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Thread: a potentially nasty new income tax development

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    Banned Melonie's Avatar
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    Default a potentially nasty new income tax development

    Essentially, the article is reporting that the US Congress has authorized the IRS to employ private businesses as "bounty hunters" - and paying them on a commission basis i.e. 25% of the amount of additional income taxes they can collect. I can envision some future horror stories such as "bounty hunters" staking out SCORES or PEC, then attempting to back bill every dancer for say $40,000 each in unpaid income tax (of which they would get to keep $10,000).

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    Default Re: a potentially nasty new income tax development

    WHAT? Wasn't the IRS revamped to improve relations with the very people who pay them? Who's the moron that came up with this?

    Sounds like a bomb waiting to explode...yikes!

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    Default Re: a potentially nasty new income tax development

    from the news blurb ... "Private collectors will have authority to set up installment payment agreements, and gather financial information about those targeted, presumably to assess their ability to pay or to locate assets that might be attached.

    (snip)

    "We do view this as an important step forward in strengthening tax administration," IRS Commissioner Mark W. Everson said last week. "It parallels what is already being done in over 40 states. It will be done with full protection of taxpayer rights, and . . . it's absolutely necessary, particularly in an environment where Congress has cut back on funding for the IRS."

    {snip}

    "The amendment to prohibit the administration from moving ahead with the plan passed on a voice vote in September during House consideration of the spending bill funding the IRS in 2005. During a brief debate that revealed divisions on the question within both parties, some Democrats supported the idea of private collections while several Republicans expressed concerns."
    "


    IMHO the scariest part about this is that in the 40 states which are already participating in information sharing with the IRS, this new federal law allows one private "bounty hunter" to sniff around likely targets, and then to 'extort' back tax payments for both federal and state income taxes, and to keep 25% of the money collected for both with no extra effort involved in the investigation ! States were not all that successful motivationg 'bounty hunters' when only a 4-5-6-7% state tax rate was involved. But with a combined federal, state and self-employment tax rate of say 30-35-40-45%, the 'bounty hunters' will now have a much stronger incentive to participate. As I mentioned, a sweeping investigation of every dancer at say SCORES or PEC could potentially result in the 'bounty hunter' earning a $1 million dollar plus commission !

    .
    Last edited by Melonie; 12-05-2004 at 10:08 PM.

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    Member Jon_CPA's Avatar
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    Default Re: a potentially nasty new income tax development

    OK TAKE A DEEP BREATH AND RELAX

    Quote Originally Posted by Melonie
    IMHO the scariest part about this is that in the 40 states which are already participating in information sharing with the IRS, this new federal law allows one private "bounty hunter" to sniff around likely targets, and then to 'extort' back tax payments for both federal and state income taxes, and to keep 25% of the money collected for both with no extra effort involved in the investigation ! States were not all that successful motivationg 'bounty hunters' when only a 4-5-6-7% state tax rate was involved. But with a combined federal, state and self-employment tax rate of say 30-35-40-45%, the 'bounty hunters' will now have a much stronger incentive to participate. As I mentioned, a sweeping investigation of every dancer at say SCORES or PEC could potentially result in the 'bounty hunter' earning a $1 million dollar plus commission !

    .
    The Article is referring to section 6306 of the Internal Revenue Code (IRC)

    1) The IRC limits the private collectors to only those people specified in the collection contracts.

    2) The private collector is prohibited from charging more, or accepting less than the amount specified in the contract. The only lee way the collector has is allow the debtor to set up an installment payment plan of not more than 5 years.

    3) The private collection agent is prohibited from obtaining any information that is not specifed in the collections contract.

    4) The private collector is bound under the laws of the Fair Debt Collections Protection Act and is prohibited from engaging in any action that an Internal IRS collection agent is prohibited from.

    5) The private collection agent is prohibited from having direct contact with any individual specified in collection contract.

    6) The private collector is prohibited from using any other form of collection notice other than that generated by the IRS.

    7) The private collector must send you notification that you have the right to contact the Office of the Taxpayer Advocate to request a Taxpayer Assistance Order.

    Any private collector engaging in activities outside those specified in the collections contract is not protected from civil action from damaged parties, or from prosecution under federal and state laws.

    in other words:

    ...a sweeping investigation of every dancer at say SCORES or PEC could potentially result in the 'bounty hunter' earning a....lawsuit from every single dancer in SCORES or PEC, and possible criminal prosecution!!!

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    Default Re: a potentially nasty new income tax development

    As I understand it this allows the IRS to employ bill collectors, not freelance agents. Nothing I could find in the article suggests otherwise. I would not have a lot of faith in the article, however. It states the one company HAD contributed to Republican candidates--that would be illegal. This mischarcterization of donations negates any other items of fact as being reliable. Also, my independent check of the FEC database for persons employed by that company only came up with donations equal to a quarter of what the article suggested.

    There is already a reward program for reporting fraud. so there already 294 million bounty hunters (allbeit with lower payouts than 25%)

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    Default Re: a potentially nasty new income tax development

    ...a sweeping investigation of every dancer at say SCORES or PEC could potentially result in the 'bounty hunter' earning a....lawsuit from every single dancer in SCORES or PEC, and possible criminal prosecution!!!
    Won't happen if the dancers are still in their right minds - can you imagine the different agencies that would be combing through the clubs' books, dancer work schedules, champagne room log, customer credit card tabs, personal finances etc. if a bunch of lawsuits were initiated by dancers which indirectly impinged on "independent" agents of the IRS ? IMHO the "bounty hunters" will correctly assume that dancers are not in a position to exercise all of their supposed civil rights without risking massive consequences on the part of the IRS, and will proceed accordingly with attempts at legalized "extortion".

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    Default Re: a potentially nasty new income tax development

    Here's excerpts from a relevant newspaper reader

    READER VIEW: IRS HEADED FOR A MISTAKE
    (from National Treasury Employees Union, Chapter 51)

    The Internal Revenue Service is about to repeat a serious mistake it made eight years ago when it put sensitive and personal taxpayer information in the hands of private companies... -- for example, putting such information in private hands increases the risk of identity theft and will subject them to the worst abuses of the debt collection industry.

    What's happening is that the IRS recently was given authority to hire private debt collectors and pay them a bounty of up to 25 percent of the tax debts they collect. The program was approved by Congress in an unrelated tax bill.

    This was tried once before, in a 1996 pilot program, with disastrous results. For one thing, the debt collectors returned far less money to the U.S. Treasury than they said they would or could. The pilot program also resulted in multiple violations by debt collectors of the Fair Debt Collection Practices Act.

    There was no reason to suggest this program and, now, every reason to scuttle it. Yet we seem determined to take the wrong course....
    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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    Banned Melonie's Avatar
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    Default Re: a potentially nasty new income tax development

    ... The pilot program also resulted in multiple violations by debt collectors of the Fair Debt Collection Practices Act....
    Yes, exactly. This provides all the more reason to suspect that the 'bounty hunters' are going to concentrate on collecting tax money from people who are NOT in a position to make official complaints for fear of having the IRS dig even more deeply into their past financial affairs.

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