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Rats! City to Pay for Informing on Tax Cheats

Councilman

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Rats! City to Pay for Informing on Tax Cheats | NBC Chicago
I hope this is acceptable as braking news since it's from NBC Chicago and listed as news.

Chicago and Cook County residents aren’t the only ones about to get shocking tax news; the city is debuting a “tax whistle-blower” plan that could turn neighbor against neighbor in Chicago’s business community.

The folks at city hall will pay cash bounties to informants who turn in business tax cheats around the city. The reward would amount to some sort of percentage of the tax money that the city recovers.

"It's just another way of bringing people into compliance," Revenue Department spokesman Ed Walsh told the Sun-Times.

Why do I bring this up? How many of you remember flag@whitehouse.gov an address we could use to report on information we felt was a lie about the so-called Health Care reform? Well that was met with so much opposition it had to shut down. Hell I was disappointed because I used it to report on the three biggest liars about it out there. Pelosi, Reid, and Obama.
Well since that effort to get you to start thinking about becoming a "Block Warden" so to speak they have this new plan to get you thinking about becoming an informant. How you could possibly know that your neighbor is a tax cheat is beyond me unless unless he or she is an idiot and tells you. But I don't think that is the point. I think the idea is to get you once again thinking about how you can help big brother and his efforts to control.
And hey if you rat out the folks next door under this Chicago plan you get paid for your efforts. I just wonder how much fun it will be to have the folks next door hate your guts. It sure will make the next block party a fun event. Or maybe it will be an occasion for a weenie roast in the flames of your house as it's burned to the ground in retaliation.
This is a bad idea. I'm not saying people should get away with being tax cheats. I'm saying is it our job to possibly put ourselves and our families at risk to help a corrupt system do the job they were hired to do.
I know your saying that could never happen most neighbors are good decent people. To that I say what is it we hear all the time about murderers? Oh John he was a quiet guy kept his lawn mowed and his car washed. Hell he dressed up like a clown and did kids parties. I never would of thought of him as dangerous.
It's something to think about that before you become the next Block Rat for any corrupt system.
Think about it.
 
I don't understand all the outrage over this. It provides people with an incentive to report crimes. Are you similarly outraged at the organizations that provide rewards for people who turn in copkillers?
 
I agree with RightinNYC.

Think of it this way Councilman, would you want your competitors to have an unfair advantage of avoiding taxation?

I don't think so. Besides, imagine the bad PR from having it get out your firm is evading taxes. Mere threat of this ordinance may be sufficient in achieving the goal.
 
There is no relevance between the Chicago 'Rat Patrol' flag@whitehouse.gov. Both processes are ill advised but for different reasons. The Chicago 'Rat Patrol' I find repugnant in that I never liked any tattle tails, rat, squealer, teachers pet, whoever ran their mouths. The flag@whitehouse.gov is just ill advised it that it makes the WH appear to be whiners.

We are so impressed that use the WH website to rant your hatred you should post those Emails they should make funny reading. Better yet post any responses that you have have received. . Lol
 
I don't understand all the outrage over this. It provides people with an incentive to report crimes. Are you similarly outraged at the organizations that provide rewards for people who turn in copkillers?

There are actual laws against killing people. There are no laws for paying taxes.
 
There are actual laws against killing people. There are no laws for paying taxes.

You're saying that there are no laws requiring businesses to pay taxes?
 
You're saying that there are no laws requiring businesses to pay taxes?

There are laws saying that you have to pay taxes, but no laws saying that you can't play the system and pay as little taxes as possible. There's no law against cheating, only laws against outright evasion. Even those laws are weak, look at the Secretary of Treasury.

This will be short lived. There are going to be more lawsuits come out of this than you can shake a stick at. The extra revenue that the government gets will not be enough to pay for the lawsuits they get slapped with. All they can do is audit you. Then you say, "oops, my bad, thougt I could deduct that".
 
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All they can do is audit you. Then you say, "oops, my bad, thougt I could deduct that".

I would think they're more after people who don't pay tax at all rather than those making up questionable deductions. From the article "It would probably be ... a business knowing that a competitor is not remitting a tax." So for example a business collecting sales tax and not sending it in. Perhaps by not reporting all of their sales, etc...

As far as the cost being more than their gains - collecting tax is nothing new to the IRS or the states. The concept of cost/benefit is not lost upon them. They're clearly not going to conduct massive audits of everyone reported through this program. Rather, they would focus their efforts where they expect the greatest payout. This just helps them identify that easier.
 
