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Curiosity killed the cat

Nearly half a dozen IRS workers at the agency’s Fresno, California facility were charged with computer fraud and unauthorized access to tax return information last Monday: prosecutors accused Corina Yepez, Melissa Moisa, Brenda Jurado, Irene Fierro and David Baker of snooping around taxpayers’ private tax information for personal purposes.

The five may have been caught by new algorithms deployed by the IRS to root out curious tax workers, which can be applied retroactively to access records stretching back for years.

According to the IRS, the five workers accused accessed between one and four records per person, sometime in 2005. The total number of compromised tax returns stands at 13.

“The IRS has a method for looking for unauthorized access, and it keeps audit trails, and occasionally it will pump out information about who's done what,” said prosecutor Mark McKoen, who will be leading the federal case against the Fresno five. “In general terms, IRS employees are only authorized to access the accounts of taxpayers who write in. They're not allowed to access friends, relatives, neighbors, [or] celebrities.”

Apparently, curious employees are a recurring problem for IRS investigators: with 430 known cases of improper access in 1998, and 521 in 2007. Problems occur frequently enough that nosy employees caught browsing are guilty of what the agency calls “UNAX,” or “unauthorized access”: Employees found in UNAX are typically disciplined internally, and a handful are slapped with misdemeanor charges of violating the Taxpayer Browsing Protection and Computer Fraud and Abuse Acts.

“Whether the intent is fraud or simply curiosity, the potential exists for unauthorized accesses to tax information of high-profile individuals and other taxpayers,” said Inspector General for Tax Administration J. Russell George. “The competing goals of protecting this information and achieving workplace efficiencies become even more difficult as technology becomes faster and more complex.”

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RE: Here is an idea...
By AntiM on 5/14/2008 11:17:58 AM , Rating: -1
I think it's doable. Eliminate income tax. Make up the lost money by increasing sales tax. Also, just have a flat tax rate per person. Every person pays $100 per year in taxes. No loopholes, no exceptions. If you have a child, you pay $100 for each child. Why? Because you are using more resources and services than a person that doesn't have children. There could also be a sliding scale for corporations, depending on how many people they employ, or maybe based on their revenue. No deductions, no loopholes. We might still need the IRS, but it would be much smaller and simpler.

RE: Here is an idea...
By wookie1 on 5/14/2008 12:03:19 PM , Rating: 2
How does this work? Right now, businesses pay big taxes on profits and dividends. A good portion of these profits even come from outside the US. If this is taken away, individuals in the US would have to make this up through sales taxes. It seems to shift a much greater burden onto individuals, and take it away from businesses. No wonder this is popular with some politicians!

RE: Here is an idea...
By MrBlastman on 5/14/2008 12:14:04 PM , Rating: 2
Businesses have to buy things too, you know?

B2B selling is actually one of the most lucrative profit centers on our economy as a matter of fact.

RE: Here is an idea...
By The Irish Patient on 5/14/2008 12:58:48 PM , Rating: 3
I really like the idea of a simplified tax system, but the problem is really the opposite from what you suggest.

Personal and business taxes are based on different concepts. Personal income tax starts with gross income, with only limited deductions for the necessary expenses of living and working. Business taxes start with the proposition that the corporation is allowed to deduct every conceivable expense of existing and doing business, with only the remainder (if any) subject to tax.

So while large corporations like to remind you of how high a percentage of their net income (profit) is taxed, the taxes are very small compared to gross income. The last time I checked, the federal taxes of General Motors only amounted to some 2% of gross income. Meanwhile, I earn just about enough to own a starter home in New England, and I pay about 15% of gross income as federal tax.

A uniform flat tax of 5% or 10% would be a huge savings to me, but it would be a real kick in the pants to General Motors. The flat tax concept can't get past campaign rhetoric unless the politicians have the political courage to explain to people that there are good economic reasons why their flat tax should be three to five times higher than the flat tax on a multi-billion dollar corporation like GM. Unfortunately, political courage is in very short supply.

RE: Here is an idea...
By MagnumMan on 5/14/2008 2:23:55 PM , Rating: 2
You wouldn't be able to afford the increased price of a GM-made car after implementing a flat tax. If their taxes increase by 8% then you know car prices will go up by at least 8%. So no matter where you hit the tax plan, it will eventually get you in the end and you'll be back to the same cost. I'm all for a simpler system though. The one thing that completely bothers me is multiple taxation. Why should I pay sales tax on something I buy when the money I am using to buy it has already been taxed (by both federal and state governments)? That's what really irks me.

RE: Here is an idea...
By joex444 on 5/14/2008 7:36:33 PM , Rating: 2
YOU don't. That's what very few of us realize.

Sales tax is a RETAIL tax paid by the business. It is just common practice to let the consumer pay the tax upfront and set aside that money to pay the state.

In the end, the sales tax money does reach the state, but it goes through the retail chain.

