So how come the IRS doesn't just send a bill?

I was thinking about this the other day... and still haven't found anyone that has been able to provide an adequate explanation.

Taxes are undoubtedly one of the least fun things to do, and I imagine they have been like that since, well forever. From what I can tell, income tax is collected in a way similar to that of an honor-system. It's all left up to the individual to choose whether or not they pay their taxes - and how accurate they are when filling taxes out.

So far I've reached a total concensus from everyone I've talked to - on the premise that for the most part, it's an educated guess at best. So basically, it seems like most people either A) don't do their taxes B) don't do their taxes right on accident C) don't do their taxes right on purpose D) do their taxes properly.


There are just so many variables to throw into the mix, and not everyone is good with money, record keeping, or math. All this begs to question, why leave income taxes up to the individual, if the IRS may go back and audit anyways? it seems more logical for the IRS to just send a bill to everyone, and then let them figure out extra deductions and etc, on their own. I mean, the IRS obviously has the capabilities and resources to get a rough idea of someone's income (granted they don't get paid in cash) - so why can't they take the extra step? It seems like they are a profit-making organization - so why not provide a legitimate service FOR people, as well as against them?

I realize the quick answer to this question is "because it would take more time / money / effort." That's the type of answer you expect from a teenager refusing to clean their room, or from a politician refusing to leave a pointless war. Since the IRS is basically leaving it up to everyone to do their best, and use good judgment... it seems like that's a huge mistake, to leave it up to people - if you are just going to doubleback and check all of their numbers anyways.

Of course, if it were up to me, there would be no IRS... but that doesn't answer the question - why leave taxes up to people, when taxes are clearly with the IRS specializes in? That's like having someone fix their car at home before they bring it in for service.

I'm missing a conspiracy angle here Scientist....

What are you suggesting?

Ah good point. The angle, is that they bet on people overpaying, or not filling their taxes our properly. Where does all that overpaid surplus go anyways?

www.entrepreneur.com...

top auditors check out other companies' tax filings and expenses at no charge. On average, they're finding businesses overpay thousands, if not tens of thousands of dollars each April. "It is truly a multi-billion dollar epidemic that is costing the average consumer nearly $10,000 per year,"

again, it seems that taxes are what the IRS deal with, so why not send out invoices?

even tax preparers can't get it right...

www.webpronews.com...

There was an average discrepancy of 300% between what the tax preparers said was due and what was actually due.

I think the real issue is a combination of factors.

1) IRS knows, and bets on people screwing up
2) Tax laws in this country are not written in english (if they were, there would be less problems)
3) IRS is so nebulous and powerful, it doesn't really matter what your numbers add up to, if they say otherwise.

So considering the fact IRS could technically just tell you your numbers are wrong (either by mistake or by intent) - it seems crazy to even leave it up to people to do their own taxes, under this current system.

Again, I refer to the car analogy. Why should you fix a car before brining it to the mechanic? Not only does the mechanic still get paid, but you just did most of his work for him, and he could STILL lie to you and say you owe more. Same difference here, unless I'm being very naive.

In conclusion - I'm suggesting the IRS is well aware of the issues this non-transparent tax collection causes, and they bask in its goodness.

[edit on 7-2-2008 by scientist]

I know what he means.

If the USA obtained their tax the same way the UK does, then getting punished for failing to submit a tax form/payment would be almost zero in comparison.

In the UK, your tax is paid direct from your wages (unless you're self employed, then you get an accountant to help you sort your taxes out).
After a while, if you feel you've paid too much tax, according to your tax code and/or earnings, then you can file for a tax return where you will be repaid any overpaid taxes, or asked to pay more if you've not paid enough due to a change in your circumstances like a pay rise that hadn't quite got through the system yet.

Leaving the responsibility to organize and pay the taxes down to the individual on a country wide scale is not very cost effective in my opinion.

Not only do you have to use tax payers money to enforce payments, you're also using tax payers money to put non payers in prison and keep them there..

They used to send a bill of sorts. Before the wonderful invention of "withholding" each and every one of us would be responsible for writing a big 'ol check once a year. As you can imagine that made people angry. They began to question why they had to fork over such a huge sum of their earned wages over to the government.

Government solved that problem by instituting "withholding." Now, rather than being upset every year at how much money the government has taken from them through force and extortion they actually get happy excited about their "refunds."

With one stupid change taxation went from this ungodly evil everyone despised to that Springtime check in the mail so many Americans rely on to pay other bills. Like their property taxes for example.

