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November 08, 2005

In a comment to this entry, reader Jeff Jacobs riddles me this:

- I regard your postings highly. But we all know that "being President for a day" doesn't guarantee enacting the tax laws you prefer.
- So let me ask you a more pragmatic, non-professorial question: What if someone made you Commissioner of Internal Revenue for one day? And what if your salary was based on 1% of the revenue you collected? Which of the current laws included in the Internal Revenue Code would you choose to enforce?

I will treat this as two questions: what I would do for good tax policy if I were IRS Commissioner for a day, and what I would do to make myself horrifically wealthy if I got a cut out of increased collections.

POLICY: I would set up a special IRS unit devoted entirely to detecting and shutting down illegal tax shelters and scams. It would be a multidisciplinary group with technical and litigating attorneys, as well as criminal and civil agents. At the first whiff of a new tax scam, this group would be empowered to analyze the transaction, fly to the location as a SWAT team and with maximum publicity get the approprate warrants and court orders to raid and close criminal tax scam enterprises. No more letting scams fester for months or years before taking action, I say. Nothing is more demoralizing for law-abiding taxpayers than undisturbed scammers.

GREED: I would program the IRS computers to run a match routine on the mortgage interest forms of every taxpayer paying AMT to look for deductions of home equity interest. While interest on home acquisition indebtedness is AMT-deductible, home equity loan interest isn't; I would bet my 1% skim that this AMT adjustment is missed more than it is made. I'd be hated, but I would simply go through witness protection and leave the country (unfortunately, probably the same way Jimmy Hoffa did).

Now if I were dictator of Iowa, then I'd have some real fun...

 • AMT       Bookmark: del.icio.usDiggreddit


- Great response. Thanks, Joe.
- My personal favorite in the "Greed" category: I would send a copy of Schedule H to every household in your area (West Des Moines), my area (Fairfield County, CT), and similar zipcodes around the country. I'd ask every taxpayer in those areas to affirm that they do not employ any household employees under the current definition of that term.

If I were Commissioner for a day, I'd test the lower boundaries of the 7701(a)(36) definition of return preparer to see just how little preparation is needed to prepare a substantial portion of a return.

Better yet, I'd rather be Secretary for a day and change the definition of "return preparer" to include all return preparation, (though keeping the de minimis exceptions intact). I'd require USPAP for all appraisal and valuation reports.

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