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Tax Penalties Fall Hardest on Poor

One Upper-Income Case Proves the Point

The Internal Revenue Service has a kind of sweeping authority to deal with citizens that has been accorded to no other law enforcement agency.

When an IRS agent decides that you owe the government additional taxes – regardless of whether he is right or wrong, and without having to go through any legal hearing – the agent may:

Take your payment or the money in your checking or savings accounts, the cash value of your life insurance policy.
Take just about any personal property you own, from the watch on your wrist to the car in your garage.

The attachments, of course, fall most heavily on the low- and middle-income taxpayers, who receive the bulk of their income from wages.

As The Inquirer reported on Sunday, the IRS has a double standard for administering the nation's Federal income tax laws.

When it comes to low- and middle-income families, the agency moves swiftly and often harshly, seizing paychecks and bank accounts to cover unpaid taxes of a few hundred dollars.

When it comes to upper-income taxpayers and some businesses, the agency moves in a more casual manner, allowing the taxpayer to go along for years without making any payments on a tax bill that may run into the millions of dollars.

If a taxpayer decides to contest the amount of additional tax an IRS agent says he owes following an audit, once again, the upper-income taxpayer gets the break.

As a general rule, the higher your income bracket and the more money you are said to owe after an IRS audit, the smaller the percentage of that money you will have to pay if you appeal the agent's recommendation.

The accompanying article, the third in the series on "Auditing the IRS," is a profile of one upper-income taxpayer, Seymour L. Rosenfeld, a Chicago and Philadelphia insurance executive, who the IRS says owes some $2 million in back taxes.