Fewer people every year realize that the "refund" just means the government took more than they were allowed to from you. Ask anyone "how much did you have to pay this year?" and 9 times out of 10 you'll hear "I didn't have to pay anything, I got money back!" That's the problem. Everyone is ignorant. I got $450 back this year, after paying 12K. I know, I know, since I paid 12K in taxes I must be rich, right? I grossed 38K and rent a small room in a small house mostly full of recovering addicts on welfare in a really crappy part of town. Yup. I'm rich alright. At least to the government I am.

To make matters worse most Americans believe that these taxes have always existed and that if left unpaid the Sun would never shine. Wrong. Most of the taxes we suffer are less that 70 years old and before they were instituted the Sun still shone. The government wanted to take a little more so we said "okay" (sort of). The government wanted to take still more and we said "okay." The government is just about taking so much that it's not worth working for the middle class because they can drop into poverty, pay less taxes, and actually end up with more in-pocket money. Now consider all of the "programs" being poor entitles you too and you could be making more money poor than you could be as working/middle class.

The government will continue to take more and more until we take up arms against it. But then the government had all the money they took from you to arm itself and hire more agents and build more prisons.

We're funding our own demise. You can thank most of, if not all of, the bent-over complacency on the magic of withholding.

Originally posted by thisguyrighthere
Government solved that problem by instituting "withholding." Now, rather than being upset every year at how much money the government has taken from them through force and extortion they actually get happy excited about their "refunds."

hah, and this adds more fuel to the conspiracy angle. Thanks for bringing that up. I was always taught by my dad, that anyone who gets a "refund" from the IRS are either ignorant, or just idiotic (but to my point, not so much idiots - more like being swindled). Basically, a "refund" means you just let the IRS hold on to your money, without charging them any interest (while they probably made interest on it!). So either you made a mistake, or you are using the tax refund like some type of no-interest savings account because you can't trust yourself to save money.

Either way, in any of the aforementioned scenarios (mistake, ignorance, idiocy, or money management) - they all hurt the taxpayers while HELPING the tax collectors.

It's just that, the IRS is a service right? I mean, if they aren't a service... then what are they? Being a service means they serve people. Even police are technically here to protect and serve, and they usually have to react to criticism and complaints. Seems like the IRS is just some horrible company that's too big to care about what consumers think, like a monopoly - but worse, a pugilistic and cold monopoly with no other purpose than collecting money without providing a service in return.

The government will continue to take more and more until we take up arms against it. But then the government had all the money they took from you to arm itself and hire more agents and build more prisons.

or if people just all collectively agree that one piece of paper isn't worth more than another, especially if it's not backed by anything physical. That's the real elephant in the room most of the time. We are essentially buying, trading and paying interest on faith. But that's another thread I suppose

We're funding our own demise. You can thank most of, if not all of, the bent-over complacency on the magic of withholding.

amen, bro. id give more stars if I could. got my sentiments exactly! This is truly the conspiratorial angle, or at least a huge factor.

[edit on 7-2-2008 by scientist]

Originally posted by scientist
or if people just all collectively agree that one piece of paper isn't worth more than another, especially if it's not backed by anything physical. That's the real elephant in the room most of the time. We are essentially buying, trading and paying interest on faith. But that's another thread I suppose

Other than the government habit of going door to door every 30 years or so to collect privately held gold there is what happened to the folks at Liberty Dollar pushing for a competitor currency to the U.S. Dollar:

www.abovetopsecret.com...

Feds raid Liberty Dollar:
www.abovetopsecret.com...

Like I said. They have all the guns, agents and prisons.

I saw this and it brought up anger that I have been trying to subdue today. I did my taxes last night, and I have to come out of pocket another 5000 dollars, after already paying 25000 between my wife and I. So we are up to 30,000 of our hard earned money going to the f ing government, plus whatever magical number they pull out of their asses this year for property tax. We make good money, but both of us have worked our asses off to get where we are, we have played by the rules and now they bend us over. Just spit and push, dont even bother with a little lube, while they reach around into our pockets.

You know as thisguy said it would be easier for us to drop from upper middle class down to poverty, we could take advantage of some of the government programs, and keep more of our money in our pockets. We get less of a deduction for our child then other people do because we make more money. Yet we still pay as much for food, child care etc etc. UGH!!!!!!!!!!!!!!!!!!!!!!!

