Free Markets, Free People

IRS

Is the IRS overstepping its authority in ObamaCare enforcement?

This should be interesting to watch:

A group of small business owners (and individuals) in six states today are suing the federal government over an IRS regulation imposed under the Affordable Care Act (Obamacare), which will force them to pay exorbitant fines, cut back employees’ hours, or severely burden their businesses. Complaint can be viewed here.

The Affordable Care Act authorizes health insurance subsidies to qualifying individuals in states that created their own healthcare exchanges. Those subsidies trigger the employer mandate (a $2,000/employee penalty) and expose more people to the individual mandate.  But last spring, without authorization from Congress, the IRS vastly expanded those subsidies to cover states that refused to set up such exchanges.  Under the Act, businesses in these nonparticipating states should be free of the employer mandate, and the scope of the individual mandate should be reduced as well.  But because of the IRS rule, both mandates will be greatly enlarged in scope, depriving states of the power to protect their residents.

Michael Carvinpartner at Jones Day, who co-argued the Supreme Court Obamacare cases in March, 2012 and who represents the plaintiffs in this lawsuit, stated: “The IRS rule we are challenging is at war with the Act’s plain language and completely rewrites the deal that Congress made with the states on running these insurance exchanges.”

33 states have refused to set up these exchanges.  The IRS, per the complaint, is ignoring that ability given by the states by the law and proceeding as if it didn’t exist.  The argument is the IRS is overstepping it’s authority.

“Agencies are bound by the laws enacted by Congress,” said Sam Kazmangeneral counsel of the Competitive Enterprise Institute (CEI).  “Obamacare is already an incredibly massive program.  For the IRS to expand it even more, without congressional authorization and in a manner aimed at undercutting state choice, is flagrantly illegal.”  CEI is coordinating the lawsuit.

We’ll see.  Given the way the law is interpreted anymore, I wouldn’t at all be surprised to see the IRS upheld (or the suits be dismissed out of hand).  Such is the lack of respect and confidence I hold for our “legal system” anymore.

~McQ

IRS sent 5 billion, with a “B”, to identity thieves

If you’re not very confident in government competence to begin with, this story should add fuel to that fire:

Investigators say the Internal Revenue Service may have delivered more than $5 billion in refund checks to identity thieves who filed fraudulent tax returns for 2011.

They estimate that another $21 billion could make its way to ID thieves’ pockets over the next five years.

$5 billion.  $21 billion in 5 years if the ID thieves can’t be rooted out prior to sending the checks. 

Surely they have a way of doing that.  There have to be simple checks like, oh, I don’t know, an address getting more than one return hoisting a red flag maybe?   Or maybe a single bank account receiving more than one return?

For example, investigators found one single address in Michigan that was used to file 2,137 separate tax returns seeking a total of more $3.3 million in refunds. In other cases, hundreds of refunds were deposited into the same bank account.

Guess not.  Guess these new fangled computers and programming security checks are just beyond them (such a system would likely cost much less than $5 billion, huh?).

IRS incompetence costs you $5 billion.   Add that to the $60 billion a year in Medicare waste, fraud and abuse, and we’re talking real money.  And then just imagine all the other waste, fraud and abuse throughout the rest of the federal government and it isn’t at all difficult to understand why we constantly find ourselves in a deficit situation.  Or why government, in the form of the Obama administration is raising taxes on everyone (see ObamaCare and the new Medicare tax) and wanting to raise them on the “rich” segment of the society.

So it can give it away to ID thieves and Medicare fraudsters, among other grifters.

[HT: Jamie Dodge]

~McQ

Twitter: @McQandO

US Olympic medal winners face a taxing experience

Are you watching the Olympics?  Did you enjoy the gold medal performances of the US women’s gymnastics team?

It was nice to see them bask in the glory of the fruition of all those years of hard work and sacrifice.  They reached the peak of accomplishment.  They took the gold.  The stories of the athletes were as interesting as the victory.  Years of monetary sacrifice, hard work, dedication and practice.  Families, who moved to avail their daughter of coaching,  who lived from paycheck to paycheck to ensure money was available for their daughter’s training, the hundreds of meets and competitions, etc.

