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IRS Audits of Small Businesses Soar Under Obama

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President Barack Obama and Governor Mitt Romney continue to tussle over tax rates and deductions. Ignored, however, have been questions about tax collection and enforcement—tools presidents use to achieve their economic policy goals. Hit a wall ramming your tax hike or cut through Congress, simply increase or decrease tax enforcement and audits.

Under the Obama Administration, the Internal Revenue Service has placed small and medium-size businesses—the engines of job creation—in its auditing crosshairs.

According to IRS statistics, from 2009 to 2011, the coverage rate (number of audits as a percentage of total returns filed) for corporations with assets between $10 million and $50 million has increased 32 percent. The coverage rate for corporations with assets between $50 million and $100 million has increased at the same rate. Some businesspeople file individual returns, and those with incomes higher than $1 million have experience a 94 percent increase in their coverage rate, and a 29 percent increase in the actual number of exams since 2009. Those with incomes $200,000 and higher have seen a 36 percent increase in their coverage rate.

So, has ratcheting up audits on small and medium-size businesses produced more revenue bang for the IRS’s buck? Hardly.

Using 2011 IRS data, the Transactional Records Access Clearinghouse (TRAC) at Syracuse University found that audits of a company with assets between $10 and $50 million yielded $702 in recommended additional taxes per hour. For large corporations with assets of $250 million or more, the recommended additional taxes are $9,173 per hour. Yet while the coverage rates of companies with assets between $10 to $50 million are up 32 percent, rates for companies with assets of $250 million or higher are up just 7.4 percent.

Read more from this story HERE.

Alaska couple plead guilty to conspiring to kill federal judge

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Lonnie and Karen Vernon, followers of jailed Alaska militia leader Schaeffer Cox, reached a deal with prosecutors to avoid the need for a trial that had been set to begin next month.

The Vernons and Cox were active in the “sovereign citizen” movement, whose adherents believe individuals are sovereign nations and federal, state and local laws do not apply to them.

The Vernons each entered a guilty plea to a single count of conspiracy to commit murder for their plan to kill Alaska-based U.S. District Judge Ralph Beistline, who presided over a federal income tax case that ultimately cost the couple their home.

The Vernons also admitted in their plea agreement to planning to kill an Internal Revenue Service official and Beistline’s daughter and grandchildren.

The Vernons bought a silencer-equipped pistol and grenades in March 2011 and told the seller of the weapons about their intentions, according to the plea agreement. But the seller turned out to be a confidential government informant, and the Vernons were arrested immediately after the transaction took place.

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Government gone wild: IRS paying billions in fraudulent tax refunds

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Photo credit: saturnism

The IRS is paying out billions of dollars in fraudulent tax refunds to identity thieves; a problem that the tax service’s inspector general told CNBC is a “growing problem” involving numbers that are increasing “exponentially.”

In a new report to be issued Thursday, the inspector general for the IRS says that tax thieves are stealing the identities of taxpayers and then filing bogus returns on their behalf and collecting fraudulent refunds as a result.

The inspector general estimates that the IRS could issue as much as $21 billion in fraudulent tax refunds over the next five years.

The scam is so rampant that thieves are apparently sending in false returns in bulk without even bothering to change the mailing address on the returns. The inspector general said it found one residential address in Lansing, Michigan that was the source of an astonishing 2,137 tax returns, and to which the IRS directed more than $3.3 million in potentially fraudulent refunds.

In another case, a single residential address in Chicago was the source of 765 tax returns, generating more than $900,000 in potentially fraudulent refunds, the report said.

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Maine’s Governor calls the IRS the “new Gestapo”

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Gov. Paul LePage used his weekly radio address to blast President Obama’s health care law and described the Internal Revenue Service as the “new Gestapo.”

The IRS description was a reference to a provision in the Affordable Care Act that requires Americans not insured by their employers or Medicaid to buy health insurance or pay an annual penalty when filing their tax returns. The provision, known more broadly as the individual mandate, was the subject of a multi-state lawsuit, but was recently upheld by the U.S. Supreme Court.

LePage said the court decision has “made America less free.”

“We the people have been told there is no choice,” he said. “You must buy health insurance or pay the new Gestapo — the IRS.”

Maine Democratic Party Chairman Ben Grant, responding to LePage’s remarks, said, “We’ve come to expect a bunch of nonsense from Gov. LePage, but this is a step too far. There appears now to be no limit to the extreme language he will use to misinform, degrade and insult people. Somebody needs to explain to him that he’s the governor of a state, and not a talk radio host. I demand a full apology on behalf of all those who suffered at the hands of the real Gestapo.”

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Photo credit: MaineDOE