From The President

By Toby J. F. Bishop, CFE, CPA, FCA

April 2005 may set a record for the largest number of false filings submitted to the government in a single month. These filings will come in two streams. Both will cause substantial harm to society, but in the short-term the smaller group of false filings may actually be the bigger problem.  

Tax fraud. Many of our readers, even outside the United States, will know that April 15th is the deadline for Americans to file individual income tax returns with the Internal Revenue Service. Despite the abundance of tax return software, electronic filing and ubiquitous storefront tax preparation firms, the process of preparing a tax return still fills many people with dread.

The many twists and turns in the tax code make it largely incomprehensible to the average person and the recordkeeping burden can be stunning. Taking the permitted deduction for state sales taxes can mean having to get a receipt from almost every purchase you make during the year. Just try doing that for a week and see how hard it is to remember to get a receipt every time you go to Starbucks(r) or to a fast food shop.

Other people view the tax filing process more enthusiastically, treating it more like a profit opportunity. As our "cheating culture" spreads, the IRS has reported, "an unprecedented volume and variety of verifiable and suspected noncompliance." Tax reduction has become a sport in which millions of citizens compete to be one step ahead of their friends in finding ways to reduce their tax bill, sometimes legitimately but often fraudulently. The U.S. government is estimated to lose $300 billion annually from underreported income. Given the massive U.S. budget deficit that is causing the dollar to plunge in value, an extra $300 billion would come in handy right now.

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