I am sorry i am not adding much to the conversation, I am just so mad about it I cant even tell you. It was the same way last year, we had to come out of pocket with more money for the fools on the hill. It is robbery, they steal our money by gestapo intimidation tactics, give it to us or you go to jail that is your option. I have half a mind to write a little note instead of a check, sorry you got enough you need no more of my hard earned money. They spend and spend, so a bank that is privately owned can make money on the principal, and the interest, it isnt our money we are paying back it is theirs.

Something needs to happen, something needs to change they cant keep doing this to us. It is time for another tea party. I dont mind paying a tax to be a part of this country, just not as much of a tax. We are slaves, and it is time to break the shackles of our masters, take the whip from their hands and tell them, NO MORE!

Scientist you are right, I truly believe that the IRS relies on people making mistakes, so they can further stick it to them. Have you ever tried to read the tax code? It is frigging dificult to understand, the forms are hard to understand, sure turbo tax and other programs are easier to use but it is still hard to understand. Why make it so hard, unless you want people to not be able to understand, and rely on them screwing up. Some people can afford to use an accountant, or use turbo tax. What about the people that cant, the people that are forced to do it by themselves? They can do it and screw it up, or they can not do it and face the wrath of our loving government.

I am trying to make rational conversation, but this deal is too frustrating for me right now to talk anymore about. Bastards, thieving stealing bastards.

Originally posted by gunner36
Why make it so hard, unless you want people to not be able to understand, and rely on them screwing up.

precisely. as with anything non-transparent, all of the fine print and legalspeak is designed to make information less accessible - which makes it easier to make up fines and fees and laws on their own time.

Even my own accountant admits - it's still "ballpark" figures most of the time, and that when auditors come to the office, after he presents them with all the b.s. they will have to go through via his lawyers and etc. they usually just turn around and leave, and flag that name to ignore next time around when it comes up for auditing. It has nothing to do with who's right, but who has more resources to fight, and who's willing to put up the time and effort to win that fight.

Just like the legal system, although again - legal system provides a service. What service does IRS provide again?

I recall Barak Obama wanted to implement a system as scientist suggests. I think it involved just receiving a notice of how much money you were going to get back, or owed, and you replied online with your checking account information or error checks.

If the IRS depends on people making mistakes now, what is to stop the government from making mistakes on purpose and depending that the people don't review their tax information?

If we didn't *really* have to check over our tax forms, if the money we got back *looked ok* then there would surely be a large amount of people that would not question it?

Originally posted by benign.psychosis
I recall Barak Obama wanted to implement a system as scientist suggests. I think it involved just receiving a notice of how much money you were going to get back, or owed, and you replied online with your checking account information or error checks.

That would be the last straw. I can't believe anyone would toy with the idea of making the process of taxation even more secretive.

1st we let the taxing entity educate out kids, now we're going to let it run our health care and tell us how much we owe them? If the taxing entity is just sending us a bill for what they say we owe them then we should be able to "audit" them if we suspect any wrong doing or wrong numbers, right?

Yeah, I can really imagine the ease and promptness of a citizen auditing its government. Government is already the leading cause of death in the world. I'm sure questioning the amount they claim you owe will be very well received.

The IRS will send you a bill, if you don't prepare your taxes. They will calculate the taxes using the information they have and nothing else so you get the worst possible tax prep job available.

Case in point. A guy comes to see me. He has a $55,000 lein on his bank account thanks to the IRS. Seems this dolt sold 3 stocks in the 90's and didn't file his taxes that year (or any other in the last decade). So the IRS takes his income and says he owes the money. What they don't know is that he actually lost money on the three stocks sold and, even if he did make money, he should be paying long term capital gains tax instead of short term, or ordinary income tax rates.

Second, and more important, I'd be out of a job.

reply to post by Crakeur


right. and that income tax is being collected from something that wasn't income... like squeezing blood from a stone. So then you have to wonder, where does that 55k go? I mean, it's basically all interest on something that wasn't a loan, and no service provided. So not only does it screw over that individual, but it screws over the entire economy, since there is now 55k in the hands of someone that doesn't deserve it, on a services not rendered and etc. Seems like that would just add to inflation as well.

I have to say that the Obama approach sounds more agreeable than the current method - albeit the lesser of two evils.

reply to post by scientist


well, when you file the return, the taxes are adjusted and then the idiot still has to pay interest and penalties. They're moron dollars. Money being paid for being a moron.

reply to post by Crakeur


You got me freaking out right now. I sent in my 1040 as soon as I got my W-2. A couple of weeks later I got a little thing from my account of stocks saying I made like $18.00 in dividends last year.

