The current tax system imposed on corporations by the U.S. government is at best, a biased system; for corporations that have a net profit, taxes on those profits amount to a full one-third. So, if you're doing business as a standard "C" corporation, and you do manage to make a profit, you're going to owe Uncle Sam about 30%. Now, you add to that tax a capital gains tax that is levied on the investment capital of that corporation, and you have the makings for a tremendous tax liability, or do you? The actual income tax paid by corporations and the tax paid as a capital gains tax has diminished tremendously over the last thirty or forty years, and apparently not many of the citizenry of this country, nor the media are asking any questions. The general public doesn't ask because for the vast majority and understanding of corporate taxation is non-existent; why isn't the media asking? That's another issue altogether.
The first thing you must understand when dealing with the corporate tax structure, is that for the most part, many large corporations do not pay the complete 30% tax that would typically be levied against an individual if they were in the same situation; corporate accountants and the sheer process by which corporations must report their income, expenses, deductions, depreciation, dividends, and any other financial transactions allows for huge deductions that typically offset any tax due. This concept is a major topic of discussion today, as we attempt to better control and regulate corporate accountability for their finances.
As for the capital gains tax, it is at an all time low, and President Bush has given corporate America and even greater gift of capital gains exemption on foreign income. Could you imagine how excited the average citizen would be to find their income had been exempted for a couple of years from tax? Don't look for that to happen any time soon, as the average guy doesn't have expensive lobbyists in Washington working for them.
When you have large corporations that are obviously reporting earnings and paying dividends, yet they pay no tax, you should be tipped off to the fact that there is a problem. How to fix that problem, may be another subject altogether.
The latest proposals have been to eliminate the corporate tax altogether. This would leave only the capital gains tax, and would shift the tax burden to the individuals of this country; that is a tremendous shift from the post-war era of the Second World War, when corporations and individuals shared the responsibility almost equally. Thanks to the lobbying done by corporate lobbyists over the last thirty years, we've finally reached the point of no return. The latest proposals have come from within the halls of Congress to eliminate corporate tax, and let the average taxpayer assume all the responsibility. Of course, these are the same individuals who voted themselves a pay raise in the face of a huge national deficit and a sluggish economy.
In case some of you have noticed, we as individual citizens are losing more and more of our take home pay each year, to taxes of some kind. Medicare, social security, and income taxes take a larger portion of our dispensable income each year. This would take a step closer to making even more of our income the property of the tax man.
What about this seems unfair? As pointed out by the individuals who are in favor of eliminating corporate tax, it would encourage capital investment and job growth in this country and that is absolutely true, it theoretically would do just that. But since when does theory actually work in practice? Communism works in theory. Many individuals believe it is simply another way to provide tax-free income to CEOs, and Board Members. The latest scandals such as Enron and HealthSouth have shown this country real hard evidence of the corporate abuses that are rampant in this country, and so far uncontrolled. The Sarbanes-Oxley Act has taken great steps toward greater accountability on the part of the corporate environment, but elimination of corporate tax is simply a legal way to avoid paying the tax.
When you factor in the ability of the wealthy and the corporate entities of this country to hire brilliant accountants that find loopholes in the tax system, and relieve their clients entirely of their tax liability, you cannot believe that the current system operates for the people, by the people, can you?
By : Dassana Jayalath
Dassana Jayalath is the author of WebSuperTips newsletter. Visit http://www.websupertips.com to download Free eCourse : Newbie's Guide To Profitable Internet Home Business
Friday, January 1, 2010
Saturday, December 26, 2009
Tax fraud and Internal Revenue Service (IRS) Tools
What is tax fraud, and how does our government control it? That's a really big question to answer, so let's break it apart and answer it in two different paragraphs. Tax fraud is the intentional avoidance of tax due by a taxpayer, corporation, or other legal entity. There is a vast difference between the opportunity to minimize your tax liability and the direct avoidance of any responsibility. The tax laws and regulations of the Internal Revenue Service are there for the benefit of the taxpayer. If there is a way to reduce or minimize the amount of tax due, legally, by all means citizens are encouraged to take the break. There are all sorts of ways to commit tax fraud, and many famous cases have been tried, such as Al Capone and Willy Nelson.
When, as a taxpayer, you seek whatever legal means possible to avoid tax liability, you are guilty of no crime. It is your given right to seek a means to minimize your liability, in order to keep more of your money. However, when companies, individuals, or any other legal entities attempt to avoid their legal responsibility, we as a country suffer. The government operates on tax dollars. Tax dollars that everyone who has been deemed liable must provide, and if not provided, penalizes everyone.
