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(9/17/03 6:48 pm)
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Feds join with states to crack down on tax cheats
Scripps Howard
09.16.2003
WASHINGTON -- Uncle Sam and the states have joined forces to wage war on tax cheats who cost states as much as $10 billion a year. Federal coffers miss out on billions more.
The IRS has agreements with 40 states and the District of Columbia to cooperate upfront in the crackdown on tax schemes and scams. Although state and federal authorities shared information before, it generally was after-the-fact, not from the get-go.
With IRS resources stretched, states will help flag, audit and prosecute abusive tax schemes, said Maryland Deputy Comptroller Stephen Cordi, head of the Federation of Tax Administrators. He added states stand to profit by catching tax scofflaws, too.
— States can share in the IRS' two-year-old campaign against domestic and offshore tax shelters. The IRS has gone after accountants and lawyers who design and sell big corporate plans; has caught smaller operators who peddle nonexistent "slave reparations" rebates, "un-tax yourself" seminars and the like; and just closed an amnesty offer that yielded 450 new leads to investigate.
— A recent multi-state task force estimated that states lose $10 billion a year to tax cheats even though there are "no hard and fast estimates" of how much money is foregone, said Dale Hart, deputy IRS commissioner in charge of the tax-shelter effort.
California alone lost at least $2 billion to tax cheats the last four years — money California can ill afford given its budget crisis, said Marcy Jo Mandel, the deputy comptroller for taxation who is looking for ways to plug California's $38 billion deficit.
In Alabama, where voters just killed a $1.2 billion income tax hike to close the worst deficit since the Depression, tax policy chief Mike Mason called the joint effort to catch tax cheats a "welcome opportunity, with Alabama's current fiscal condition."
Internal Revenue Commissioner Mark Everson said the market for tax shelters and schemes is changing, partly because corporate scandals forced tighter corporate governance and accounting standards the last year. However, he added, "The battle isn't won. Are we making progress? We think we are, and we just brought in new ammunition."
Tennessee and Texas, two states without broad-based personal income taxes, have not yet joined the partnership, although states such as Florida without personal income taxes signed on to get at corporate and sales tax scofflaws. Other states not yet part of the federal-state effort are Alaska, Colorado, Delaware, Maine, Michigan, Nebraska, Nevada and Wyoming.
On the Net: www.irs.gov
www.taxadmin.org
© 2000 Scripps Howard News Service.
All Rights Reserved.
Copyright © YellowBrix Inc 2003
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