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Thread: IRS adds to tax enforcement staff in a major way ...

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    Default IRS adds to tax enforcement staff in a major way ...

    is a report on the addition of hundreds of new agents and offices to track down untaxed 'offshore' money. This has received a great deal of press coverage because the concept of 'taxing the rich' is popular with most Americans. However, less popular but equally important changes at the IRS have escaped most mainstream media attention ...

    - the IRS has increased the percentage of audits of small businesses - and particularly those small businesses whose transactions are primarily in cash

    - the IRS has established a new targeted enforcement unit for Adult businesses. While this is primarily targeted towards Adult media ( video and websites ) and escort agencies ( the IRS has no qualms about wanting to tax prostitution income ), it also includes strip clubs and, by implication, dancers.

    Statistically speaking, in the absence of a 'flag being waved' to attract IRS attention, the probability of a dancer being audited by the IRS is still very close to zero. However, it is NOT zero ... it is higher this year than it was last year. And the potential causes for a 'flag being waved' are higher this year than they were last year.

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    Default Re: IRS adds to tax enforcement staff in a major way ...

    I bet the clubs are going to have to deal with the tax man. With so many scandalous owners and managers doing everything they can to squeeze more money out of not just customers (although this is very much the case) but also dancers and their employees too.

    This is also bad news for dancers, because tax seizures of properties means unemployment.


    Promote yourself and earn more money! This is a business that is owned by strippers for strippers. Let's make that money!


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    Default Re: IRS adds to tax enforcement staff in a major way ...

    wow, guess i should tell more accountants to get into forensic accounting-- clearly a growth field!

    perhaps a means of transitioning for dancers, who could bring specialised knowledge to the table and get a salary premium.

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    Default Re: IRS adds to tax enforcement staff in a major way ...

    ^^^ in deed my own personal accountant agrees that 'forensic accounting' is the fastest growing aspect of the financial industry. For those who are unfamilair, the 'forensic accounting' specialty is a direct branch of forensic science ... trying to gather up various 'clues' from fragmentary financial information in order to 'reconstruct' a probable picture of what had actually been taking place in the past ( financially speaking ).

    The 'forensic accounting' specialty was born back in the 1930's as a technique to bust high profile criminals like Al Capone. But back then it required an army of human accountants to collect and analyze the fragments of financial information. With the advent of Enron and the internet, the collection and analysis process entered the modern era - allowing it to be applied to much lower profile 'targets' such as the Scores Club in NY. And of course, today, there is so much automatic financial data collection and reporting taking place that 'forensic accounting' can now be used in individual cases i.e. the IRS 'estimating' that individual dancers have actually under-reported their income - based on her bank records / credit card records / investment account records / local 'cost of living' database amounts etc.

    As before, there are really two principal points of relevance for dancers stemming from this thread. The first is that the IRS ( as well as many state and local tax authorities ) now focus more resources than ever before upon the strip club / exotic dancing profession ... because it is a cash business, because it is (arguably) an Adult business, because certain high profile clubs and clubowners have already been caught 'playing financial games' in regard to taxes, because certain high provile clubs and clubowners have been involved with (arguably) fraudulent credit card charges etc. But mostly, the strip club / exotic dancing profession represents an 'easy mark' in regard to the potential extraction of large amounts of additional tax revenue without much risk of either a public backlash or a strenuous defense being put up by clubowners and/or dancers.

    The second is that, as a 'cash' business, book-keeping by both the clubs and the dancers is almost entirely 'self-generated'. In other words, there is very little in the way of third party financial documentation available to substantiate the claimed 'accuracy' of strip club and dancer balance sheets. As such, the IRS is placed in the position of having to make a subjective judgement as to whether or not the club / dancer has been honest and complete in their record-keeping, as opposed to the club's / dancer's books being 'cooked' in order to obscure their actual income ( and thus minimize their tax liability ). As discussed in detail in a different thread, if the IRS arrives at a conclusion that a club / dancer has 'cooked' the books or otherwise obscured financial information, the can deem the income amounts stated by the club / dancer to be lacking in 'credibility' ... and can then proceed to come up with their own 'estimate' as to what the higher actual levels of income must have been via 'forensic accounting' techniques ( resulting in the IRS sending the club / dancer a bill for additional taxes due on past 'estimated' earnings ).

    Thus today it is more important than ever for dancers to pay particular attention to their book-keeping, with the objective being to establish and maintain a high level of 'credibility' if and when those books are audited by the IRS. This is of paramount importance because, if a dancer's books are deemed to be lacking in 'credibility', the dancer has absolutely no way to conclusively prove that she did not in fact earn the higher amounts that the IRS may 'estimate' ( and thus avoid having to pay additional taxes on 'estimated' income that she never actually earned ).

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    Default Re: IRS adds to tax enforcement staff in a major way ...

    If everyone paid their fair share of taxes I guess we'd all be paying only our fair share. Imagine that.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: IRS adds to tax enforcement staff in a major way ...

    If everyone paid their fair share of taxes I guess we'd all be paying only our fair share. Imagine that.
    Well, that brings up a whole 'nuther discussion of what constitutes a 'fair share'. Obviously one aspect of that discussion was the historical ability of people working in 'cash' businesses to get away with under-reporting their incomes thus under-paying their 'fair share' of income taxes. The primary point of this thread is that, in the future, people working in 'cash' businesses will be singled out for increased scrutiny by the tax man in this regard.