Tax fraud has been a part of society for as long as there have been societies. Even during Roman rule, there were tax collectors, and individuals who evaded their payment of taxes. This country was founded on the precept that England charged an unfair tax on tea (and other various assorted sundry) to the point that the colonists were unfairly taxed, without a voice in the government. The Internal Revenue Service is charged with overseeing the regulation and prosecution of any person or entity that avoids payment of taxes due, and can assess penalties for those who succeed.
What tools does the Internal Revenue Service (IRS) use to control tax fraud? There are actually several means by which the IRS can control tax fraud, once they discover the crime has been committed. How do they detect tax fraud? The IRS has some 2800 special agents that are trained to gather information that is used to detect tax fraud; they have unlimited access to tax returns, the power to issue summons regarding needed financial information, and the right to seize or freeze monies in the attempt to collect the necessary financial information.
Once the tax fraud has been detected, the Internal Revenue Service can levy tax liens, seize assets, freeze money in checking and savings accounts, and garnish wages. Any and all properties held by the individual taxpayer can be seized, and sold at auction if no attempt is made to repay the liability. Everyone that is determined to be involved in an evasive or fraudulent act of tax liability has the opportunity to be heard, to meet with the Internal Revenue Service, and receive a trial to determine if the accused party is guilty. It is generally in the individual's best interest to settle with the Internal Revenue Service if there is any possible doubt as to their innocence.
That's not to say that the Internal Revenue Service has always played fairly, or that they are free from mistakes. This is not so. There have been many instances of improper intelligence access, and errors on the part of the Internal Revenue. But, in the majority of cases, the tax fraud accusation was legitimate, and the individual charged was guilty. Many individual taxpayers rely on accountants and business managers to handle their financial affairs; in fact, many are not even aware of the status of their finances. It is however, ultimately, the individual taxpayer's responsibility to be held accountable for the information provided to the Internal Revenue Service. So, if you're going to be the one in front of the Internal Revenue, you should do yourself a favor and examine your return, understand what you're reading, and check the return for accuracy.
By : Hans Hasselfors
Hans Hasselfors is the founder of http://www.SubmitYourNewArticle.com. You may find varied tax fraud articles in our article directory.
When, as a taxpayer, you seek whatever legal means possible to avoid tax liability, you are guilty of no crime. It is your given right to seek a means to minimize your liability, in order to keep more of your money. However, when companies, individuals, or any other legal entities attempt to avoid their legal responsibility, we as a country suffer. The government operates on tax dollars. Tax dollars that everyone who has been deemed liable must provide, and if not provided, penalizes everyone.
Tax fraud has been a part of society for as long as there have been societies. Even during Roman rule, there were tax collectors, and individuals who evaded their payment of taxes. This country was founded on the precept that England charged an unfair tax on tea (and other various assorted sundry) to the point that the colonists were unfairly taxed, without a voice in the government. The Internal Revenue Service is charged with overseeing the regulation and prosecution of any person or entity that avoids payment of taxes due, and can assess penalties for those who succeed.
What tools does the Internal Revenue Service (IRS) use to control tax fraud? There are actually several means by which the IRS can control tax fraud, once they discover the crime has been committed. How do they detect tax fraud? The IRS has some 2800 special agents that are trained to gather information that is used to detect tax fraud; they have unlimited access to tax returns, the power to issue summons regarding needed financial information, and the right to seize or freeze monies in the attempt to collect the necessary financial information.
Once the tax fraud has been detected, the Internal Revenue Service can levy tax liens, seize assets, freeze money in checking and savings accounts, and garnish wages. Any and all properties held by the individual taxpayer can be seized, and sold at auction if no attempt is made to repay the liability. Everyone that is determined to be involved in an evasive or fraudulent act of tax liability has the opportunity to be heard, to meet with the Internal Revenue Service, and receive a trial to determine if the accused party is guilty. It is generally in the individual's best interest to settle with the Internal Revenue Service if there is any possible doubt as to their innocence.
That's not to say that the Internal Revenue Service has always played fairly, or that they are free from mistakes. This is not so. There have been many instances of improper intelligence access, and errors on the part of the Internal Revenue. But, in the majority of cases, the tax fraud accusation was legitimate, and the individual charged was guilty. Many individual taxpayers rely on accountants and business managers to handle their financial affairs; in fact, many are not even aware of the status of their finances. It is however, ultimately, the individual taxpayer's responsibility to be held accountable for the information provided to the Internal Revenue Service. So, if you're going to be the one in front of the Internal Revenue, you should do yourself a favor and examine your return, understand what you're reading, and check the return for accuracy.
By : Hans Hasselfors
Hans Hasselfors is the founder of http://www.SubmitYourNewArticle.com. You may find varied tax fraud articles in our article directory.
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