There are laws saying that you have to pay taxes, but no laws saying that you can't play the system and pay as little taxes as possible. There's no law against cheating, only laws against outright evasion. Even those laws are weak, look at the Secretary of Treasury.

You can create labels to describe the distinctions all you want, but the fact remains that there are tax practices that are acceptable (i.e. legal) and those that are not (i.e. illegal). If someone is paying his employees under the table, that's obviously illegal. If someone is operating a cash business and underreporting their sales, that's obviously illegal.

This will be short lived. There are going to be more lawsuits come out of this than you can shake a stick at. The extra revenue that the government gets will not be enough to pay for the lawsuits they get slapped with.

I'm curious as to what you're basing this on - how exactly would it "create lawsuits" other than your general feeling that this is bad and that all bad things lead to lawsuits? Who would be suing who? On what grounds?

All they can do is audit you. Then you say, "oops, my bad, thougt I could deduct that"

And if your story is obviously not believable, such as if you're paying people under the table or underreporting sales by $300k, then nobody will believe you and you will go to jail.

You seem to be under the impression that the purpose of this law is to get people to rat out their neighbors for taking a questionable $300 home office deduction. It's not.
 
I would think they're more after people who don't pay tax at all rather than those making up questionable deductions. From the article "It would probably be ... a business knowing that a competitor is not remitting a tax." So for example a business collecting sales tax and not sending it in. Perhaps by not reporting all of their sales, etc...

And, at the end of the day, all they're going to do is an audit. That's all. Depending on the kind of business, the monthly tax reports are going to be made. You can't really cheat on sales tax, unless you make cash sales that aren't registered anywhere. You can't cheat on payroll taxes, either, trust me, I've tried. It can't be done.

As far as the cost being more than their gains - collecting tax is nothing new to the IRS or the states. The concept of cost/benefit is not lost upon them. They're clearly not going to conduct massive audits of everyone reported through this program. Rather, they would focus their efforts where they expect the greatest payout. This just helps them identify that easier.

Therein lies the problem. Are we going to go after businesses, purely on the say-so of another person? Audits cost money. They cost the government money and they cost the citizens money. What will we create, when Joe the Grocer is fingered by who-the-hell-ever as a tax cheat, gets audited and is found to have perfect taxes? The government spent money for nothing and Joe the Grocer was forced to spend money for nothing, on the word of who-the-hell-ever. At the end of the day, Joe has a nice, fat, juicy lawsuit against the government and the clown that invaded his privacy and wrongfully accused him of tax evasion; again, costing more money.

The $64,000 is: will the effort be worth the return? IMO, there's no way.
 
And, at the end of the day, all they're going to do is an audit. That's all.

You know that tax evasion is a criminal act, right? It's not "just an audit."


Depending on the kind of business, the monthly tax reports are going to be made. You can't really cheat on sales tax, unless you make cash sales that aren't registered anywhere.

Yes, that's exactly how you cheat on the sales tax. You say this as if it's uncommon, when in reality it's how the vast majority of cash businesses that cheat on their taxes manage to do so.

You can't cheat on payroll taxes, either, trust me, I've tried. It can't be done.

Did you ever think of paying your employees under the table? That's a quick and easy way to cheat on payroll taxes.

Therein lies the problem. Are we going to go after businesses, purely on the say-so of another person? Audits cost money. They cost the government money and they cost the citizens money. What will we create, when Joe the Grocer is fingered by who-the-hell-ever as a tax cheat, gets audited and is found to have perfect taxes? The government spent money for nothing and Joe the Grocer was forced to spend money for nothing, on the word of who-the-hell-ever.

Again, you seem to be assuming that the government will begin a massive investigation into someone based only on an anonymous tip. I think the program is a bit more nuanced than that.

At the end of the day, Joe has a nice, fat, juicy lawsuit against the government and the clown that invaded his privacy and wrongfully accused him of tax evasion; again, costing more money.

And you're basing this on...?
 
You can create labels to describe the distinctions all you want, but the fact remains that there are tax practices that are acceptable (i.e. legal) and those that are not (i.e. illegal). If someone is paying his employees under the table, that's obviously illegal. If someone is operating a cash business and underreporting their sales, that's obviously illegal.

And, if he gets audited, he'll have to account for that money. If he didn't do a good job of hiding it, then he's going to simply pay the amount, plus penalties and interest. And, you know what? Then, the IRS is coming for the employee. So, this sorta thing must be thought through very carefully, because it might end up hurting all the wrong people. Ultiamtely, what's, "illegal", and what the IRS can prove, are two different things.



