Published Tue, Aug 20th, 2013 Marty Biancuzzo, Senior Political For decades, the IRS has overbearingly chased down every penny owed by average citizens and small businesses. Yet at the same time, it turns a blind eye to major corporations who are bleeding the loophole system dry. If you file incorrectly and pay too little… you’re audited. If you file incorrectly and overpay (which millions of Americans do each year)… you’re none the wiser. You’ll never receive a letter from the IRS, saying, “You’ve paid too much! Contact us now for your money back!” Not in a million years. But there’s a simple reason why so many Americans file incorrectly… The system is insanely complicated. When all rules and regulations are added up, the written U.S. tax code is just shy of four million words! In fact, it’s so thick and complicated that individuals and businesses spend more than six billion hours per year trying to comply with filing requirements. That’s sick. But here’s something sicker… It just became even more complicated – and with even more unfair targeting… A Letter You Never Want to Receive If you’ve ever received mail with “Department of Treasury Internal Revenue Service” on the envelope, you know what it’s like to have your stomach lodged in your throat. Well, since the fall of 2012, tens of thousands of small business owners across America have experienced that exact feeling. And the number is rising. Why? Because the IRS is cracking down on the $140 billion it loses each year from small businesses that under-report their income. In the IRS crosshairs: Companies that rely heavily on credit card machines. I’ll repeat… credit card machines. An insane proposition, if I’ve ever heard one. The last time I looked at the calendar, it read 2013. And the last time I was in a store, I witnessed a person paying with a cellphone. Memo to the IRS: We’re getting further away from using physical anything. Books, magazines, newspapers… you name it. And it’s especially true when it comes to our physical wallets. In fact, Visa (V) says “mobile wallets” will render physical wallets obsolete in a matter of five years. Yet the IRS is blasting out letters to small businesses that it thinks has an unusually high portion of revenue coming in from credit and debit card transactions. When a company’s records get classified as “unusual,” the IRS sends them a notice, informing them that they’re “under investigation for possible income under-reporting.” Small Business, Big Headache For example, one recipient owns a baking equipment supply company. She received a letter from the IRS in May, indicating that she was under investigation because 80% of her $549,955 annual revenue came from credit cards. The IRS explained to her how they expected “larger non-card revenue” from her type of business. The businesswoman was given 30 days to dig through her records and send a written response, detailing why the IRS’ accusations were wrong ( something the IRS can’t even do for their personal finances, it seems.) Could it really be the case that the next time you swipe your card at a small business, you could potentially be making life more difficult for the owner? Unfortunately, this will be the new “business as usual” for all small businesses going forward. It’s all part of a new IRS initiative that cracks down on small businesses owners – an initiative that some say is just another unruly government measure that makes regular Americans stiffen up in their chairs, while tax-dodging CEOs sit comfortably in theirs. In the case above, the IRS ran the bakery supplier’s numbers through a system, compared it against a list of industry averages, and since it didn’t add up, the firm was stamped as a potential tax evader. What the system didn’t account for was the rise in online orders that the company experienced last year. It’s just one example out of tens of thousands of similar cases. The solution to this problem? Down With the IRS The recent IRS scandal was more shocking evidence of just how large, unregulated and out of control every arm of government has become today. And how powerless we are. Americans are sick and tired of it. And so are several elected officials… Their solution: Abolish the IRS and establish a flat tax rate. A proposal that’s not even centered on conservative targeting. At the core of the “Abolish the IRS” movement is a modest idea that the entire U.S. tax code is simply far too big and complex to be interpreted the way it should. And at the heart of it is an outdated IRS that’s too big, too powerful and unprepared to fully conceptualize its own regulations. Now, with small business regulations becoming even stricter and unruly, it’s just one more page added to the four million others that Senators Ted Cruz and Rand Paul are using to help justify their anti-IRS campaign. And one more reason why I agree… Your eyes on the Hill,
Posted on: Wed, 21 Aug 2013 07:10:26 +0000
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