“They’re coming for you. And they have guns.”
That’s the warning coming from some right wing elected officials. Those congresspersons received huge sums from the very rich to deter the government from collecting taxes. Actually, very few IRS agents are armed, and only if they are deemed to be at risk. Usually you’ll get a letter, however sometimes they do just drop in to visit you. In negotiations it’s best to have your accountant there especially if he or she prepared your return.
Under the Inflation Reduction Act of 2022 just under $80 billion was funded over ten years to be mostly used for enforcement by IRS.
Leona Helmsley left her $4 billion estate for the care of her dog and dog charities. (Remember the Helmsley Palace Hotel in New York City?) She was quoted by her housekeeper as saying that “Only the little people pay taxes.” Leona was imperious and she cheated on over $1.2 million on her taxes and committed 33 counts of fraud. She was initially fined $7million. She went to jail. However, she was right. Mr. Elon Musk, probably the richest man in the world, paid “0” in taxes in 2018 from what I could learn. Bloomberg and Soros evidently paid zero for three years. Warren Buffet paid very little. It’s easy. The value of your assets goes up and if you need money you borrow against them instead of selling. The highest income tax rate is 39.6%. The wealthiest pay about 3.4%. One senator, who received big money from Wall Street interests, insisted on putting in a special clause into the Inflation Reduction Act which allowed Wall Street Hedge Fund managers to have fund interest charges be deducted from their management fees. They are getting a HUGH tax break!
Then there’s Alan Weisselberg, the Trump Organization’s CFO who just pleaded guilty to 15 crimes and is facing five months in prison. He didn’t pay New York State income taxes on his apartment, two Mercedes cars, and tuition for his grandchildren at private schools. There were also charges by the State of New York for misrepresenting the value of real estate. IRS didn’t go after the Trump people, but the State of New York did. So please pay your state taxes.
The abuses are legend. Writing off jet airplanes, sports cars, limousines, summer homes, non-existent home offices, vacations, household help, club memberships and fraudulently reducing the value of real estate.
The very, very rich seem to get away with it, but probably not you. So be prepared for a visit from IRS. You should really be concerned if:
Your income is over $500,000.
You have a cash heavy business.
There are math errors on your return.
You file a Schedule C.
You take a Home Office deduction.
You lose money consistently.
You don’t file.
Your return is incomplete.
You have a big change in income.
Also, don’t keep two sets of books.
Maybe it’s time to stop Congress from selling tax benefits to the rich.
Good luck! ~ Lewis