I'm curious as to what you're basing this on - how exactly would it "create lawsuits" other than your general feeling that this is bad and that all bad things lead to lawsuits? Who would be suing who? On what grounds?

Unless I blabbed to the whole world that that I outright cheated on my taxes, how would someone know? Think about it. Look at the above post, when I talk about Joe the Grocer. Oh yeah, I can just see lawsuits popping up for unjustifiable audits. Audits are just like criminal charges, you can't do them without some kind of probable cause.



And if your story is obviously not believable, such as if you're paying people under the table or underreporting sales by $300k, then nobody will believe you and you will go to jail.

You won't go to jail. Growup! They'll just make you pay the money you owe them, plus interest and penalties. The IRS is made up of a bunch of pricks, but they're not stupid. They know that they can't get their money, if you're in jail and your business closes. And, you're only responsible for the sales that they can prove. The Constitution applies to the IRS, too. Believe it, or not.

You seem to be under the impression that the purpose of this law is to get people to rat out their neighbors for taking a questionable $300 home office deduction. It's not.


That's what it's going to lead to. Wait and see.
 
You know that tax evasion is a criminal act, right? It's not "just an audit."

You know that they have to prove tax evasion, right?




Yes, that's exactly how you cheat on the sales tax. You say this as if it's uncommon, when in reality it's how the vast majority of cash businesses that cheat on their taxes manage to do so.

No ****! And, if there's no paper trail on the jack, guess what?



Did you ever think of paying your employees under the table? That's a quick and easy way to cheat on payroll taxes.

I never figured out where to hide the money.



Again, you seem to be assuming that the government will begin a massive investigation into someone based only on an anonymous tip. I think the program is a bit more nuanced than that.

Let us hope so!



And you're basing this on...?


It's called, "invasion of privacy". If you and your accountant are the only ones that see your books, then someone illegally snooped into your ****. It's unethical for an accountant to rat out a client.
 
And, if he gets audited, he'll have to account for that money. If he didn't do a good job of hiding it, then he's going to simply pay the amount, plus penalties and interest.

Good point, nobody ever goes to jail for tax fraud.

And, you know what? Then, the IRS is coming for the employee. So, this sorta thing must be thought through very carefully, because it might end up hurting all the wrong people.

If a business owner is underreporting his sales, why would they go after the employees?

Ultiamtely, what's, "illegal", and what the IRS can prove, are two different things.

Of course. The problem is that you seem to think they're mutually exclusive.

Unless I blabbed to the whole world that that I outright cheated on my taxes, how would someone know? Think about it.

"Unless I blabbed to the whole world that I [committed X crime], how would someone know? Think about it." - Famous last words of innumerable prisoners who were convinced that they were smarter than they actually were.

Use common sense - you don't think that anyone else could possibly find out that someone was paying his employees under the table or was cooking the books?

Look at the above post, when I talk about Joe the Grocer. Oh yeah, I can just see lawsuits popping up for unjustifiable audits.

I don't doubt that you can, but that's because you don't really understand the law and just assume that whenever anything bad happens, you can sue.

Audits are just like criminal charges, you can't do them without some kind of probable cause.

Link? Furthermore, who said they were going to?

You won't go to jail. Growup! They'll just make you pay the money you owe them, plus interest and penalties.

I just don't know what to say to this. There are approximately 3,000 prosecutions brought each year for federal tax evasion. That doesn't count the thousands more that brought in state court. Furthermore, the point of this push is not just to put people in jail - it's to deter others from underreporting.
 
You know that they have to prove tax evasion, right?

And they do it 3,000 times a year.

No ****! And, if there's no paper trail on the jack, guess what?

Then they don't bring charges. If there is, then they do. What's your point?

I never figured out where to hide the money.
It's called, "invasion of privacy". If you and your accountant are the only ones that see your books, then someone illegally snooped into your ****.

Now you're just not being creative. I can think of a half dozen ways in which someone would legally come into possession of enough info to tip off the IRS.

-Employee who handled the books and saw the underreporting
-Employee who was getting paid under the table
-Disgruntled spouse who came across the books
-Competitor who found out from former employee that you were paying under the table

It's unethical for an accountant to rat out a client.

It's also unethical for an accountant to help you violate tax law. If they're willing to be unethical in that way to get your $2k payment each year, why would you think they'd hesitate to be unethical in this way to get 1/3 of your $500k in unreported sales taxx?
 
Good point, nobody ever goes to jail for tax fraud.

Well, now you're talking about fraud. Big difference between fraud, evasion and cheating.



If a business owner is underreporting his sales, why would they go after the employees?

