Monday, December 14, 2009

IRS hires "hundreds" for new wealth unit

More examples of a completely rogue government. The government is bankrupt. A situation that, for you and I, would require us to cut back on unnecessary spending, for the government means more reckless spending - spending our way out of a depression caused by reckless spending. Nobody is that stupid, people. If a guy sitting at his computer in his boxer briefs can figure it out, no doubt Obama and his team of corporatist advisors know it too: you cannot fix a crisis spawned by reckless spending and cheap, loose credit by facilitating more reckless spending and encouraging cheap, loose credit. This is being done purposefully. By design. Why? Hegelian dialectic. Never let a good crisis go to waste. And if you can create the crisis and exploit it, all the better. Why sit on your hands and wait for it?

And now, again, rather than reign itself in, rather than instill some sanity in fiscal policy - why would they want to do that? - they search for more creative ways to collect revenue. This only highlights the absurdity of the concept of an internal revenue service: we actually pay the government to rob us.

    Reuters -

    A new Internal Revenue Service unit set up to catch rich tax cheats hiding their wealth in complex business entities is rapidly taking shape with the hiring of hundreds of employees.

    The IRS high wealth unit, part of a broader effort to combat international tax evasion, is focusing on "the entire web of business entities controlled by a high wealth individual," IRS Commissioner Doug Shulman told a tax conference this week.

    Another IRS official told Reuters "hundreds" of people have already been hired to staff the new unit, including some from within the agency.

    "We have drawn top talent within the IRS that have expertise involving wealthy individuals as well as examination of their related entities," said Mae Lew, an IRS special counsel.

    The high-wealth unit is focusing on trusts, real estate investments, privately held companies and other business entities controlled by rich individuals.

    While use of sophisticated legal structures can be legal, in other instances they "mask aggressive tax strategies," Shulman said.

    Tax authorities in Japan, Germany and the UK have also created similar units.

    The U.S. House of Representatives on Thursday approved a $387 million boost for the IRS for the fiscal year that started October 1, in part to fund the high-wealth unit. The Senate is expected to vote on the measure on Sunday.


    The IRS is also opening new criminal offices in Beijing, Panama City and Sydney to focus on funds flowing out of Europe and into Asia, in part because of a heightened focus on international enforcement in Europe.

    The goal is to get those up and running during this fiscal year, which ends September 30, according to Barry Shott, IRS deputy commissioner for international issues for large and midsized business.

    At the center of the agency's offshore effort is its legal cases against Swiss banking giant UBS AG. UBS agreed to turn over nearly 5,000 names of individual American clients and paid $780 million to settle a criminal case for aiding tax evasion.

    The IRS has also begun initial steps to join forces with other governments to scrutinize corporate tax filings to prevent "tax arbitrage" by companies seeking the best regime.

    President Barack Obama has proposed tightening tax rules for U.S. multinationals, including one in which companies delay paying taxes on income earned offshore, a legal practice known as deferral that officials say is abused.

    Some tax practitioners expressed worry about such coordination.

    "With any new thing, you never want to be the guinea pig," Mary Lou Fahey, general counsel for the Tax Executive Institute, comprised of business executives, said.

    Shott said a likely scenario will likely be two countries getting together and decide to examine a narrow issue. In the beginning it will operate like a pilot program where the corporation examined would agree to take part.

    "With rare exception ... the taxpayer will absolutely know they are subject to a simultaneous examination," Shott said.

    Still, he said there could be cases where the audit needs to be kept quiet, such as when a criminal probe is ongoing.

    Initial partners would likely include Canada, the UK and Australia, Shott said.