IRS Given More Power to Increase Revenue

By Joel McDurmon

Forbes reports on the IRS’s expanding quest for more revenue. A federal judge — who is obviously paid by the party for which he ruled — ruled in favor of the use of increased powers by the IRS.

A federal district court judge has given the Internal Revenue Service permission to serve a “John Doe” summons on the California State Board of Equalization demanding the names of residents who transferred property to their children or grandchildren for little or no money, from 2005 to 2010. The IRS wants those names as part of a crackdown on what it believes is the widespread failure to file required tax returns when real property is passed between family members.

The IRS has already received information about intra-family property transfers from county or state officials in Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington state and Wisconsin. But officials of California’s BOE said state law prohibited them from disclosing the information without a court approved summons.

Judge Morrison England ruled for what he called “the most reliable and least burdensome option for the IRS.”

An editorial piece at Businessweek explains why this use of “John Doe” warrants sets a dangerous precedent (warning on click-throughs: the full piece contains foul language):

These pushy techniques have worked well in Switzerland. The hard working folks at the DOJ/IRS are now bringing them to California. This means that the IRS can look at anyone’s real estate transactions. With John Doe warrants, they can go fishing/snooping wherever they like.

Think what you will of this. The country is starved for revenue. The outfit that is charged with collecting that revenue has an army of tough-minded lawyers behind it. It will have the power to turn over stones as it pleases. In the end this effort will raise some additional revenue. It will scare the crap out of a few folks as well. Some will cheer this. I see the John Doe warrants as a big and dangerous step on a very slippery slope. It sure won’t do much for Uncle Sam’s image.