The New IRS

In yesterday's McBlog, I posted the observation,"The IRS seized Tax Rebel Larken Rose's computers over a year ago, but have apparently been unable to find any actual tax violations to charge him with during all this time. Now, suddenly, after more than a year of scrying, the IRS suddenly claims to have found `kiddie porn' on these machines." As well as expanding their jurisdiction to include disclosures of child pornography, the IRS seems to be assuming regulatory powers over the wages that charities pay their executives. The stated justification:"The rules governing charities and private foundations say they cannot pay executives more than reasonable compensation. Excessive compensation can be penalized by excise taxes. A group's tax-exempt status can be revoked if trustees, founders, directors or others use the charity for their own benefit." Since there are tax rules/exemptions governing a a vast of businesses -- and especially corporations -- the justification of"just checking on the tax status" could easily be expanded. Moreover, implicit in the investigations is the notion that the IRS rather than some other regulatory factor -- like the free market -- should define what is a"reasonable salary" for a given position. The IRS is clearly gearing up to launch a major assault on wallets across the U.S. It is not merely that IRS Commissioner Mark Everson has vowed an"aggressive program" of examining charities. Or that the agency seems determined to"get" tax rebels by any means, including smearing them as pedophiles. Consider this news item:"Suspect your company is cheating the IRS out of millions in taxes? Pass along the inside information to the Internal Revenue Service and you stand to collect up to 30 percent of taxes and penalties recovered under whistle-blower legislation aimed at snaring high-dollar tax cheats." Aggressive, yes, but the flexing of new muscle is not unpredictable. On November 23, 2003, political activist Robert R. Raymond {{link reported,"In a precendent-setting case, the IRS wielded new power to punish the political speech of those who"espouse views" the government considers"inconsistent" with government-held beliefs. In a hearing originally closed to the public in a secret tribunal on a military island, but moved to a public location after protests from the press and the public, the IRS wants to wield this power against a former IRS whistleblower, who was forced to resign upon his discovery of fraud in the agency. After monitoring and taping the whisteblower's appearances on Sixty Minutes, talk radio shows, and political publications where he rebroadcast his findings of IRS fraud, the IRS initiated this inquisition against their former whistelblower. This new power may find new political targets soon enough."

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