IRS and Ownership Society (Continued)

At least those of us who believe in individual accountability will have a perpetual ally in the IRS. When mortgage brokers and home buyers collude to cheat mortgage buying banks and investors ("You give me money I can't pay back so I can live in a home I can't afford, and I'll trash my credit so you can sell a junk loan and make a huge commission.") somehow the individual can plead "ignorant". Not innocent or guilty, just ignorant. It's predatory lending, not predatory borrowing, though ironically the bank is the one left holding the bag, and I'm at a loss to understand how the bank violated it's contractual agreement - as stated in writing. By failing to make payments, the borrower certainly is in breach of contract...although excuses abound.

If you don't buy this logic of guilty, innocent and ignorant, you're not alone, the IRS sees only black and white as well. A recent form of tax fraud is an email offering tax preparation services with abnormally large tax savings. Does the IRS take mercy on those duped by these predatory tax preparers? Not a chance. From the IRS:

Return preparer fraud generally involves the preparation and filing of false income tax returns by preparers who claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. Preparers may also manipulate income figures to obtain tax credits, such as the Earned Income Tax Credit, fraudulently.

In some situations, the client (taxpayer) may not have knowledge of the false expenses, deductions, exemptions and/or credits shown on their tax returns. However, when the IRS detects the false return, the taxpayer — not the return preparer — must pay the additional taxes and interest and may be subject to penalties.

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Tax evasion is a risky crime, a felony, punishable by five years imprisonment and a $250,000 fine.

It may come as a hit to your self esteem that the Gov't doesn't trust you to understand 10 pgs. of mortgage documents and elementary household budgeting, but take courage, the 16,845 pgs. of the U.S. tax code can be mastered by even the lowliest American.