Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

IRS LAUNCHES CRACKDOWN ON 'TAX DEFIERS'

April 09, 2008

So it turns out yesterday's big effort to enjoin tax quacks from peddling their absurd "tax honesty" nostrums is part of a larger effort to squelch tax protest schemes:

WASHINGTON – Today Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division, announced the creation of the National Tax Defier Initiative or TAXDEF. The purpose of this initiative is to reaffirm and reinvigorate the Tax Division’s commitment to investigate, pursue and, where appropriate, prosecute those who take concrete action to defy and deny the fundamental validity of the tax laws.

Maybe there will finally be a systematic effort to stop these plans before they get to far. From the Justice Department Press Release:

The TAXDEF initiative will:

* Strengthen and expand coordination among the Tax Division, IRS and US Attorneys’ offices to ensure that both criminal and civil enforcement tools are fully considered and utilized.

* Leverage expertise and resources to enable agents and attorneys across the country to efficiently detect, investigate and where appropriate, prosecute tax defiers, viewing enforcement from a national rather than regional or local perspective.

* Expand our efforts to enjoin tax defier activity. Since 2001 the Tax Division has obtained over 300 civil injunctions against tax promoters and preparers, over a third of which directly involved tax defier activity. Injunctions are a powerful method of stopping the promotion of tax defier activity at the earliest possible moment. We estimate that we have collected over $600 million in tax as a result of our efforts.

* Maximize our use of technology to detect, develop and prosecute cases. The explosion of the Internet in the last decade has greatly facilitated tax defier activity and turned what was once a paper–based local or regional enterprise into a click and download national operation. Our response must take full advantage of ongoing changes in technology.

* Alert and educate the public to the falsity of tax defier claims and publicize the consequences of tax defier conduct. Simply stated, we want to pull back the curtain and show the public that the promoters of these schemes are not wizards imparting the secrets of a “tax-free universe” but are nothing more than garden variety hucksters and modern day snake oil salesmen peddling tax evasion schemes.

If they are serious, it's about time. Tax scams often have operated openly for years, like the one they went after yesterday. It's long puzzled me how long it takes to shut them down. The longer a scam stays in business, the easier it is to convince the gullible that the scam works. After all, wouldn't the IRS shut it down if they could?

The press release talks about "the use of technology to detect, develop and prosecute cases." I hope their tech budget includes a Google subscription, as many scams could be identified early by having one guy monitor the internet daily.

Once they identify a scam, they should be able to file for an injunction weeks, rather than months, and then call in the TV cameras when they back up a truck for the scammers' computers and customer lists.

Links:

TaxProf Coverage

Associated Press

UPDATE: For the benefit of our comments section.

Tags: scams.tax administration.tax protesters.

      Bookmark: del.icio.us • Digg • reddit