Tax noncompliance

Tax noncompliance is a range of activities that are unfavorable to a state's tax system. This may include tax
avoidance, which is tax reduction by legal means, and tax evasion which is the criminal non-payment of tax
liabilities.[1] The use of the term 'noncompliance' is used differently by different authors.[2] Its most general use
describes non-compliant behaviors with respect to different institutional rules resulting in what Edgar L. Feige calls
unobserved economies.[3] Non-compliance with fiscal rules of taxation, gives rise to unreported income and a tax
gap that Feige estimates to be in the neighborhood of $500 billion annually for the United States. [4]
In the United States the use of the term 'noncompliance' often refers only to illegal misreporting. [5] Laws known as a
General Anti-Avoidance Rule (GAAR) statutes which prohibit "tax aggressive" avoidance have been passed in
several developed countries including the United States (since 2010), [6] Canada, Australia, New Zealand, South
Africa, Norway and Hong Kong.[7] In addition, judicial doctrines have accomplished the similar purpose, notably in
the United States through the "business purpose" and "economic substance" doctrines established in Gregory v.
Helvering. Though the specifics may vary according to jurisdiction, these rules invalidate tax avoidance which is
technically legal but not for a business purpose or in violation of the spirit of the tax code. [8] Related terms for tax
avoidance include tax planning and tax sheltering.
Individuals that do not comply with tax payment include tax protesters and tax resisters. Tax protesters attempt to
evade the payment of taxes using alternative interpretations of the tax law, while tax resisters refuse to pay a tax for
conscientious reasons. Tax protesters believe that taxation under the Federal Reserve is unconstitutional, while tax
resisters are more concerned with not paying for particular government policies that they oppose. Because taxation
is often perceived as onerous, governments have struggled with tax noncompliance since the earliest of times.

https://en.wikipedia.org/wiki/Tax_noncompliance

What to Expect If You Don't Pay Your Taxes

People fail to file tax returns for a variety of reasons - personal or business problems, feelings of
hopelessness or fear due to an extended period of nonfiling, anti-government sentiments, or
beliefs that the penalty will not outweigh the expense and trouble of filing. Because the United
States tax system is based on taxpayers willingly honoring their obligations, the IRS does what it
can to encourage nonfilers to voluntarily come forward after a period of not paying taxes. Part of
this strategy includes taking a voluntary disclosure into consideration when determining whether
to criminally prosecute, negotiating payment installment plans, and reducing tax liability for
certain needy individuals.
Whatever your reason for not filing, you may want to consider the following information:

Knowing failure to file a return can be a criminal violation of the law.

It is not the policy of the IRS to prosecute ordinary people who make simple mistakes or
whose returns were lost in the mail.

The IRS, although it reserves the right to do so, will probably not recommend prosecution
for failing to pay your taxes so long as you voluntarily come forward before they contact
you and arrange to pay what you owe.

If you cooperate, you are less likely to be prosecuted.

If you derive your income from illegal sources, it is more likely that the IRS will recommend
prosecution.

The more blatantly fraudulent your behavior has been, the more likely the IRS is to
prosecute you. For example, you would likely be prosecuted for failing to file returns year
after year, despite repeated contacts by the IRS.

In order to convict you of a tax crime, the IRS does not have to prove the exact amount
you owe.

The IRS has a general policy of not enforcing the filing of returns older than six years.

The IRS can collect taxes, interest, and penalties for all of the taxes you have owed over
the years.

The IRS has programs in place to identify nonfilers.

The filing of a return starts the audit and collection time limits.

If you do owe taxes, you can probably work out an installment plan to pay off your debt.

You may be able to negotiate a settlement with the IRS, depending on your ability to pay,
that will significantly diminish your overall tax debt.

The IRS may owe you money.

If you go to a tax professional, you will probably not have to deal directly with the IRS.

A tax professional should be able to obtain your past W-2s, 1099s, and 1098s from the IRS
if you no longer have them.

