point, what difference does it make?

In any case, IRS can see the NSA for a good, high quality copy.

Follow Michael Lotfi On Facebook & Twitter.

The Shocking Real Reason for FATCA, and What Comes Next

This article was written by guest contributor Nick Giambruno

If you’ve never heard of the obscure and seemingly boring Foreign Account Tax Compliance Act (FATCA), I don’t blame you.

Few people have, and even fewer fully grasp what it really means or the terrible things that it’s a harbinger for.

Readers of International Man of any duration will no doubt be familiar with it. (In case you aren’t, see here and here to get up to speed.)

That so few people understand FATCA is perhaps not surprising. Often, otherwise offensive government actions and institutions are given dull and opaque names to obfuscate their true purpose.

I think the Federal Reserve is an excellent example of this.

After two experiments with central banking in the US failed to take root in the 1800s, anything associated with a central bank became deeply unpopular with the public.

So, the central banking advocates decided to try something new—a fresh branding strategy.

Rather than call their new central bank the Third Bank of the United States (the previous ones were named the First and Second Bank of the United States respectively), they decided to give it a vague and boring name that would conceal from the average person what it really was: a central bank. They chose the name “Federal Reserve” for that purpose.

I’d say they were pretty successful, unfortunately. Nearly 100 years later, most Americans don’t have the slightest clue what the Federal Reserve is, what it does, nor how it affects them.

I believe the same dynamic is at work with FATCA.

While FATCA is ostensibly about cracking down on offshore tax evasion, I think another motive is at play.

So let’s peel back the layers of this onion and find out.

The optimistic estimate for FATCA is that it will bring in around $9 billion over 10 years, or $900 million on average per year.

With the deficit in fiscal year 2013 for the US federal government at $680 billion, the expected $900 million from FATCA isn’t even a drop in the bucket (actually around one-tenth of one percent). Even in the event that the US will moderately reduce its deficit in the future, the revenue from FATCA will remain a pittance in comparison.

So it begs the question: Why would the US government go through all the enormous trouble and cost of implementing FATCA if it’s going to bring in such a relatively meager amount of money?

FATCA on Steroids

FATCA’s real purpose is not to collect money, but rather to pave the way for a global FATCA, informally known as GATCA.

You see, complying with FATCA often breaks the privacy laws of other countries. To get around this problem, the US government has been negotiating bilateral agreements with pretty much every country in the world.

However, it’s not practical for each and every country to create their own version of FATCA and accompanying web of bilateral agreements. It would be a very slow and tedious process.

So to address this issue, the central planners at the G20 and OECD devised what they call a new “global standard” of automatic financial information exchange between governments (i.e., GATCA) modeled on the US’s FATCA.

In other words, unaccountable bureaucrats from these supranational institutions are foisting upon the world a FATCA on steroids.

However, GATCA would have never been possible in the first place had the US not cleared the path with FATCA.

The G20 and OECD needed the US—the sole financial superpower (for now at least)—to strong-arm and cram down the throats of the rest of the world this privacy-killing measure. There’s no other entity on the planet with the capability to do so.

The very big stick the US wielded was access to the US financial system and the world’s premier reserve currency. Don’t sign up for FATCA and forget about accessing the US dollar or US financial system, and by extension the vast majority of international trade. It wasn’t long before most of the world fell in line.

Now that FATCA has become a fait accompli, the foundation has been laid for GATCA.

Unfortunately GATCA also will likely become an irreversible reality in the not-so-distant future.

I believe it’s highly probably that the OECD, the G20, and others will sanction or otherwise blackmail countries that don’t comply with GATCA. The pressure will likely be too enormous for the vast majority of countries to bear.

In the end, this means a permanent record of every penny you have ever earned, saved, borrowed, or spent anywhere in the world will be available in an instant to be analyzed and scrutinized, and shared with any number of local and global government agencies, all regardless of any actual or suspected wrongdoing.

But wait, there’s more!

If FATCA wasn’t the end game, don’t expect GATCA to be either.

Let’s peel back the final layer of the onion.

