[reflux]

http://www.nytimes.com/2006/07/23/business/23tax.html?_r=1&oref=slogin

The federal government is moving to eliminate the jobs of nearly half of the lawyers at the Internal Revenue Service who audit tax returns of some of the wealthiest Americans, specifically those who are subject to gift and estate taxes when they transfer parts of their fortunes to their children and others.

The administration plans to cut the jobs of 157 of the agency’s 345 estate tax lawyers, plus 17 support personnel, in less than 70 days. Kevin Brown, an I.R.S. deputy commissioner, confirmed the cuts after The New York Times was given internal documents by people inside the I.R.S. who oppose them.

The Bush administration has passed measures that reduce the number of Americans who are subject to the estate tax — which opponents refer to as the “death tax” — but has failed in its efforts to eliminate the tax entirely. Mr. Brown said in a telephone interview Friday that he had ordered the staff cuts because far fewer people were obliged to pay estate taxes under President Bush’s legislation.

But six I.R.S. estate tax lawyers whose jobs are likely to be eliminated said in interviews that the cuts were just the latest moves behind the scenes at the I.R.S. to shield people with political connections and complex tax-avoidance devices from thorough audits.

Sharyn Phillips, a veteran I.R.S. estate tax lawyer in Manhattan, called the cuts a “back-door way for the Bush administration to achieve what it cannot get from Congress, which is repeal of the estate tax.”

Mr. Brown dismissed as preposterous any suggestion that the I.R.S. was soft on rich tax cheats. He said that the money saved by eliminating the estate tax lawyers would be used to hire revenue agents to audit income tax returns, especially those from people making over $1 million.

Mr. Brown said that civil service rules barred the estate tax lawyers from moving over to audit income taxes. An I.R.S. spokesman said that the agency had asked for permission to allow such transfers twice, but that the Office of Personnel Management had not responded.

Estate tax lawyers are the most productive tax law enforcement personnel at the I.R.S., according to Mr. Brown. For each hour they work, they find an average of $2,200 of taxes that people owe the government.

Mr. Brown said that careful analysis showed that the I.R.S. was auditing enough returns to catch cheats and that 10 percent of the estate audits brought in 80 percent of the additional taxes. He said that auditing a greater percentage of gift and estate tax returns would not be worthwhile because “the next case is not a lucrative case” and likely to be of relatively little value.

That is a change from six years ago, when the I.R.S. said that 85 percent of large taxable gifts it audited shortchanged the government. The I.R.S. said then that it would hire three more lawyers just to audit taxable gifts of $1 million or more.

Over the last five years, officials at both the I.R.S. and the Treasury have told Congress that cheating among the highest-income Americans is a major and growing problem.

The six I.R.S. tax lawyers, some of whom were willing to be named, all said that clear evidence of fraud was pursued vigorously by the agency, but that when audits showed the use of complicated schemes to understate the value of assets, the I.R.S. had become increasingly reluctant to pursue cases.

The lawyers said that the risk analysis system the I.R.S. used to evaluate whether to pursue such cases gave higher-level officials cover to not pursue tax cheats and, in the process, emboldened the most aggressive tax advisers to prepare gift and estate tax returns that shortchanged the government.

“This is not a game the poor will win, but the rich will,” said John Hruska, another I.R.S. estate tax lawyer in New York who, like Ms. Phillips, is active in the National Treasury Employees Union, which represents I.R.S. workers.

Colleen M. Kelley, the national union president, said: “If these lawyers are not there to audit the gift and estate tax returns, then a lot of taxes that should be paid will go uncollected, and that impacts every taxpayer who is paying their fair share.”

While I don't make a habit of wearing a tin hat, I can't help but think that the timing is interesting. Seeing as how recent efforts to repeal the estate and gift tax have failed, it does indeed seem like a nice backdoor method to "eliminating" the tax.

 

[narlus]

while i know it's fashionable to bag on the rich, i think the estate tax is inherently unfair...they've already paid taxes on the money once, why get hit w/ a tax again?

 

[Tenchiro]

while i know it's fashionable to bag on the rich, i think the estate tax is inherently unfair...they've already paid taxes on the money once, why get hit w/ a tax again?

Although I still think the rich should be lined up on the wall.

 

[Changleen]

While I don't make a habit of wearing a tin hat, I can't help but think that the timing is interesting. Seeing as how recent efforts to repeal the estate and gift tax have failed, it does indeed seem like a nice backdoor method to "eliminating" the tax.

I think you need a lot of different hats to perceive the world correctly. A tin foil hat is certainly one of them.

 

[Silver]

while i know it's fashionable to bag on the rich, i think the estate tax is inherently unfair...they've already paid taxes on the money once, why get hit w/ a tax again?

The idea is that it helps to avoid Paris Hilton situations. After all, if Paris Hilton is a poor drug addict instead of a fashionable rich one, she probably ends up in jail and can't get a job due to a felony possession record. Rich people don't have to deal with that kind of thing (Rush Limbaugh, I'm looking at you....) That's a fairly even trade, I think, but opinions vary.

At the same time, it's hardly like the rich in this country have it bad when it comes to taxation. Get rid of the ceilings for SS and Medicare taxes, and I'd probably be willing to make that trade.

 

[N8 v2.0]

The idea is that it helps to avoid Paris Hilton situations. After all, if Paris Hilton is a poor drug addict instead of a fashionable rich one, she probably ends up in jail and can't get a job due to a felony possession record. Rich people don't have to deal with that kind of thing (Rush Limbaugh, I'm looking at you....) That's a fairly even trade, I think, but opinions vary.

At the same time, it's hardly like the rich in this country have it bad when it comes to taxation. Get rid of the ceilings for SS and Medicare taxes, and I'd probably be willing to make that trade.

A Kennedy says what?

 

[BuddhaRoadkill]

while i know it's fashionable to bag on the rich, i think the estate tax is inherently unfair...they've already paid taxes on the money once, why get hit w/ a tax again?

Quite the contrary. Inheritance is patently unfair and a cornerstone of our oligarchy. It should be elliminated all together, but that's unrealistic. A cap would suffice. The starting line needs to be at least reasonably close if we are to claim any sort fairness.

 

[Silver]

A Kennedy says what?

Is the Kennedy family trying to get rid of the estate tax?

Jesus Christ, you're dumber than Damn True...and you don't have the crazy religion excuse.

 

[MMike]

Estate tax is BS... My wife inheritted almost 6 figures back in 99 or 2000 when her uncle died. Lost more than half in taxes.

 

[Changleen]

Just so y'all know - No estate tax in NZ... Invest it all here before you die.

 

[reflux]

Estate tax is BS... My wife inheritted almost 6 figures back in 99 or 2000 when her uncle died. Lost more than half in taxes.

Was it all in cash or appreciated property? If it was appreciated property (read: stocks, equities, etc), it was actually the first time those unrealized gains were taxed. I'm not saying its fair to be taxed at that high of a rate, but if we do away with the estate tax, those unrealized gains will NEVER be taxed. I'd say that's a great deal for the rich.