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The Tax Collector

March 26, 2010 by Lazy Man 5 Comments

[The following is a fictional story by Kosmo. Kosmo is an aspiring novelist, vehement opponent of the designated hitter, student of true crime, and plays the keyboard for The Casual Observer – an eclectic, team-written web magazine.

Kosmo would like to give readers of Lazy Man and Money a discount at his store. For the next month, use the coupon code LAZYMAN20 to get a 20% discount on all items (excluding writers’ tip jars).]

Michael Hays tried to avoid talking about his job whenever possible. When the question inevitably arose, he said that he worked as a compliance specialist within the Treasury Department.

This was technically true. The Internal Revenue Service was within the Treasury Department, and an auditor could be thought of as a compliance specialist. This was Michael’s way of evading the slings and arrows that might otherwise come his way, while still staying on the angelic side of the truth.

Michael plopped into his chair and looked at the work ahead of him today.

First on the list were follow-ups to some letters than had been sent to taxpayers to ask for evidence of certain deductions. Many of the taxpayers had deftly shunted the letter on to their tax professional. Most of the tax professionals had written coherent responses and attached the necessary documentation.

Some of the others had decided to respond without the assistance of professionals. Several of them had done very competent jobs, allowing Michael to cross their names off his list as well. Several others had responded in a manner that made it very clear that they did not fully comprehend Michael’s request. Michael set these aside for the moment.

Next on his list was the dispute with Mr. Anthony Davis. Mr. Davis had taken advantage of an investment opportunity that was determined by the IRS to be a tax shelter. The amount was so small that Mr. Davis was getting minimal benefit from the shelter. Michael had the impression that Davis was simply trying to pick a fight with the IRS. Michael hoped that Mr. Davis would soon realize how foolish it was to risk jail time over this dispute.

The next batch of letters contained the interesting ones. Most of these were from the people who had ignored the W2s and 1099s that had been sent to them, under the firm belief that the IRS did not have the authority to collect taxes. The standard array of arguments arose from the letters. The tax system was voluntary, the sixteenth amendment was never properly ratified, the only people subject to income tax are employees of the federal governments. Some of the other letters involved disputes about bogus credits that the taxpayers had claimed on their returns.

Michael spent time carefully crafting his responses to these letters, citing the relevant case law in each situation. Michael was a bit surprised that so many people were still conned by quacks selling fraudulent tax evasion schemes. Time after time, courts had affirmed the authority of the IRS to collect taxes. So many frivolous claims had been argued, and so many had been dismissed by judges. The IRS had even posted a list of these arguments with details of the cases ““ but many of these people simply didn’t want to hear the truth.

The final letter on Michael’s desk was the most pleasant. A recent audit had tripped up a wealthy business owner who had used a variety of shell corporations and foreign bank accounts to evade taxes. Michael had eventually unraveled the mess, and the IRS had laid the facts out in front of the man. They offered a deal ““ pay the back taxes, plus interest and penalties, and the IRS would back down and not pursue a fraud case. Michael pulled the check out of the envelope and stared at the amount for a moment – $13,312,872.42. It was not uncommon to receive checks to settle disputes, but Michael was always happy to see such a large check.

Michael wondered where these dollars would end up going. The construction project near Michael’s home had been stalled due to a lack of federal funding. Perhaps now the road could be widened and the traffic lights installed. The current state of the road was not adequate for the volume of traffic. The changes would make it much safer.

Perhaps the war on terror could afford more advanced screening tools that would allow for detection of dangerous items that currently evaded the scans at the airport. Maybe this money would prevent a hijacking.

Michael was a volunteer at one of the Head Start programs in town. The program was always a bit short of funds. Maybe this money would allow these kids to be more prepared for elementary school.

Of course, Michael knew that this thirteen million dollars wouldn’t be earmarked for any of these projects. However, he also knew that actively pursuing all tax revenue legally owed to the government would allow a higher level of funding for many great programs. Michael knew that nobody enjoyed paying taxes, and realized that large amounts of federal funds were unfortunately wasted ““ but also knew that without the funds provided by income taxes, the United States would be a much worse place to live.

[If you liked the story above… or even if you didn’t… I urge you to visit The Casual Observer and extol the virtues of the designated hitter.]

Filed Under: Guest Writer Tagged With: fiction, Tax

4 Investing Ideas for Your Economic Stimulus Tax Rebate Check

June 14, 2008 by Lazy Man 9 Comments

Today’s post comes from Miranda Marquit. She writes about personal finances for YieldingWealth and edits debt consolidation information for Destroy Debt.

The “economic stimulus” tax rebates have begun arriving, and now people are wondering how to spend them. Instead of blowing all that cash on something you don’t actually need, why not put part — or even all — of that money to work for you through investing? Here are 4 investing ideas for your “economic stimulus” tax rebate check:

  1. Retirement account – If you aren’t putting the maximum amount into your retirement account, why not use that tax rebate check to bring it up to scratch? Even with a modest rate of return (around 7 percent) over 20 or so years, you can make a big difference in the end result if you put the money in your retirement account.
  2. Index funds – In general, the stock market is struggling a bit. This means that now is an ideal time to get in (you know, the old “buy low, sell high”). You can buy more units for your money. And if you choose index funds, you can enjoy instant diversification. Over time, the stock market gains. You can take advantage of that buy getting in now, even though the returns are modest, averaging between 7 and 11 percent.
  3. Cash – This is not going to get you a great return right now. But cash investments (like a high yield savings account or a CD) can be a good way to build your emergency fund. And they are safe, if you use a bank that is FDIC insured. You can pad your “rainy day” fund with an infusion in the form of your tax rebate check. The money will grow (albeit slowly), and offer you a bit of a safety net. Besides, the Fed has to start raising rates again sometime. When that happens your savings account yield will increase, and you can ladder CDs into something with a better return.
  4. Growth stocks – If you’re the type of person who can stomach a little more risk, this might be a good opportunity for you invest in some growth stocks. These stocks are riskier, and you could end up losing the money, but it you choose carefully, you just might parlay your tax rebate check into some serious stimulus for your investment portfolio. One of the more promising sectors is clean tech.

What you choose to do depends on your risk tolerance and your investing style — as well as your individual needs. But no matter your decision, you can put this “found” money to work.

Filed Under: Investing Tagged With: cash investments, debt consolidation, diversification, Economic Stimulus, emergency fund, fdic, growth stocks, high yield savings, high yield savings account, index funds, Investing, personal finances, rainy day fund, rate of return, rebate check, retirement account, safety net, stock market gains, Tax, tax rebate, tax rebates

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