The IRS may accept reasonable estimates of charitable contributions, medical expenses,
and other deductions.

Depending on how complicated your situation and how good your record keeping is, the
entire process of clearing up your nonfiling status could take as little as a few weeks.

http://tax.findlaw.com/tax-problems-audits/what-to-expect-if-you-don-t-pay-your-taxes.html

Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. Tax evasion often entails
taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability
and includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually
earned, or overstating deductions.
Tax evasion is an activity commonly associated with the informal economy. One measure of the extent of tax
evasion (the "tax gap") is the amount of unreported income, which is the difference between the amount of income
that should be reported to the tax authorities and the actual amount reported.

In contrast, tax avoidance is the legal use of tax laws to reduce one's tax burden. Both tax evasion and avoidance
can be viewed as forms of tax noncompliance, as they describe a range of activities that intend to subvert a state's
tax system, although such classification of tax avoidance is not indisputable, given that avoidance is lawful, within
self-creating systems.[1]

https://en.wikipedia.org/wiki/Tax_evasion

Political corruption
Political corruption
Political corruption is the use of powers by government officials for illegitimate private gain. An illegal act by an
officeholder constitutes political corruption only if the act is directly related to their official duties, is done under color
of law or involves trading in influence.
Forms of corruption vary, but
include bribery, extortion, cronyism, nepotism, gombeenism, parochialism patronage, influence peddling, graft,
and embezzlement. Corruption may facilitate criminal enterprise such as drug trafficking, money laundering,
andhuman trafficking, though is not restricted to these activities. Misuse of government power for other purposes,
such as repression of political opponents and general police brutality, is also considered political corruption.
The activities that constitute illegal corruption differ depending on the country or jurisdiction. For instance, some
political funding practices that are legal in one place may be illegal in another. In some cases, government officials
have broad or ill-defined powers, which make it difficult to distinguish between legal and illegal actions. Worldwide,
bribery alone is estimated to involve over 1 trillion US dollars annually.[1] A state of unrestrained political corruption is
known as a kleptocracy, literally meaning "rule by thieves".
Some forms of corruption now called "institutional corruption" [2] are distinguished from bribery and other kinds of
obvious personal gain. A similar problem of corruption arises in any institution that depends on financial support
from people who have interests that may conflict with the primary purpose of the institution.

It is argued that the following conditions are favorable for corruption:

Information deficits

Lacking freedom of information legislation. In contrast, for example: The Indian Right to Information
Act 2005 is perceived to have "already engendered mass movements in the country that is bringing the
lethargic, often corrupt bureaucracy to its knees and changing power equations completely." [26]

Lack of investigative reporting in the local media. [27]

Contempt for or negligence of exercising freedom of speech and freedom of the press.

Weak accounting practices, including lack of timely financial management.

Lack of measurement of corruption. For example, using regular surveys of households and
businesses in order to quantify the degree of perception of corruption in different parts of a nation or in
different government institutions may increase awareness of corruption and create pressure to combat it.
This will also enable an evaluation of the officials who are fighting corruption and the methods used.

Tax havens which tax their own citizens and companies but not those from other nations and refuse
to disclose information necessary for foreign taxation. This enables large-scale political corruption in the
foreign nations.[28][citation needed]

Lacking control of the government.

Lacking civic society and non-governmental organizations which monitor the government.

An individual voter may have a rational ignorance regarding politics, especially in nationwide
elections, since each vote has little weight.

Weak civil service, and slow pace of reform.

Weak rule of law.

Weak legal profession.

Weak judicial independence.

Lacking protection of whistleblowers.

Government Accountability Project

Lack of benchmarking, that is continual detailed evaluation of procedures and comparison to others

who do similar things, in the same government or others, in particular comparison to those who do the best
work. The Peruvian organization Ciudadanos al Dia has started to measure and compare transparency,
costs, and efficiency in different government departments in Peru. It annually awards the best practices
which has received widespread media attention. This has created competition among government agencies
in order to improve.[29]

Individual officials routinely handle cash, instead of handling payments by giro or on a separate cash
desk illegitimate withdrawals from supervised bank accounts are much more difficult to conceal.