I personally would like a law which forbids this practice, but you know that if they abolish that then the retail stores just up the item price to maintain their bottom line.

RE: Here is an idea...
By dever on 5/14/2008 3:06:43 PM , Rating: 2
How can anyone really believe that additional cost will not be passed on to the consumer? It's not even possible. A company must pay all of it's expenses (materials, labor, taxes) to continue to compete. These expenses are automatically reflected in a companies single source of income... it's customer... YOU.

RE: Here is an idea...
By Ringold on 5/15/2008 1:09:06 AM , Rating: 2
Dever already commented on one thing..

.. but on another.. I'd suggest the concept is identical.

Fair warning: I'm not an accountant. That said, I find 'gross income' to be misleading. Revenue is a much better word. Income conceptually sounds like profit. When you get a pay check, thats a pure profit flowing in to your household. The government taxes your profit, the government taxes corporations profit. Indeed, if you bother to go to the trouble, you too can deduct a lot of things. God bless Turbotax, I was able to deduct expenses I didn't even think about with respect to my investments.

Therefore, a uniform flat income tax would impact you and GM in similar ways. If GM ran a loss, they'd pay no taxes. If you personally did not work, you'd pay no taxes. To try to suggest corporations are getting a tax break is an argument on extremely frail factual ground, particularly when Exxon alone pays more in taxes than the bottom 50% of all American tax payers.

RE: Here is an idea...
By rsmech on 5/14/2008 6:42:10 PM , Rating: 2
A Corporation does not pay taxes. If you raise them they charge you more. You pay the taxes, they are built into the price. Reduce the tax, reduce the price.

RE: Here is an idea...
By hlper on 5/14/2008 12:34:03 PM , Rating: 2
Unfortunately, sales tax is the most regressive form of taxation, and the set $100 tax would only compound the problem.

It's simple; poor people have to spend every cent they make to survive (so they pay taxes on every dollar they get). Rich people spend proportionately less of their money the richer they become. So the richest people approach a tax rate close to 0%, while poor people pay whatever your increased sales tax rate is, plus your $100. That's not to say that the system could not be simplified, but this is not the answer

RE: Here is an idea...
By dragonbif on 5/14/2008 1:24:03 PM , Rating: 2
First of all sales tax, property tax, gas tax and luxury tax are all state and local government tax. The federal do mostly income and services tax with a few other tax like polluting and such but most of us do not pay that sort of thing.
The reason the US does not change to a fixed income tax like other countries (9-13% or more) is because we have state income tax or state sales tax which we can get deductions for unlike other places who would only have local and federal. Also we have democrats in the US so giving back to the poor and people with lots of kids is so important that they would not want a fixed tax rate. To tell them to pay what other people pay would make it so you could not get elected into office. Do not forget we have things like Social Security and Medicare that could never be covered by income tax.
I would love a fixed tax rate of 9% and no more tax returns but I do not see that happening. The average person I would say pays 30% of their income to taxes in a year. If you add up income tax, sales tax, property tax, gas tax (west US mostly), SS, Medicare and all other tax it would be close to 30% if not more. They may fix are income tax but they would make us pay more in others.

RE: Here is an idea...
By Ringold on 5/15/2008 1:35:13 AM , Rating: 2
Actually, some New England states, combining federal, state and local taxes, directly consume nearly 40% of the average joe's income.

Throw in the taxes embedded in to retail prices, and if you're a college grad with a few years in the work force then every $1.00 theoretically earned is really translating in to $.30 of buying power.

I can't recall the exact number, but even a middle class blue-collar family ends up seeing an average of 60+ cents on the dollar being absorbed by various taxes.

Your 30% doesn't even cover what the average joe is probably seeing taken right off their pay stub!

RE: Here is an idea...
By Gumby16 on 5/14/2008 5:43:34 PM , Rating: 2
Flat tax=good idea. Flat amount (e.g. $100 per person)=bad idea. If you make $10k a year, $100 is much more valuable than if you make $100k. So a flat PERCENTAGE tax=good idea. 10% of your total income hits everyone in exactly the same way- i.e. their purchasing power is reduced 10%. A flat tax not based on a percentage is highly regressive and disproportionately hits the lower income brackets.

RE: Here is an idea...
By Teancum on 5/14/2008 7:04:53 PM , Rating: 2
Where was this story during the Huckabee campaign. He would have ran with this.

RE: Here is an idea...
By Samus on 5/14/2008 7:20:49 PM , Rating: 2
Two words: FAIR TAX

It works in every other industrialized country in the world. We are practically the only government utilizing a huge tax agency to process income taxes. It's a complete waste of tax payers money, and the IRS is only so efficient. I remember reading they are ripped off over 100 billion dollars a year because people fix their estimates/actuals or don't pay at all. Hence the need for audits. This could all be eliminated with the elimination of the IRS (at least as we know them now; they will still exist, but the roll will be completely different.)

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