Page 2 of 2 FirstFirst 12
Results 26 to 33 of 33

Thread: Example of new IRS use of 'spending' side / 'local cost of living' data ...

  1. #26
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Example of new IRS use of 'spending' side / 'local cost of living' data ...

    ^^^ thanks for helping to convey in graphic terms the degree of fundamental change which the exotic dancing industry has experienced since the 90's. One of my fondest memories of that period was the night that a very famous tech company founder ... and 6 business associates ... walked into a very small club in southern Michigan. The company had just been sold / gone public, and this group of guys easily spent and tipped a total of $30,000 between them ... on about a dozen dancers ! I earned more money (after taxes) that one night than I could earn in a solid month of dancing today.

    But you are absolutely correct about the degree of 'automatic financial reporting' that now goes on behind the scenes. In many states, any 'cash' transaction over $3,000 will generate a report to the IRS. Same with the purchase of $1,000 or more in money orders within the same day. Every car / motorcycle / boat / snowmobile / real estate title registered automatically prompts a state agency to generate a report of the 'sale' to the IRS. Every college tuition payment or grant / loan also generates a report to the IRS. It's also left up to the discretion of bank tellers to generate IRS reports of 'suspicious' cash transactions i.e. a young girl coming into the bank 2-3 times a week making $1000+ cash deposits in small bills.

    And beyond that, if the IRS has a reason to go snooping, it takes all of 5 minutes worth of computerized financial network inquiry to turn up a credit report listing every bank account, every credit card account, every outstanding loan, etc. It then might require 5 extra minutes to come up with investment / retirement account information, (corporate) apartment rent or owned home property tax information etc. The IRS computers might then require another 5 minutes to cross-check past tax returns, average cost of living for the person's zip code area, average earnings for people with the same 'occupation code' in the same zip code area, and who knows what else in the way of statistical benchmark comparisons. If the results 'wave a red flag' ... even if the results are based on accurate income reporting ... an audit will undoubtedly follow.

  2. #27
    Veteran Member
    Joined
    Mar 2006
    Posts
    471
    Thanks
    21
    Thanked 173 Times in 84 Posts

    Default Re: Example of new IRS use of 'spending' side / 'local cost of living' data ...

    What happens is that there's a reverse onus of proof for taxes: in other words, you have to prove that you didn't earn the income, whereas the tax authorities (and I say this generically, as it's the same in many/most countries) only have to claim that you did. Obviously, if the claim were totally outlandish, you'd manage to make a convincing case of that, but you can see how hard it is!

    For criminal tax evasion charges, however, the usual standard of "proof beyond a reasonable doubt" applies, and it's much harder to get convictions on that.

    C


    Quote Originally Posted by Paris View Post
    I have to agree with Laurisa on this one. Since when does the IRS require proof of something that doesn't exist? They audit a person to find out if a person is hiding money, not to force a person to prove they didn't earn money for which no proof exists of ever having earned the money in the first place.

    Also, the caveat in Melonie's statement of dancers keeping shoddy records is the exact point I made. It isn't hard to keep good and accurate records. Balancing a checkbook is harder IMO. If every other dancer that works for a particular club claims she earned $500 a shift and one girl claims that she earned $50 per shift, if I were the IRS I'd think something was up, too.

  3. #28
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Example of new IRS use of 'spending' side / 'local cost of living' data ...

    What happens is that there's a reverse onus of proof for taxes: in other words, you have to prove that you didn't earn the income, whereas the tax authorities (and I say this generically, as it's the same in many/most countries) only have to claim that you did. Obviously, if the claim were totally outlandish, you'd manage to make a convincing case of that, but you can see how hard it is!
    Exactly ... this is how every gov't agency seems to operate where 'civil' versus 'criminal' is concerned. And the IRS has three particulars that make it even harder for a 'stripper' to escape the effects of IRS 'estimated' income amounts being higher than the amount that she actually earned. The first is that, rather than a general civil court, IRS civil cases are heard in a special 'tax court' ( but purely unbiased I'm sure !!! ). The second is that, in the absence of authoritative 3rd party based financial documentation, the tax court judge will be weighing the word of a federal officer against the word of a 'stripper'. Lastly, the IRS can point to a growing body of anecdotal evidence from news media regarding 'stripper' income quotations ... all of which seem to be ridiculously high.

  4. #29
    Featured Member Laurisa's Avatar
    Joined
    Sep 2009
    Location
    Doesn't Matter
    Posts
    1,969
    Thanks
    649
    Thanked 1,823 Times in 587 Posts
    My Mood
    Confused

    Default Re: Example of new IRS use of 'spending' side / 'local cost of living' data ...

    I agree that people do have a preconceived notion of what strippers make annually, and it's not anywhere near what I've been told to expect.

    $100,000 for working three nights a week? Where do I sign up?! I think that's just stereotyping and won't go away though.
    If you are willing to do for one year what other's won't, you can spend a lifetime doing what other's cant.


  5. #30
    God/dess
    Joined
    Jan 2004
    Location
    Your imagination
    Posts
    2,875
    Thanks
    19
    Thanked 174 Times in 119 Posts

    Default Re: Example of new IRS use of 'spending' side / 'local cost of living' data ...

    re: the original case with the lady in seattle:

    her parents paid for the children's clothing and food, and she did not in fact claim approx. 10k in tip income on top of her hourly. plus the massive rent discount her parents gave her means that the IRS was actually right-- she was getting about 36k or so in income and thus wasn't eligible for the EIC at all and was just betting she could get 'free money' and also skip tax on her tips. and it caught up to her.

    go figure.

  6. #31
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Example of new IRS use of 'spending' side / 'local cost of living' data ...

    ^^^ well, along the same lines, my relatives in upstate NY tell me that the state tax / unemployment benefit people have just busted over 50 people who were continuing to collect unemployment benefits while working at new and mostly 'under the table' jobs. Increasingly, 'big brother is watching' !!!

  7. #32
    Senior Member
    Joined
    Oct 2008
    Posts
    165
    Thanks
    30
    Thanked 22 Times in 17 Posts

    Default Re: Example of new IRS use of 'spending' side / 'local cost of living' data ...

    Deleted
    Last edited by loveyonetwo; 08-15-2011 at 04:34 PM.

  8. #33
    Veteran Member
    Joined
    Feb 2005
    Posts
    230
    Thanks
    0
    Thanked 3 Times in 2 Posts

    Default Re: Example of new IRS use of 'spending' side / 'local cost of living' data ...

    Well if they claim their income (as they should) then it's not a problem.

    The "problem" is they don't want to. They want to keep geting loans a grants they are not really eligible for, they want momy and daddy to be able tokeep claiming them as dependents on their taz returns and momy and daddy want that too and they don't want to have to expalin to mommy and daddy how their little girl is earning thousands of dollars and doesn't have a W-2 to show for it.

Page 2 of 2 FirstFirst 12

Similar Threads

  1. Roommates and the Cost of Living!!!
    By xoscarletox in forum Life Support
    Replies: 16
    Last Post: 02-05-2011, 06:05 PM
  2. Replies: 0
    Last Post: 08-30-2009, 05:43 PM
  3. cost of living in the us
    By Flick6 in forum The Lounge
    Replies: 32
    Last Post: 03-17-2008, 04:48 PM
  4. busted! cost of living help
    By pollyanna in forum Newbie Board
    Replies: 12
    Last Post: 10-15-2006, 10:46 PM
  5. a helpful IRS data website
    By Melonie in forum Dollar Den
    Replies: 7
    Last Post: 04-10-2005, 11:40 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •