Monday, July 24, 2006

Bush to Uber-Rich Americans: "Go Ahead & Cheat on Your Taxes; I'm Firing the IRS Lawyers Who Would've Audited You"

Bush Finds the Backdoor for More Tax Breaks to His Benefactors; Layoffs at IRS Will Halve Audits of Wealthy Estates

David Cay Johnston reports
The U.S. government is moving to eliminate the jobs of nearly half of the lawyers at the Internal Revenue Service who audit the 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 fewer than 70 days.

Kevin Brown, an IRS deputy commissioner, confirmed the cuts after The New York Times was given internal documents by people inside the IRS who oppose the action.

The Bush administration has successfully lobbied Congress to enact 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.

Brown said during a telephone interview that he had ordered the cuts because far fewer people were obliged to pay estate taxes under Bush's legislation.

But six lawyers whose jobs are likely to be eliminated said during interviews that the cuts were just the latest moves to shield people. Sharyn Phillips, an IRS estate tax lawyer in New York, called the cuts a "backdoor way for the Bush administration to achieve what it cannot get from Congress, which is repeal of the estate tax."

Brown dismissed as preposterous any suggestion that the IRS 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 returns, especially those from people making more than $1 million

Brown said that civil service rules barred the estate tax lawyers from moving to audit income taxes. An IRS 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 IRS, according to Brown. For each hour they work, they find an average of $2,200 of taxes owed to the government

Brown said that analysis showed the IRS 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 such 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 IRS said that 85 percent of large taxable gifts it audited had sought to shortchange the government.

Over the past five years, officials at both the IRS and the Treasury have told Congress that cheating among the highest-income Americans was a major and growing problem.

What will they do with all that extra cash?

A mere $135 million buys Starwood Estate in Aspen, Colo.
Prince Bandar bin Sultan bin Abdul Aziz, former Saudi Arabian ambassador to the U.S., has put his 95-care ranch on the market. The Starwood Ranch estate includes a 56,000-square-foot mansion with 15 bedrooms and 16 baths, several smaller buildings, stables, a tennis court and an indoor swimming pool.

You remember Bandar Bush, don't you?:

George W. Bush and Prince Bandar (affectionately known as Bandar Bush to members of the Bush family) in the private residence of the White House, September 12, 2001.

For $65 million, the Gold Coast Mansion in San Francisco, Calif., is a steal. It's clad in French limestone and needs two more years of work. But this Gold Coast palace is certainly exclusive - you won't even get a go-see without having $800 million in the bank. The dramatic neoclassical villa was sold two years ago for $32 million; neighbors on "Billionaire's Row" include the Getty family.

Then again, with the hell on earth that Bush and Republicans are creating, sitting out the inevitable economic crash and widening war on a private island might be just the ticket:

A mere $39.7 million will put you on Isla de sa Ferradura, off the coast of Spain. This 14-acre island lies just off the northern coast of Ibiza, in the bay of San Miguel. Edged by dramatic cliffs, the resort island is dominated by a luxurious white hacienda. It features a large salon, home theater, professional kitchen, dining room that seats 14 and several terraces, including a revolving one overlooking the swimming pool. The pool has its own waterfall and bar. There is also a cave complex built to house a whirlpool, solarium, steam bath and other amenities. Ferradura can be reached by boat, helicopter or by the small private road that connects it to the main island.

A little closer to home, this large landmass (it totals about 35,000 acres) is located off the east coast of Baja, in the Sea of Cortez:

Cerralvo Island, Mexico, for sale at $35 million. Trump might like this one. The rugged island has beaches and sandy points, and a consistently balmy climate. Incredibly deep water nearby provides extraordinary fishing opportunities. Though Cerralvo is undeveloped, it could accommodate several hotels and golf courses. I actually know this island, although it didn't cost me a cent to visit. Tip to Buyer: Bring gallons of insect repellent - the place is swarming with sand fleas.

Although, with the deal that Bush cut with India that has started a new nuclear arms race (Pakistan, feeling "slighted", is back in the nuclear arsenal building business - 50 nuclear bombs a year), Down-under, "On The Beach," isn't the worst idea:

Pakatoa Island, New Zealand, is available for $35 million. Most of the islands in Hauraki Gulf have been set aside as reserves. Pakatoa, which is occupied by an inactive resort, is one of the few exceptions. Among its amenities are 24 beachside cabins, 38 hillside cottages, a nine-hole golf course, beaches, two mini tennis courts, a bowling green, squash court, gym and restaurant. Pakatoa is about 30 miles from Auckland, and is accessible by boat or plane (it has its own landing strip).

Or maybe more portable wealth - a shopping spree at Christie's?:
Unmounted pear-shaped diamond weighing 50.67 carats. Estimate: $2.25 million to $2.5 million

The Rojtman Diamond, a round-cornered square brilliant-cut of fancy yellow color weighing 107.46 carats, within a pendant mounting. Estimate: $1.5 million to $2 million

Look! Isn't this the Bennifer ring?:
Colored diamond ring set with a modified square-cut fancy pink diamond weighing 5.25 carats, which is flanked on either side by a trapeze-cut diamond, mounted in 18 karat rose gold and platinum. Estimate: $400,000 to $600,000

The Bennifer Ring

Or a "Him & Her, Carats & Carry" shopping spree:

Magnificent Diamond and Emerald Necklace - "Price Upon Request" A virtual cascade of white and green, this Magnificent Diamond and Emerald Necklace from Chopard's "Haute Joaillerie" collection will keep all eyes on your sweetheart, whatever the occasion. There are 191-carats worth of Columbia's most beautiful emeralds on there, completely set by 16 carats of rose-cut and drop-shaped diamonds. Though officially "price upon request," you should figure on spending $3 million-plus.

Guy Equivalent: Two '66 Ford GT 40s (the most expensive Ford, ever) - if you can find them:

I need a nap; shopping with the rich is exhausting.

Filed under: Bush, IRS, audits, fire, uber-rich, estate tax, Prince Bandar, private islands, diamonds, Ford GT40, conspicuous consumption, David Cay Johnston

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