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Grassley vs. tax cheaters


Sen. Charles Grassley is at his down-to-earth Iowa farmer best when he tries to make people follow the rules. Tax cheaters, for example.

Grassley, chairman of the Senate Finance Committee, in the past has defended innocent citizens against rough treatment by the Internal Revenue Service. Now he’s shining light on the not-so-innocent among us, and it sounds like another good use of his time and clout. By his figures, some $311 billion is owed to the federal government in past-due taxes. That’s more than enough for a U.S. senator to worry about.

Who’s cheating? The meek and the mighty alike.

According to one national poll, one out of five Americans admitted to cheating on their tax returns. The number might be closer to one in four if you count the people who don’t bother to file returns at all.

Grassley quotes a study by the Government Accountability Office that discovered that more than 100,000 businesses that applied to hire immigrant workers in the past seven years either owed back taxes, failed to file tax returns or didn’t register with the IRS in the first place.

At the same time:

• The number of high-income filers is jumping dramatically, producing returns that are easier to tweak because of all the non-wage sources of income.

• The IRS has far fewer auditors than it did a decade ago, so they focus on the simple cases and let the sophisticated cheaters slide by.

• The tax code has grown ever more complex, which tends to make cheating easier and detection more difficult.

Grassley plans to improve communication among government agencies and push legislation to encourage more whistle-blowing by employees who know about corporate tax fraud.

If you’re an honest taxpayer, this sounds like a good cause for Grassley. If you cheat, maybe it doesn’t.

But we all know it’s going to be a monumental task. For example:

A few years ago, the IRS suggested a law requiring U.S. banks to report the interest they paid to foreign depositors. The goal was not only to keep foreigners from cheating at home, but to prevent Americans from cheating by pretending to be foreigners. Seems like a reasonable requirement, doesn’t it?

But the bankers rose up against it. In the words of Florida Gov. Jeb Bush, the measure “could trigger a massive withdrawal of deposits in U.S. banks.”

If that reflects the nation’s lack of concern about fair play, Grassley truly has a big job ahead of him.

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