I find the "well then just pay your taxes" answers to be on the same level of "well if you have nothing to hide...".
You can be a honest and tax-paying citizen of society and still get audited. There's always the chance that there may be a mistake somewhere. The US tax code is not simple. Even if you shell out $20-$80 a year to do it via TurboTax, H&R Block, whatever, there's always room for a mistake.
And even if there are no mistakes, simply being told you are being audited would make most people's heart skip a beat.
The article didn't quite cover what approach the IRS is using.. Whether they are taking already flagged people and getting more info via social network profiles, or if they are using social network profiles and using that as a deciding factor on if one should be audited or not.
The former I don't have much of an opinion on. The latter I don't like the sound of one bit.
It does suck, and I can't imagine anybody wants to be audited, and there can be mistakes. That's the cost of any government bureaucracy, I'd wager.
But I'm not clear why it's unsettling to use social networking posts—that is, public broadcast publishing by individuals—as a source of information. It's as legitimate as any other.
The preliminary flagging process is done through an automated system that compares your return with others in your income bracket, as well as other characteristics that suggest errors or ommisions. I assume this would be one of many signals that are included. Besides, having your return flagged doesn't mean you will be audited, it just means a human will likely review it and make a determination.
There is no way I could imagine social network posts would be used as the sole or even as a major indicator for an audit. If it was, the audit success rate would be terrible, anyway.
The IRS doesn't have a system to track down FB posts or Instagram photos. It doesn't even have the resources to maintain its own systems.
Audits are randomly chosen out of several pools (i.e., corporations, very wealthy individuals, the self-employed, business-owners, every else, etc.) with heavy emphasis on high-fraud pools such as the self-employed. These pools are generated based on self-reported information (the much vaunted/feared comparative reporting analysis system is years from implementation). Due to high fraud levels, some pools (i.e., the self-employed pool) have higher likelihoods of audits but from the standpoint of the taxpayer, the increased risk is isn't meaningfully worse.
They always audit your tax, no matter what. I just got audited and boom they wanted $63 more. Whatever you paid this year, a few years later they will review again...
There are different levels of audit. The "standard" audit they apply to everyone is basically a cross-check of your 1099's and W-2's, as well as a form check to look for computational errors (or didn't-follow-instructions errors).
When people say "I am being audited", they mean the higher levels of audit where they must produce extra records for the IRS to prove deductions & such.
Most people's taxes are pretty basic and this is likely the typical audit response. The one thing I would have expected though is we want $63 more plus a $100 fine for making a typo.
One thing that always bugs me, is that if the gov. has enough information to know you owed $63 more dollars they had enough information to tell you exactly what you owed up front and you could have skipped doing taxes and paying turbo tax or whoever in the first place.
I deal with 3 tax agencies every year. I submit my personal and my business's tax returns to the British HMRC as that's where I live. I deal with my home country's (Hungary) tax agency too for various, boring reasons. And, ultimately, as I tend to do my wife's tax returns as well and she's a citizen of the United States I file taxes with the IRS.
I don't know how else I could put this: the US tax system is absolutely insane. It's several orders of magnitude more complicated than any other I'm familiar with. It's simply ridiculous. It's really, really bad.
My father-in-law was pretty high up in the NY State taxing agencies before he retired. When I once asked him why he thought the tax codes in the US were so complicated, he said it was simply because the US likes to use the tax codes to for social engineering and many different people have had their hands at the controls over the years.
That's wholly untrue. Yes, the tax preparation industry has made token donations to efforts to preserve the current tax code.
But I would argue that the failure of tax reform is not so simple. Major tax reform is a massive, massive legislative undertaking. And doing so redefines many of the basic American incentives. Having your say in tax reform is the equivalent of leaving your mark on the next 20-30 years of American society.
Suffice to say, the massive polarization of our Legislature, combined with the hyper-efficacy of Senate obstruction, and finished off with the fact that tax reform is hard to campaign on means that there is no real incentive for our legislators to reform. But sure, a token campaign contribution making up a miniscule fraction of total donations doesn't hurt...
The tax code isn't just overly complicated, it's poorly equipped for dealing with a global economy and effectively encourages you to shirk as many taxes as you can legally get away with. This is especially noticeable in the business world where you're forced to file more frequently and actively put yourself at a disadvantage if you don't exploit the loopholes to the level your competitors do.