I didn't say anything about underreporting sales. I was referring to paying employees under the table. If the employer is paying his employees under the table, then the employees owe the government income taxes.



Of course. The problem is that you seem to think they're mutually exclusive.

The burden of proof is on the IRS.



"Unless I blabbed to the whole world that I [committed X crime], how would someone know? Think about it." - Famous last words of innumerable prisoners who were convinced that they were smarter than they actually were.

Use common sense - you don't think that anyone else could possibly find out that someone was paying his employees under the table or was cooking the books?

How would that person go about it? The accountant can't say anything.



I don't doubt that you can, but that's because you don't really understand the law and just assume that whenever anything bad happens, you can sue.

I understand that IRS audits are held to the same search and seizure laws as anything else. Like I said, the Constitution doesn't cease to apply, just because we're dealing with the IRS.







I just don't know what to say to this. There are approximately 3,000 prosecutions brought each year for federal tax evasion. That doesn't count the thousands more that brought in state court. Furthermore, the point of this push is not just to put people in jail - it's to deter others from underreporting.


Compared to how many millions of tax payers?? Do you know that I have a greater chance of being wrongfully convicted of murder than being convicted of tax evasion?
 
Then they don't bring charges. If there is, then they do. What's your point?

The point is, without probable cause, they can't do ****.






-Employee who handled the books and saw the underreporting

Ok, you got one.

-Employee who was getting paid under the table

An employee is going to admit to tax evasion on his part. Hmmmm!
-Disgruntled spouse who came across the books

Ok, two. Been there, done that.

-Competitor who found out from former employee that you were paying under the table

At which time, the competitor goes to prison for industrial espionage. A felony, by the way.



It's also unethical for an accountant to help you violate tax law. If they're willing to be unethical in that way to get your $2k payment each year, why would you think they'd hesitate to be unethical in this way to get 1/3 of your $500k in unreported sales taxx?


You're exactly right. That's why you only tell your accountant what they need to know. If an accountant ratted out a client, that accountant would not only lose his license, but his testimony in any court hearing would be inadmissable. It's the same style of ethics that prevents a lawyer from testifying against his client.
 
All they can do is audit you. Then you say, "oops, my bad, thougt I could deduct that".

Leave the auditing and accounting to those with the knowledge. There's a sliding scale of certainty when it comes to deductions. If you take a large number of frivolous claims, you can be prosecuted for tax evasion. Furthermore, your accountant can be fined between 50% and 100% of the entire return amount. There are some real teeth behind the legislation regarding such deductions that has come out in the past five years. Ignorance is no excuse in an audit.
 
An employee is going to admit to tax evasion on his part. Hmmmm!

Actually this is very common. It happens when the employee is paid under the table and then goes to get their income tax refund expecting a few thousand dollars of EIC. The employee may not have understood that they were being paid under the table, just that they got money each week. Earned income is not a bad thing, not for everyone.
 
You're exactly right. That's why you only tell your accountant what they need to know. If an accountant ratted out a client, that accountant would not only lose his license, but his testimony in any court hearing would be inadmissable. It's the same style of ethics that prevents a lawyer from testifying against his client.

This is patently false and you really outta stop talking about this subject. There is no such thing as an accountant-client relationship that prohibits the same actions as a lawyer-client relationship. You are ignoring that accountants regularly get subpoenaed to testify. An accountant would lose their license for pushing illegal tax shelters and knowingly helping a client evade taxes. In fact, Circular 230 along with several other pieces of legislation and ethical guidelines requires an accountant to inform authorities of illegal actions by your client that your client refuses to cease. Auditors are legally required to inform the SEC of illegal actions that the board of directors will not fix. The law makes it mandatory to rat out a client that does not change their actions.

Well, now you're talking about fraud. Big difference between fraud, evasion and cheating.

Not at all. Reporting that you made only X dollars on your return when you know you made Y is fraud. It is also tax evasion. Avoidance however, is another issue. Evasion and fraud are fundamentally the same thing.
 
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Leave the auditing and accounting to those with the knowledge. There's a sliding scale of certainty when it comes to deductions. If you take a large number of frivolous claims, you can be prosecuted for tax evasion. Furthermore, your accountant can be fined between 50% and 100% of the entire return amount. There are some real teeth behind the legislation regarding such deductions that has come out in the past five years.


That'll only happen when the frivilous deductions run into the millions.

Ignorance is no excuse in an audit.

At which time, you write a check for the difference and go on about your business. Been there, done that. Twice!