    Another aspect of that discussion was the historical ability of the American 'rich' to (quasi) legally pay a far lower de-facto income tax rate than the 'official' published income tax rates call for ... by being able to afford the advantages of (formerly) secret offshore accounts, by being able to afford the purchase of triple tax free municipal bonds, by being able to afford purchase of a private partner share in a wind farm, ethanol refinery or other 'green' business whose most important real world 'product' is gov't granted production tax credits which can be used to directly offset income taxes due on income from other sources etc. While the tax man is starting to slam the door on secret offshore accounts, however, the other options remain legally available to those who can afford the high price of 'buying into' such tax favored investments. Unfortunately, at $50,000 per muni bond, and at $100,000+ per private partnership share, 'regular' people simply cannot afford to take advantage of these sort of options.

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    Default Re: IRS adds to tax enforcement staff in a major way ...

    ^^ The "fair share" refers to "according to current tax laws". Whether or not that is "fair" likely depends on just how much you feel you are getting rooked by the current tax laws. But who said life is "fair?" Just obey the laws, in spite of unfair preferential treatments, and I'll be happy for now.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: IRS adds to tax enforcement staff in a major way ...

    also, here's some fairly strong 'indirect' evidence that the gov't is now 'outsourcing' a whole lot of personal data gathering / reporting functions to 'fourth party' private databases ... which arguably allows the gov't to avoid some aspects of Fourth Amendment 'due process' protections which would otherwise limit the gov'ts ability to access personal data before 'probable cause' to suspect wrongdoing can be established. In a financial context, for example, the use of private databases allows the gov't to 'sneak a peek' at an individual's / business's financial situation via 'fourth party' private data gatherers in order to find sufficient 'probable cause' of wrongdoing and thus justify a wider investigation.


    (snip)"Buying You: The Government's Use of Fourth-Parties to Launder Data about 'The People'

    Joshua L. Simmons
    Columbia Law School

    Columbia Business Law Review, Vol. 2009, No. 3, p. 950

    Abstract:

    Your information is for sale, and the government is buying it at alarming rates. The CIA, FBI, Justice Department, Defense Department, and other government agencies are at this very moment turning to a group of companies to provide them information that these companies can gather without the restrictions that bind government intelligence agencies. The information is gathered from sources that few would believe the government could gain unfettered access to, but which, under current Fourth Amendment doctrine and statutory protections, are completely accessible.

    Fourth-parties, such as ChoicePoint or LexisNexis, are private companies that aggregate data for the government, and they comprise the private security-industrial complex that arose after the attacks of September 11, 2001. They are in the business of acquiring information, not from the information’s originator (the first-party), nor from the information’s anticipated recipient (the second-party), but from the unavoidable digital intermediaries that transmit and store the information (third-parties). These fourth-party companies act with impunity as they gather information that the government wants but would be unable to collect on its own due to Fourth Amendment or statutory prohibitions. This paper argues that when fourth-parties disclose to law enforcement information generated as a result of searches that would be violations had the government conducted the searches itself, those fourth-parties’ actions should be considered searches by agents of the government, and the data should retain privacy protections. "(snip)

    from


    again, from a financial standpoint, the ability to 'outsource' de-facto first order financial investigations to these 'fourth party' database operators in exchange for a 'small fee' allows the gov't to greatly expand its overall investigative / audit capability without expanding the level of actual gov't employees involved.

    Also, by implication, this also means that the gov't already has potential access to every stick of financial transaction data involving any sort of ID linkage to a particular individual. Besides the obvious i.e. purchases via credit cards and debit cards, this now can include cash purchases linked to a store 'discount / membership' card, cash payments to utilities, cash payments for 'lay-aways', cash payments to purchase 'corporate' money orders etc.

    While it has always been Dollar Den policy to recommend that dancers fully comply with their income reporting and tax obligations, it has also been an acknowledged fact that a certain percentage of dancers ( as well as a certain percentage of all workers involved in 'cash' businesses ) will choose not to do so. The point of this post is to accentuate the gov'ts rapidly expanding ability to track an individual person's expenditures ... which can in turn be compared to that individual person's officially reported income.

    ~
    Last edited by Melonie; 01-02-2010 at 08:32 AM.

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    Default Re: IRS adds to tax enforcement staff in a major way ...

    Quote Originally Posted by threlayer View Post
    ^^ The "fair share" refers to "according to current tax laws". Whether or not that is "fair" likely depends on just how much you feel you are getting rooked by the current tax laws. But who said life is "fair?" Just obey the laws, in spite of unfair preferential treatments, and I'll be happy for now.
    "The leader of genius must have the ability to make different opponents appear as if they belonged to one category."

    In other words, complainers of taxes are the same as those who cheat in taxes. That they are the clay feet of government bringing progress to the masses. That they merely steal the resources of all around like a criminal at night. Don't complain of your taxes or do to much to avoid them, as you are treachery to the good of all peoples!

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    Default Re: IRS adds to tax enforcement staff in a major way ...

    ^^ You always have the right, even duty, to complain about laws/regulations that you feel are harmful. I always remember that a letter or phonecall to your Congressmen is at least 100% more influential than either a vote or a poll result, not that you will get easy immediate response. But in the long term it will do a lot more good than complaining on SW.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: IRS adds to tax enforcement staff in a major way ...

    Quote Originally Posted by Melonie View Post
    also, here's some fairly strong 'indirect' evidence that the gov't is now 'outsourcing' a whole lot of personal data gathering / reporting functions to 'fourth party' private databases ... which arguably allows the gov't to avoid some aspects of Fourth Amendment 'due process' protections which would otherwise limit the gov'ts ability to access personal data before 'probable cause' to suspect wrongdoing can be established. In a financial context....
    ~
    This is a U S Supreme Court case just waiting to happen.


    If such data were available independently, say a news magazine, that's one thing. But a gov't-sponsored clandestine operation to subvert the law is purely unconstitutional.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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