But hey, we all know they “didn’t build that” themselves.  They traveled on roads to their practice sites and meets, used other common infrastructure improvements and now they get to pay the piper.

It’s time for them to pay up for winning those gold medals, and the IRS will ensure they do.

At today’s commodity prices, the value of a gold medal is about $675 according to Americans for Tax Reform.  And the gold medal brings with it $25,000 in prize money.  The IRS will tax them at 35%. 

So for all those years of hard work, sacrifice and performance, our gold medalists will pay the IRS $8,986 for each gold medal they win.  The silver will cost them $5,385 ($15,000 prize money, and $385 for the medal) and bronze $3,502 ($10,000 prize money, $5 for the medal).

Of course they’ll be about the only athletes in the world so treated because you see, the US is one of the few countries in the world that takes it upon itself to tax the world wide earnings of its citizens.

Because, you know, that infrastructure is everywhere and it’s expensive. </sarc>

But I’m sure we’ll hear from our usual apologists for intrusive government trying to spin these taxes as something both necessary and proper.

Just a note to them – most Americans don’t at all agree with the sentiment that they didn’t build what they now have.   But you have to hope the Democrats keep trying to sell that.    Our Olympians and their tax experience make as good a case against that as any I can imagine.

~McQ

Twitter: @McQandO

ObamaCare: It just gets better and better

And, of course, I say that facetiously.   As it stands now, it has fostered more government regulation, more bureaucrats and more intrusion in epic proportion:

"There’s already 13,000 pages of regulations, and they’re not even done yet," Rehberg said.

"It’s a delegation of extensive authority from Congress to the Department of Health and Human Services and a lot of boards and commissions and bureaus throughout the bureaucracy," Matt Spalding of the Heritage Foundation said. "We counted about 180 or so."

So, minimally (we all know they’re not nearly done) 13,000 new pages of regulation, 180+ boards, commissions and bureaus and, of course, scads of bureaucrats to fill them.

Then there are the new broad powers granted HHS and the IRS.

Yes, friends, that’s right, this is how you make health care less expensive and better, not to mention making government less intrusive.

Probably the funniest thing, in a sad and ironic way, is the fact that there are still millions of people out there who believe the propaganda that sold this crap sandwich to the public.    Someone among them I’m sure will someday be able to explain how adding costly regulations and layers upon layers of bureaucracy somehow helps reduce the cost of health care delivery.  

According to James Capretta of the Ethics and Public Policy Center, federal powers will include designing insurance plans, telling people where they can go for coverage and how much insurers are allowed to charge.

"Really, how doctors and hospitals are supposed to practice medicine," he said.

Wait, wasn’t one of the primary problems with the old system, per the Democrats, a problem of insurance companies telling doctors how to practice medicine?

See, solved by government, right?

In fact, one master has been replaced by another one, the newest master being the most inept, inefficient and corrupt of the two.  And, of course, no one has yet explained how all of this is going to ensure people have better access to a doctor.  Why?  Because, quite simply, having insurance doesn’t guarantee care.  And with the disincentives provided by massive increases in regulation (and the increase that will cost for compliance) and oversight via these board, commissions and bureaus, my guess is there will be fewer doctors in the future.

So prepare to enjoy the dawning of the age of ObamaCare and the attendant disappointment, shock and anger it will eventually engender among the public.  There are some things that one shouldn’t mess with, and people’s health care is one of them.

Forward.

~McQ

Twitter: @McQandO

Happy Dependence Day!

My how things change over the course of 200+ years.

Back at the beginning of this experiment, people rejected a large and intrusive government.  They’d been the victims of one and threw off that yoke.  They acclaimed freedom as their goal and chose liberty as their battle cry.

When they finally got around to forming their own government, they carefully wrote a document which I’m sure they figured was an iron-clad guarantee that this country’s future would never see the same sort of tyranny they’d suffered under.

I just wonder what they’d think of this sprawling, debt ridden and intrusive mess we have now?  I wonder what they’d think of over half the population getting some sort of compensation from government. 