There's a certain irony in wealthy corps/individuals being able to pay less effective taxes than the less fortunate purely because they can afford to work the system to their advantage. The only reason most of these gimmicks are possible is because the government is so damn determined to influence behavior through taxes.
A billion dollars has already been raised in the 2014 midterms. A non-presidential year, 6 months before the election, and a billion has already flowed in.
So yes, your millions are a very tiny fraction of the money flowing in.
A large cause is all the government handouts we hide in the tax code as deductions. Simplifying the tax code removes a favorite way for politicians to payoff donors.
I wonder if tax credits on mortgage payment interests is a contributing blocker to tax reform. If they got rid of it, buying and owning a house would be so much more expensive. It would make renting more worth it.
The problem is they can't dump that deduction without causing a massive discontinuity. If you get rid of it, house prices will drop instantly and incumbent owners are holding the bag in the form of their existing mortgage. So the only sane way to get rid of it is start now and phase it out over decades.
"If you don’t want the IRS in your online business, Dyanim suggests ratcheting up the privacy settings on all of your social media accounts. And never posting anything that you wouldn’t want the agency to see. You could also try a charm offensive. The IRS has 24,000 Facebook fans and 52,000 Twitter followers."
Isn't it true that "liking" a page on Facebook gives the owner of that page information about your profile? It seems like the two calls to action for this article are contradictory.
> Isn't it true that "liking" a page on Facebook gives the owner of that page information about your profile? It seems like the two calls to action for this article are contradictory.
We don't want to drive more corporations out of the US, but if the feds actually think they are losing $300 Billion in revenues each year, why not go after the Fortune 100 and their offshore shenanigans rather than 100+ million poor schlubs who might owe a few more bucks here and there. That is the major problem I have with the current tax system - Jane/John Sixpack don't have the "opportunities" that corporations do when it comes to taxes, yet every year around this time we hear hit pieces against the American people like this that we aren't paying our fair share. Nonsense.
I am for over complicating the tax code. Let me tell you why.
If we over complicate the tax code as well as complicate doing your taxes, maybe folks will finally get more upset with it.
The more folks get upset, maybe the more outspokeness to change it. The IRS is a huge problem and the loop holes are even a greater problem.
I am all for flat or fair tax at 9-13%. First you might say no, but with a flat tax, you no longer have to worry about filing taxes, but maybe a small slip of paper. Secondly, how much time is spent preparing and filing? Time could be drastically put back into the citizens rather than being taken away with another government task.
I don't see how the US Federal Tax Code could get more complicated without just inserting pure gibberish into it.
The thing is, most of the tax code doesn't apply to everyday citizen. The really complicated stuff only applies to a certain number and I'm sure they have well paid people doing their best to avoid those sections.
The easy way to get people riled up about taxes? Remove withholding from paychecks and force people to write that big check every April. Then you'll get an uproar since most people have no idea how much in taxes they pay. But that's likely not the point you're trying to make.
> "The easy way to get people riled up about taxes? Remove withholding from paychecks and force people to write that big check every April. Then you'll get an uproar since most people have no idea how much in taxes they pay. But that's likely not the point you're trying to make."
This would have the desired effect, but also others. Mostly that the IRS would suddenly have a lot of individuals who owed money to the government but couldn't pay it. I agree with this in principle, but the current system has trained (intentionally, I would argue) people to not think about what they pay in taxes or what it gets used for. Suddenly reverting to a system that demands financial planning and responsibility from individuals isn't workable. It takes time.
That number is already shown on W-2s and copied to the tax return. I guess it's easier to not care about the number than it would be to not care about a check.
One thing that would happen is that a lot more people would come up short at tax time.
And yet if you ask people how much they pay taxes they probably don't know.
They may know how much they take home and how much they get back on their return, but the dollar amount they pay in taxes? I would bet most don't know.
Oh, I agree with that. I was just pointing out that the information is already pretty available (It isn't actually on the W-2, that's just withholding, but it's a line item on the 1040). To me that at least hints at people not believing they can do much to change it, rather than being completely oblivious.