The IRS really has a lot of people bluffed into thinking that they're gonna be big trouble is they punk Uncle Sam out of a few thousand bucks. it just ain't true. I'll say it again, the IRS knows that they'll never see their money, if they put you in jail. In fact, they'll go in the hole, because now, they have to house you, clothe you and feed you.

But, again, it all boils down to what they can prove. They can't gig with assumptions.

I wrote off a ****ing shotgun one time and got away with it in an audit. If I can do that, I can do damn near anything.
 
This is patently false and you really outta stop talking about this subject. There is no such thing as an accountant-client relationship that prohibits the same actions as a lawyer-client relationship.

Untrue, untrue!

You are ignoring that accountants regularly get subpoenaed to testify. An accountant would lose their license for pushing illegal tax shelters and knowingly helping a client evade taxes. In fact, Circular 230 along with several other pieces of legislation and ethical guidelines requires an accountant to inform authorities of illegal actions by your client that your client refuses to cease. Auditors are legally required to inform the SEC of illegal actions that the board of directors will not fix. The law makes it mandatory to rat out a client that does not change their actions.

Yeah, they get subpeonaed all the time...as a third party auditer. But, an accountant cannot testify against his client, based on that accountant's assumption of wrong doing.


Not at all. Reporting that you made only X dollars on your return when you know you made Y is fraud. It is also tax evasion. Avoidance however, is another issue. Evasion and fraud are fundamentally the same thing.

No, refusing to pay your taxes is evasion. Falsifying your tax return is fraud. Huge difference.
 
That'll only happen when the frivilous deductions run into the millions.

Glad to see you are once again changing your argument, this is what? the 500th time since you started posting?
You first claim that you won't get prosecuted...but then you agree that it DOES happen. Just what side are you arguing?

At which time, you write a check for the difference and go on about your business. Been there, done that. Twice!

Yours must have been small numbers. People have gone to jail for tax evasion.

Richard Hatch anyone?
Janine Lindemulder anyone? (I'm sure that names rings some bells here)
Thomas Carbo anyone?

I'll say it again, the IRS knows that they'll never see their money, if they put you in jail.

Depends on what other assets you have. Furthermore, you ignore the fact that the IRS tends from time to time to make examples of people. Often the IRS will actually spend more money in proving a case then what they get from the judgment JUST to make a point that tax evaders will get hunted down.

But, again, it all boils down to what they can prove. They can't gig with assumptions.

Hence why accountants get subpoenaed.

I wrote off a ****ing shotgun one time and got away with it in an audit. If I can do that, I can do damn near anything.

Depends on the materiality. And seriously, I don't trust a damn thing you say about your life.
 
Well, now you're talking about fraud. Big difference between fraud, evasion and cheating.

No, there's actually not. Tax evasion/fraud are the same thing. Presumably, when you refer to "cheating," you're referring to tax avoidance, which is legal. However, since this entire thread is about tax evasion/fraud, I don't know why you keep bringing that up.

I didn't say anything about underreporting sales. I was referring to paying employees under the table. If the employer is paying his employees under the table, then the employees owe the government income taxes.

And the employees will figure that out with the government. I don't know why you think that excuses the employer from liability for his failure to pay taxes.

The burden of proof is on the IRS.

Yes, I know. The problem is that you can't fathom how the IRS would ever prove any of this.

I understand that IRS audits are held to the same search and seizure laws as anything else. Like I said, the Constitution doesn't cease to apply, just because we're dealing with the IRS.

Incorrect.

FindLaw | Cases and Codes

Compared to how many millions of tax payers?? Do you know that I have a greater chance of being wrongfully convicted of murder than being convicted of tax evasion?

The concept of deterrence appears to be lost on you.

Tell me, if the chances are so slim, then why don't you lie on your taxes every year?

The point is, without probable cause, they can't do ****.

Incorrect.

An employee is going to admit to tax evasion on his part. Hmmmm!

If he knows that he will only have to pay a small penalty while he would receive a large whistleblower payout, you bet.

At which time, the competitor goes to prison for industrial espionage. A felony, by the way.

lol, learning information about crimes committed by a competitor and then passing that on to the government is not "industrial espionage."


You're exactly right. That's why you only tell your accountant what they need to know. If an accountant ratted out a client, that accountant would not only lose his license, but his testimony in any court hearing would be inadmissable. It's the same style of ethics that prevents a lawyer from testifying against his client.

Incorrect. Accountant-client privilege is far narrower than attorney-client privilege. The accountant-client privilege only applies in civil matters. If the government decides to bring criminal charges, there is no privilege.
 
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