I wonder what they’d think of a Supreme Court Chief Justice more worried about what they’ll say about him and the court on the cocktail circuit and in the media than he is about upholding the Constitution, his sworn duty.  I think I know.

And I’m pretty sure I know what they’d think of this:

Our nation’s current debt, nearing $16 trillion, and our annual budget deficit of $1.2 trillion, indicate that our government’s addiction to spending is nowhere near its limit.

Of that $16 trillion debt, the U.S. owes more than $5 trillion to foreign nations, an all-time high. So much for independence. We’re now a debtor nation, and unless we get our fiscal house in order, that debt will endanger our nation’s prospects for long-term growth.

If that sounds alarmist, consider this: In August 2011, Vice President Joe Biden visited China. This wasn’t just any diplomatic visit — it was the supplication of a debtor, in which Biden undertook to reassure our Chinese debtors that their investment is sound.

Biden assured his hosts that they had "nothing to worry about" when it comes to the U.S. honoring its obligations. It wasn’t the first time a high-ranking U.S. official has had to offer soothing words to our creditors, and at this rate it won’t be the last.

Let’s be clear.  This administration isn’t the cause of all that debt.  It’s just the latest (and the worst) to add to it, to the point that our debt now stands at more than our GDP.  We are indeed a debtor nation.

That’s not at all how this began is it?  Nor was that ever the plan.

I’m also pretty sure I know how they’d feel about the level of intrusion government now routinely practices (and increases) in this country.  For example:

IRS officials on background tell FOX Business the U.S. Supreme Court ruling on health reform gives the IRS even more powers than previously understood.

The IRS now gets to know about a small business’s entire payroll, the level of their insurance coverage — and it gets to know the income of not just the primary breadwinner in your house, but your entire family’s income, in order to assess/collect the mandated tax.

Plus, it gets to share your personal info with all sorts of government agencies, insurance companies and employers.

And that’s just the tip of the iceberg. "We expect even more lien and levy powers," an IRS official says. Even the Taxpayer Advocate is deeply concerned.

As government takes more and more control of your lives, it intrudes deeper and deeper into them:

The TAO [Taxpayer Advocate Office] says that the “IRS will need to determine a taxpayer’s compliance with the individual [insurance] mandate and assess a penalty if coverage is inadequate.”

However, the penalty isn’t based on just your personal net income. The penalty will be based on an entirely different number that is more than just your paycheck earnings — your ‘household income.’

“This determination is based on a concept of ‘household income,’” TAO has said, adding, “this may differ from the income reported on the taxpayer’s return, because it is a composite of all of the income reported by members of a taxpayer’s household — information that may not be readily accessible to the IRS."

If the IRS finds you have fallen short of the law, it would hit you with a penalty tied to your household income (which may be that of an individual or several family members).

Under the new health law, the IRS penalty would be based on “modified adjusted gross income,” not adjusted gross income that you normally report at the bottom of the first page of your tax form 1040, before you take deductions or personal exemptions.

The modifications add back in things like non-taxable interest and excluded foreign income to this number.

Meaning:

Health reform’s insurance mandate says if you do not have “adequate” insurance, you’ll have to pay a fine as part of your tax return. If your business doesn’t provide “affordable” coverage,  that business may have to pay a fine to the IRS, too, as part of its tax return filings.

The TAO has noted Americans must now tell the IRS under the new law:

    *Insurance plan information, including who is covered under the plan and the dates of coverage;
    *The costs of your family’s health insurance plans;
    *Whether a taxpayer had an offer of employer-sponsored health insurance;
    *The cost of employer-sponsored insurance;
    *Whether a taxpayer received a premium tax credit; and
    *Whether a taxpayer has an exemption from the individual responsibility requirement.

The TAO has warned: “This is different from the type of information the IRS typically deals with, and some taxpayers may feel uncomfortable about sharing it with the IRS.”

In fact, it is incumbent upon you to prove to the IRS that you have “adequate coverage”, whatever that ends up meaning. And:

The TAO has also reported that “obtaining this new information will require the IRS to communicate with entities and government agencies that it may not deal with now,” including:

    *New state-run insurance exchanges;
    *Employers;
    *Insurance companies; and
    *Government insurance programs.