A flat tax is highly regressive and is basically a giveaway to the rich. A flat tax system that attempts to be fair ends up being a progressive rate system by another name. Either way, a flat tax system isn't any better than the current system because the progressive marginal rate structure isn't where the complexity of the tax code lies.
You are missing the incentive structure that results from over-complicating the tax code.
Getting angry about an over-complicated and taking productive action to change it takes effort. Lots of it, sustained over time in an organized and intelligent way. But people generally aren't passionate about taxes. They're passionate about hobbies, their families, friends, major life goals, and so on. Taxes are just an obstacle to move past.
When you overcomplicate the tax code, you create a huge market for companies willing to take on that burden for you, at a price. Because they operate at scale, they achieve efficiencies that no individual or small group can hope to achieve. Doing peoples' taxes is much more palatable when you're getting paid to do so. Meanwhile, John and Jane Smith can go back to what they're really passionate about.
For a price.
As a litmus test for a country's tax code, I propose: if a typical high school graduate with access to all necessary information cannot do his or her federal/national taxes in an afternoon, your country's tax code is too complicated.
I totally agree. I spent about 6 hours today trying to sort through federal, state, AND city forms--3 levels of hell, really, with city being the worst. For city, I was denied the ability to e-file after going through a long sign-up process spanning many pages and questions. They asked for my SSN at least 5 times. At the end, with a simple 3-question form, they determined I wasn't eligible to e-file. Maybe they should have put that first.
The rules shouldn't be so convoluted that we have to pay private companies to untangle the mess for us. The government had a choice in the matter; they could have gone with simplicity instead of the Gordion knot. I guess I'm not surprised, since we're forced to deal with their system. We can't vote with our dollars, only votes at the ballot box, and last time I checked, simplifying the tax code wasn't on the agenda.
German citizen here. 70% of all tax literature is German, because our law is notoriously complex. Efforts to simplify it have largely failed. So, I wouldn't hold my breath.
"If Nike is analyzing my information, the worst consequence is that they market stuff to me that I don’t want and it’s annoying," says Dayanim. "If the government does it, the worst consequence is there could be legal ramifications, whether it’s fines, penalties or imprisonment."
Maybe don't evade your goddamned taxes then.
Seriously, people who not only evade tax, but follow it up by flaunting that fact in public, deserve absolutely no sympathy.
The IRS doesn't use your online profile to decide if you're a tax evader. It's simply fearmongering from anti-tax advocates.
The IRS doesn't even have the budget to carry out basic audits in which the bulk of the investigational burden is placed on the taxpayer (by means of responding to auto-generated documentation requests). It certainly doesn't have the budget to invest in a high-tech system that could track multiple social media platforms and somehow connect that to financial spending or tax reporting.
It is not. Tax evasion is an actual crime. The IRS using public signals from social media to determine if somebody is cheating on their taxes is not the same as the NSA tracking your GPS location via your cell phone at all times.
You are correct. Perhaps I did not make my point clear. If you publicly post pictures of your new Porsche and your newly remodeled kitchen and claim that you only made $10k last year, why should that not be cause for the IRS to take a deeper look? You do not, by definition, have any expectation of privacy in that scenario. If you sent the picture of your new ride in a private message, that is a different story.
I see it as more of the 'if your problem is that you don't like surveillance, it shouldn't matter who is doing it' as Nike is being stated as a preferable body to have surveillance them than the IRS in a hypothetical worst case scenario for both which appears to involve them being a tax cheat.
It is not difficult after all to imagine a situation where the worst case scenario of Nike monitoring you is much worse than the worst case scenario of the IRS monitoring you.
You can be a honest and tax-paying citizen of society and still get audited. There's always the chance that there may be a mistake somewhere. The US tax code is not simple. Even if you shell out $20-$80 a year to do it via TurboTax, H&R Block, whatever, there's always room for a mistake.
And even if there are no mistakes, simply being told you are being audited would make most people's heart skip a beat.
The article didn't quite cover what approach the IRS is using.. Whether they are taking already flagged people and getting more info via social network profiles, or if they are using social network profiles and using that as a deciding factor on if one should be audited or not.
The former I don't have much of an opinion on. The latter I don't like the sound of one bit.