Romney should be audited immediately! Start with the $77,000 deduction for his wife’s horse as a business expense. I have a problem letting go of this. And as you begin to read this keep in mind there is no way to totally simplify what you should know about what constitutes a deduction based on the form presented to the IRS to get around the substance and intent of the Tax Code’s definition of income.
I have spent my career, and over 4 decades of membership in groups of tax experts from prominent Cleveland law and accounting firms, listening to overly aggressive tax lawyers and accountants argue ridiculous tax postures that rely on form to avoid the substance of the tax code. (Keep in mind Regulations do not control what constitutes substance, so this discussion is not about regulations.)
Brilliant tax specialists contrive form to get around the material substance of the code to avoid paying tax. It is the code that defines the material substance of what constitutes income and the distinction between earned income and unearned income. These “brilliant” tax attorneys and tax accountants often rely on the thought that they can “bully their way through an audit, because they are smarter than IRS agents. There is a vast graveyard full of brilliant tax schemes.
WHERE IS IT WRITTEN THAT ROMNEY’S (MISSING) RETURNS with OVERREACHING TAX POSTURES ARE LEGAL? WHAT WOULD A BRILLIANT IRS AGENT THINK?
And why does the media parrot Romney’s self-serving contention that he has always paid whatever is legal? Possibly because there has been a paucity of tax explanations by the brilliant experts who continue to be employed by men like Romney. And the public pundits from business backgrounds may also not want anybody to know the difference between form vs substance, because they have also relied on form vs substance on their returns.
(I have specialized in tax advantaged investments for 45 years as well as succession planning. I have never recommended anything designed to subvert or in conflict with the substance of the code, so I have no conflicts, and no recommendations or advice ever reversed in tax court. I have personally defended myself in tax court and won, because of the substance that controlled my deduction. This is not about me, but you are entitled to understand my background and lack of conflicts, because so often the Press must rely on expert sources, and so often many of these experts have severe conflicts that may not be apparent to the uninitiated members of the 4th Estate who rely on their “tax experts.”)
From 47 years of experience with tax schemes, with the ability to think “tax” – I bet many of Romney’s tax postures wouldn’t hold up in tax court. Anyone remember the failures to make life insurance deductible; the “Beverly Hills Trust? Oil deals combined with empty shell corporations containing losses to leverage deductions? TRA 76 stopped non recourse loan deductions, which were not “grandfathered,” and established new “at risk rules.” For TRA 86 – I presented testimony to Senate Finance, at the request of George Mitchell, Senate Majority Leader – TRA 86 reneged on perfectly legal tax deductions from Garne St. Germain in 1981. The deductions sanctioned by Garne were socially engineered to encourage more multi-family housing, and were not what the Press refers to as loopholes – I could summarize another 30 years, because I have lived this stuff. A loophole is to be found in a sweater that has not been out of your closet for a while so it had become a buffet for neighborhood moths.
Never reason legality from an overly aggressive tax adviser’s contention! Price Waterhouse has now furnished a summary of Romney’s unreleased (carefully massaged and guarded) past tax returns to assure Americans that Romney has always paid a rate of about 14%. Assurances from the, perhaps, overly aggressive tax preparer? Certainly PW is not going to tell anyone about how aggressive the returns were, nor is it in their client’s best interests to release closed returns to open them to additional scrutiny. So Romney is also not going to admit his returns are more than aggressive – but it is self-evident from all of his offshore accounts that he is at the outter edge of avoidance, or is it evasion? The IRS not long ago removed penalties, like jail, for evasion for thousands of Swiss Bank Account evaders/felons (evasion is a felony) who brought their money back to the US and “ponied up.” The US had to sue Switzerland to get information released from the enabling Swiss Banks.
It’s likely Romney’s returns often rely on form vs substance – or worse? However, tax postures, i.e., deductions, based on form when the substance is rancid, are worse than difficult to defend in tax court. Obama tax experts are the last people Romney would want to review his returns. At least the public is entitled to know if the IRS has attacked Romney’s absolutely bogus “business expense” deduction for Ann’s personal horse! And if we reason from this blatantly ludicrous deduction and all his off shore tax haven accounts, then it is logical to conclude it is likely there is a plethora of other highly specious issues.
From the obviously crazy “horseshit” deduction the media and the rest of us can postulate that Romney’s past returns are full of other deductions for Horseshit – not of the loophole variety. If there is a pattern which looks like evasion, it should not be considered merely to pay as little as possible. Romney’s contention in public: “Americans don’t want to elect a president who pays more in taxes than is legally required.” Legal according to Romney the chameleon and his tax advisors who make a living assisting the ultra rich skirt the code?
Do you wonder why Romney has not been to tax court yet – I do. But think about it: Corzine did not break the law, and neither did Lehman, and Justice has refrained from prosecuting Goldman. That’s the pattern, and it does not apply to most of us.
There is an old saying in tax court: if it tastes like shit and smells like shit, it must be shit.
To learn more, read: How We Got Swindled by Wall Street Godfathers, Greed & Financial Darwinism ~ The 30-Year War Against the American Dream — foreword by David Satterfield, former business editor of the Miami Herald and 2 times Pulitzer Prize-winner. Go to “About New Book”