If a decade from now the IRS takes everything I own because I didn't write in $18.00 in dividends I swear to god I'm taking out a small Northwestern town ala First Blood. Or at the very least going into the local IRS building and blowing my brains out in such a way the splatter messes up some paperwork.

reply to post by thisguyrighthere


you can do one of two things. file a 1040X and an amended state return showing the $18 in dividends or you can wait for them to adjust the figures. They will do this quickly and the taxes, with interest and penalties will be minimal. if you were in the highest bracket the taxes on the dividends would be $6 (unless they're qualified, then the tax would be $3) and the vig for leaving it off your return would be a buck or two. not worth the effort of refiling.

Originally posted by Crakeur
reply to post by scientist

 

well, when you file the return, the taxes are adjusted and then the idiot still has to pay interest and penalties. They're moron dollars. Money being paid for being a moron.

perhaps, but it's also much easier to call someone a moron when you know much more than them due to your profession. I could call everyone that has problems with a computer a moron, since I work with them.... but it's not really that accurate, like saying a crashed / slow computer is a moron-error. Even though I suppose it might be, it's really more of a reflection of a bad process that should be changed, as opposed to forcing people to submit to something so complex and opaque.

Back to the topic:

the government, thank God, is not omniscient. If I sell veggies I grew on my 4 acres at a local fruit stand, there is no real record for that, and they expect me to account for these monies (which is somewhat reasonable). Then again, my late grand-aunt might have left me 15k in her will. I might have chosen to invest in tax exempt funds. I might have been tutoring somebody and accepted checks and cash. This is hardly traceable.

There is a myriad of factors which makes it impossible for the govt to know every freaking detail of your life, and you should be grateful for that. And if they count in a little good will on your part, there is nothing wrong with that either.

reply to post by scientist


I call the penalties and interest he's saddled with moron taxes because he's been avoiding dealing with this bill for about ten years now. He could have resolved the issue in say 1998 or 1999 when he received the first notice. He knew it as we told him, repeatedly, how simple it was to resolve.

so, when you rack up over $30,000 in penalties and interest because you simply ignore the bill, you are, without a doubt, a moron.

The IRS generally only looks at the 3 most current years. You file a return with a mistake, like that other poster did, they send a notice. If you don't file at all, they send requests for the return, then they send a bill for the taxes based on their calculations, then they send you to collections and you get notices and bills every 45 days or so. This guy collected these notices for close to ten years and all he ever did was talk about how he really needed to get the information to us. The information was the purchase price of three different stocks. Not a whole lot of work involved.

I do whatever I can to ensure that my clients pay as little tax as possible (within the confines of the law of course) and when I advise them, repeatedly, to do something and they ignore me, I have little sympathy for them.

Here's another stellar example of taxpayer stupidity. A woman came to see me with something like $120,000 in taxes, penalties and interest. She never paid the payroll taxes she withheld from her employees. This is the equivalent of stealing (not the IRS money but the employees' money). I spoke to the IRS agent she was dealing with. This guy was, for some unknown reason, being overly kind and generous with this woman. He hinted, repeatedly, that the IRS was on the verge of deeming her debts uncollectible. All she had to do was do nothing for the month of December (this was 2006). I told my client to do nothing. She said she was in line for a job and they wanted her to start in January but she offered to start the last week of December. I told her that would put her back on the IRS radar as she now had income. She ignored me. That one week of work resulted in her debt being deemed collectible again. The IRS got wind of an inheritance she was getting and put a lein on the estate. That one week of work, earning her maybe $2,000, cost her $120,000.

It is my very strong opinion that the IRS is already planning to "Go out of Business"

Regardless of who takes the Presidency, it is going to happen.

Why? Because it is no longer about how they can gleam money from the tax payers, it is more about how they can continue to pay all of the tax returns to the ordinary US working class. Now when they allow the open borders it will be even worse.

Figure the average return whether you work at Macdonald's or a low end executive job, is about 6-8K per family and then another 1,000 per child.

We Dont Have It. We cannot sustain at this rate.

After rallying all of the voting citizens to abolish the IRS, we all know the truth at this point, what I want to know is what do they have around the corner to compensate for the trillion dollar industry.

One thing for sure, they do nothing for the betterment of We The people, so all I can say is beware.