But remember the sales pitch – government will make health care simpler, more cost effective and better.

Congratulations to all the simpletons out there who bought into this scam and ended up foisting this intrusive monstrosity on the rest of us.  In fact, thanks to all, who through out the 200 years it has taken us to to get to this point, worked so hard to achieve it “for the common good”.  </sarc>  Nice mess you’ve given us.

As for the rest of you, happy Dependence day!

Forward.

~McQ

Twitter: @McQandO

IRS to have power to confiscate passport?

Iguess we’ve moved into the realm of “guilty until you prove yourself innocent”:

The Republican House of Representatives may soon follow the Democratic Senate and give the IRS the power to confiscate your passport on mere suspicion of owing taxes. There’s no place like home, comrade.

‘America, Love It Or Leave It" might be an obsolete slogan if the "bipartisan transportation bill" that just passed the Senate is approved by the House and becomes law. Contained within the suspiciously titled "Moving Ahead for Progress in the 21st Century Act," or "MAP 21," is a provision that gives the Internal Revenue Service the power to keep U.S. citizens from leaving the country if it finds that they owe $50,000 or more in unpaid taxes — no court ruling necessary.

Note … “mere suspicion”.  Like the IRS screws up its audit and thinks you owe more than you do (and at least $50k), your passport is yanked without going to court.

Let freedom ring, eh?

And, as the lede points out, it isn’t just the Democrats.  Another attempt by both parties to shred the Constitution.

This is not the sort of power an unaccountable agency should be given.  Any idea of how many people will suddenly find themselves on the wrong end of a suspicion they owe $50k or more in taxes?  Whether true or not, with the power to grab your passport and only a suspicion needed (no court order), the IRS will likely “suspect” many people owe at least that much.

That’s certainly consistent with the history of such granted power. Go to the extreme quickly – there’s no reason not too.  No penalty for them, certainly.  Oh, you don’t owe $50k?  Here’s your passport. 

“Moving Ahead for Progress in the 21st Century”?

Since when is changing the IRS to a form of the KGB a “move ahead?”

~McQ

Twitter: @McQandO

More goodies found in ObamaCare

Since no one apparently read – or had the time to read – the ObamaCare bill before it was passed into law, parts of it are just now coming to light that, to most, are going to be a surprise. For instance, a mandate having very little to do with health care but certainly a very costly tax mandate for business was slipped into the bill. Maybe this is why those additional 16,000 IRS agents are needed:

Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress.

[…]

Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.

As one CPA notes:

Under the health legislation, the IRS could be receiving billions of more documents. Under current law, businesses send Forms 1099 for payments of rent, interest, dividends, and non-employee services when such payments are to entities other than corporations. Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases. And for the first time, 1099s are to be sent to corporations. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.

This mandate will generate new compliance costs which will, as the CPA notes, cost businesses “more than any additional tax that the IRS might collect as a result”. As little as $600 in business supplies generates a 1099. It is no longer limited to the categories listed above, but to the size of the purchase. The practical fallout?

The House bill would extend the Form 1099 filing requirement to ALL vendors (including corporate) to which they pay more than $600 annually for services or property. Consider all the payments a small business makes in the course of business, paying for things such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services.

In order to file all these 1099s, you’ll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.

As Chris Edwards at CATO notes:

Private transactions are the core of a market economy, and the source of America’s growth and prosperity. Now the federal government is imposing a vast new web of red tape on perhaps billions of these growth-generating private exchanges.

If it were me I’d be figuring out how to make a whole bunch of $599 purchases, but that’s not the point, of course. This mandate and imposition on business is going to require a huge effort toward compliance and cost a lot of money. It’s just another reason for a business to postpone hiring because the money they were going to put toward a new employee is now shifted to the compliance requirement.

This is how government interferes in the economy in a non-productive way and ties up money that would otherwise be put toward productive economy and job expanding use.