What Comes Next

Did you really think that all these governments would go through all the trouble of creating the architecture to gather all this global financial data with GATCA and then just let it collect dust? Of course not. They’re going to leverage this data as much as they can.

It’s no secret that collectivists the world over have long fantasized about creating a global tax with a planetary taxation authority. Whether it’s the global carbon tax, a worldwide tax on financial transactions, or a UN tax on air and sea travel, all prior attempts at creating a global tax haven’t really worked, as the infrastructure for collecting the data and enforcement wasn’t in place.

However, that could all change with GATCA, which could provide a platform to make the disturbing dream of a global tax a reality.

Bankrupt governments like France and the UK are also on board, as it allows them to more efficiently fleece and control their citizens. Strangely, you never hear financially sound countries, like Switzerland, Singapore, or Hong Kong advocating for FATCA, GATCA, or a global tax. It’s only the failed welfare states drowning in debt, and that’s not a coincidence.

All of this dovetails perfectly with the disconcerting global success of the economist Thomas Piketty. Piketty is sort of like a modern John Maynard Keynes in that he is giving academic cover and legitimacy to what otherwise should be perceived as radically destructive policies—like an inescapable global wealth tax.

Old Wine in New Bottles

Similar to how the income tax was originally sold to Americans, FATCA is being sold as a measure targeted only at the “rich.”

Of course, once you give politicians an inch, they will take a mile.

You’ll recall that when the federal income tax was introduced in 1913, those making up to $20,000 (equivalent to around $475,000 today) were only taxed at 1%, the top bracket kicked in at $500,000 (equivalent to around $12 million today), and the tax rate there was only 7%.

Of course once the infrastructure was in place for the federal income tax, the politicians naturally couldn’t resist ramping it up until we have the monstrosity that exists today, which most Americans passively accept as “normal.”

Expect a similar dynamic and gradualism with FATCA, GATCA, and a global tax.

What You Can Do

Obscure and boring wording was used to conceal to the average American the true purpose of the Federal Reserve, and the same is true about FATCA.

In reality, FATCA isn’t about stopping tax evasion or collecting revenue, as the numbers clearly show. It’s all about setting up the architecture to the ultimate goal of establishing a global tax as envisioned by Piketty and his fellow travelers.

Unfortunately there’s little any individual can practically do to change the trajectory of this trend in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation.

This is what Doug Casey’s International Man is all about: helping you cut through the smoke and mirrors while making the most of your personal freedom and financial opportunities around the world. The free IM Communiqué is a great place to start.

Utah Congressman Makes Push To Disarm BLM, IRS

Washington- Congressman Chris Stewart (R-Utah) has called to cut funding for excessive “paramilitary units” used by agencies such as the Bureau of Land Management in the wake of the standoff between Cliven Bundy and the BLM.

Stewart is worried about the heavily armed forces at the helm of the BLM, and he is also concerned about the same type of forces that other federal agencies have in place. On Tuesday Stewart spoke off the House floor, criticizing the fact that several federal departments have incredibly overwhelming, and largely unnecessary, firepower.

Earlier this month it was reported that numerous armed agents surrounded Bundy’s property in response to a dispute over grazing rights. After a tense standoff between the agents and protesters, the BLM forces left the area and ended up pursuing alternative methods to approach the conflict with Bundy.

While Stewart is in a neutral position regarding the incident between Bundy and the BLM, he was troubled that the agency had reacted by bringing its own special forces to the Bundy Ranch.

“There are lots of people who are really concerned when the BLM shows up with its own SWAT team,” Stewart said. “They’re regulatory agencies; they’re not paramilitary units, and I think that concerns a lot of us.” 

Stewart would prefer that the BLM and others use local police resources instead of massive squads such as the ones that were called to the Bundy Ranch. “They should do what anyone else would do,” he told the Salt Lake Tribune. “Call the local sheriff, who has the capability to intervene in situations like that.” 

The Department of The Interior defended the use of special forces in the Bundy-BLM conflict, saying that the forces were there to protect the public and federal agents.

Follow Annabelle on Facebook and Twitter.