The IRS Audit Blog

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Question: Can someone tell me why our governments are unable to crack down on following fraudulent activities?

John Doe opens up a business for the price of $80=registration. It is Called Doe Inc. He
works for Mr. Smith who deposits a check in the amount of 3000 ever month to the Doe Inc. The IRS or Revenue Canada finds out about Doe Inc and sends a letter to Doe Inc address requesting money. John Doe closes the business, changes address and goes back to the registration office were he opens up a new business in the name of Doe J Ltd. This sort of activity is wide spread in the southern states of the US ( Mexican cleaners ) and in many parts of Canada. Why hasn’t the government cracked down on these illegal practices? Why pay all the tax revenue when the system is so corrupt and unable to track you down? Someone please explain this to me???

Answer: The government shouldn’t set taxes so high that people choose to evade them. 20% of Americans don’t pay their taxes (tax rate of about 37ish%). 40% of Europeans don’t pay taxes (tax rate of 50-60ish%). If they cut the taxes, I’m certain they’d have fewer people in the Tax Honesty movement (the people who come up with arguments about why the Income Tax is illegal, hoping that somebody will believe them), which would be in the best interests of the government if it doesn’t want to go the way of the dodo. However, that’d be the end of the Welfare/Warfare State because they can’t support Wars in Iraq or Socialized Medicine with a lower tax rate.

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