~McQ

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Individual mandate unenforceable? Ask the IRS

If there is any doubt about the individual mandate being enforceable, the chief of the IRS certainly sees no problem:

Individuals who don’t purchase health insurance may lose their tax refunds according to IRS Commissioner Doug Shulman. After acknowledging the recently passed health-care bill limits the agency’s options for enforcing the individual mandate, Shulman told reporters that the most likely way to penalize individuals that don’t comply is by reducing or confiscating their tax refunds.

“These are not the kinds of things we send agents out about,” Shulman said. “These are things where you get a letter from us. Congress was very careful to make sure there was nothing too punitive in this bill.”

Well, I guess that depends on how you define “punitive”.  But be advised – others may claim the individual mandate is unenforceable.  The IRS doesn’t share that belief.

~McQ

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Privacy – With Health Care, Not A Priority

The left certainly likes to give the right of privacy at least lip service as they tell you what you should be concerned with concerning government. But when it concerns something they want, privacy isn’t such an important right.

HR 3200, the infamous house health care insurance bill apparently proves that point quite handily. Nestled within its 1,000 plus pages is a provision, on top of all the other provisions noted previously, that should give real privacy rights advocates pause:

Section 431(a) of the bill says that the IRS must divulge taxpayer identity information, including the filing status, the modified adjusted gross income, the number of dependents, and “other information as is prescribed by” regulation. That information will be provided to the new Health Choices Commissioner and state health programs and used to determine who qualifies for “affordability credits.”

Section 245(b)(2)(A) says the IRS must divulge tax return details — there’s no specified limit on what’s available or unavailable — to the Health Choices Commissioner. The purpose, again, is to verify “affordability credits.”

Section 1801(a) says that the Social Security Administration can obtain tax return data on anyone who may be eligible for a “low-income prescription drug subsidy” but has not applied for it.

Of course the Privacy Act, that inconvenient law that requires agencies to get information not from other agencies but from the individual, is being pointedly ignored here. In fact, reading above, you’d think our “lawmakers” were completely unaware of their own laws.

Given most of them haven’t even read the bill, you’d be exactly right. Additionally, we find out that not all health care insurance reform is contained in the pending versions of health care insurance legislation:

A better candidate for a future privacy crisis is the so-called stimulus bill enacted with limited debate early this year. It mandated the “utilization of an electronic health record for each person in the United States by 2014,” but included only limited privacy protections.

That’s right – already passed into law, in the “stimulus” bill, and without any debate, is a mandate for the use of electronic health records.

Sound like “representative government” at work for you? Or does it sound like an increasingly intrusive government discarding your privacy for the sake of its own hoped for efficiency? Not that such access will provide a more efficient bureaucracy, but it sure will provide that bureaucracy with almost unlimited access to tax information about you and your family.

And that’s without ever getting into what this “Health Choices Commissar Commissioner” is supposed to do. Wouldn’t Orwell have a field day with all of this?

~McQ

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Of “Greed” and “Fairness”

One of the reasons we’ve reached a tipping point between freedom and welfare statism is because much of the country pays no taxes and increasingly the burden of taxes is being shifted to a smaller and smaller percentage of the population. Now I’m not a tax advocate by any stretch. But it is obvious we’re not going to be able to avoid them, especially with this new crowd in town who wants to tax just about everything.

But back to the point – if you’re not paying taxes, but the government is taxing others to your benefit, why wouldn’t you want more stuff? Oh I know the moral argument and I agree with it. What I’m describing is a dynamic which plays on human greed. It’s funny, we hear politicians talk about the “greed” of Wall Street, or the “greed” of big oil or the “greed” of big pharma.

But what is never discussed is the “greed” of those who don’t pay taxes but demand more benefits paid for by others. Or how politicians have “incentivized” that greed.

How ridiculous has it gotten?

Check this chart out:

tax-burden

Yes, that’s right – the top 1% pay more taxes than the bottom 95%. And the plan is to have them pay even more as this health care boondoggle comes on line.

So the next time you hear your favorite “progressive” begin their “greed” or “fairness” nonsense, show them this chart. If that doesn’t shut them up, nothing will.

~McQ