Sunday, April 13, 2014

IRS Goes for Little Guy

WaPo reported:
Across the nation, hundreds of thousands of taxpayers who are expecting refunds this month are instead getting letters informing them that because of a debt they never knew about — often a debt incurred by their parents — the government has confiscated their check.

The Treasury Department has intercepted $1.9 billion in tax refunds already this year — $75 million of that on debts delinquent for more than 10 years.  

The aggressive effort to collect old debts started three years ago — the result of a single sentence tucked into the farm bill lifting the 10-year statute of limitations on old debts to Uncle Sam.

Four years ago private equity underwriters successfully defended their preferred private interest taxation.  PEU's pay virtually no federal income taxes.  The Carlyle Group reported $104.1 million in net income in 2013.  It noted a $2.2 million provision for federal income taxes, a 2.1% income tax rate. 

While Uncle Sam holds average citizens responsible for debts they never incurred PEU boys are taxed like a nonprofit charity and get to park money offshore.  Care to play "Count the Cayman's"?  The game is correctly counting the number of Carlyle Group affiliates in the Cayman Islands (from their 2013 SEC filing).  It may be time to update the challenge.

Update 4-14-14:  The government stopped this practice as of today.