2011 Tax Offender of the Year

It’s time again to be considered for that most prestigious of awards, the Tax Offender of the Year. To be considered for the Tax Offender of the Year award, you must do more than cheat on your taxes. It has to be special; it really needs to be a Bozo-like action or actions.

Coming in second was Mark Leitner. Mr. Leitner felt that the government shouldn’t lean on him, so he filed liens against the government…to the tune of $48.489 billion from seven individuals involved in prosecuting him. Mr. Leitner is not enjoying that money (those liens were, as you would imagine, quashed); instead, he’s spending some time relaxing at ClubFed.

Coming in third was Norma Coronel. Ms. Coronel gave birth to one child in December 2002. However, she thought that she could do better on her tax return by claiming she gave birth to 19 children…all at once. That truly Bozo tax fraud got her the joy of repaying, with interest, the over $300,000 she received from the IRS.

I’m giving a dishonorable mention to the IRS Automated Underreporting Program (AUR). I’ve had several clients who have responded to notices from the AUR group, and the AUR group, when writing back, helpfully notes that they’ve reconfigured the amount that the clients allegedly owed. The trouble is that the AUR group ignores the correspondence from the client, and simply restates the amount owed. I’m going to be sending Nina Olson, the National Taxpayer Advocate, a letter on this issue; I’ll post a copy of the letter in the blog in the coming weeks.

This year’s winner has a proud history; indeed, without them we likely wouldn’t be here. I’m talking about the United States Congress, who have moved up from being runner-up the past two years. Congress, especially the Senate, forsook its duties. Consider the budget passed by the US Senate…but that would be problematic as the US Senate didn’t pass a budget in 2009 or 2010 and waited until the closing days of December to actually pass one. However, these are minor issues in comparison with the major problem: The needless and horrible complexity of the US Tax Code.

Nina Olson, the National Taxpayer Advocate, has noted the problem year after year in her reports to Congress. For example,

The National Taxpayer Advocate on numerous occasions has identified the complexity of the tax code as the most serious problem facing taxpayers and urged Congress to simplify it. In this section, we discuss the sources and impact of code complexity and the practical obstacles to simplification. In an accompanying legislative recommendation later in this report, we outline principles and proposals that we encourage Congress to consider as it explores tax reform options.

In 1986, Congress simplified the Tax Code. It’s high time again for another round of simplification. Consider one of my areas of practice, dealing with individuals with foreign financial accounts. Not only do those individuals now have to file an FBAR (Form TD F 90-22.1), they must repeat that information on Form 8938 (if they have sufficient foreign financial accounts). I don’t blame the IRS for this duplication. Rather, I blame Congress. Congress enacted the laws requiring these forms; it is Congress that needs to enact laws that would simplify the Tax Code.

I’d like to see a simple, fair Tax Code. This is likely one of the few issues where the Tea Party protesters and the Occupy Wall Street protesters would agree. Again, consider Form 8938. The instructions note that the estimated average time to complete this form is one hour, five minutes. And that’s just one form. No wonder I’m not worrying about my employment.

I’d like to be put out of a job–at least, on the tax preparation side. Realistically, I doubt that will ever happen: There will still be plenty of complex corporate and business returns that need completion.

Today, taxpayers who do not have simple situations–and that’s millions of Americans–have tremendous difficulties completing tax returns on their own. Albert Einstein stated that, “The hardest thing in the world to understand is the income tax,” and that was over 60 years ago! The situation today is far, far worse and the blame is squarely with Congress. Unfortunately, 2012 is an election year and I believe there’s zero chance of anything coming out of this Congress. Indeed, President Obama has shown no inclination at simplifying the Tax Code. We likely need new leadership in Washington to ease the pain of all Americans.

And that’s a wrap on 2011. Everyone have a safe, happy, and healthy New Year. I’m sure I’ll find plenty of other Bozos to write about in 2012.


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