Public funds are centralized rather than distributed. For example, if $1,000 is embezzled from a local
agency that has $2,000 funds, it is easier to notice than from a national agency with $2,000,000 funds. See
the principle of subsidiarity.

Large, unsupervised public investments.

Pay disproportionately lower than that of the average citizen.

Government licenses needed to conduct business, e.g., import licenses, encourage bribing and
kickbacks.

Long-time work in the same position may create relationships inside and outside the government
which encourage and help conceal corruption and favoritism. Rotating government officials to different
positions and geographic areas may help prevent this; for instance certain high rank officials in French
government services (e.g.treasurer-paymasters general) must rotate every few years.

Costly political campaigns, with expenses exceeding normal sources of political funding, especially
when funded with taxpayer money.

A single group or family controlling most of the key government offices. Lack of laws forbidding and
limiting number of members of the same family to be in office .

Less interaction with officials reduces the opportunities for corruption. For example, using the
Internet for sending in required information, like applications and tax forms, and then processing this with
automated computer systems. This may also speed up the processing and reduce unintentional human
errors. See e-Government.

A windfall from exporting abundant natural resources may encourage corruption. [30] (See Resource
curse)

War and other forms of conflict correlate with a breakdown of public security.
Social conditions

Self-interested closed cliques and "old boy networks".

Family-, and clan-centered social structure, with a tradition of nepotism/favouritism being acceptable.

A gift economy, such as the Soviet blat system, emerges in a Communist centrally planned
economy.

Lacking literacy and education among the population.

Frequent discrimination and bullying among the population.

Tribal solidarity, giving benefits to certain ethnic groups. In India for example, the political system, it
has become common that the leadership of national and regional parties are passed from generation to
generation.[31][32]

creating a system in which a family holds the center of power. Some examples are most of the
Dravidian parties of south India and also the Congress party, which is one of the two major political parties
in India.

Lack of strong laws which forbid members of the same family to contest elections and be in office as
in India where local elections are often contested between members of the same powerful family by
standing in opposite parties so that whoever is elected that particular family is at tremendous benefit.

Governmental corruption[edit]
If the highest echelons of the governments also take advantage from corruption or embezzlement from the state's
treasury, it is sometimes referred with the neologismkleptocracy. Members of the government can take advantage of
the natural resources (e.g., diamonds and oil in a few prominent cases) or state-owned productive industries. A
number of corrupt governments have enriched themselves via foreign aid, which is often spent on showy buildings
and armaments.
A corrupt dictatorship typically results in many years of general hardship and suffering for the vast majority of
citizens as civil society and the rule of law disintegrate. In addition, corrupt dictators routinely ignore economic
and social problems in their quest to amass ever more wealth and power.
The classic case of a corrupt, exploitive dictator often given is the regime of Marshal Mobutu Sese Seko, who ruled
the Democratic Republic of the Congo (which he renamedZaire) from 1965 to 1997. It is said that usage of the
term kleptocracy gained popularity largely in response to a need to accurately describe Mobutu's regime. Another
classic case is Nigeria, especially under the rule of General Sani Abacha who was de facto president of Nigeria from
1993 until his death in 1998. He is reputed to have stolen someUS$34 billion. He and his relatives are often
mentioned in Nigerian 419 letter scams claiming to offer vast fortunes for "help" in laundering his stolen "fortunes",
which in reality turn out not to exist.[40] More than $400 billion was stolen from the treasury by Nigeria's leaders
between 1960 and 1999.[41]
More recently, articles in various financial periodicals, most notably Forbes magazine, have pointed to Fidel Castro,
General Secretary of the Republic of Cuba since 1959, of likely being the beneficiary of up to $900 million, based on
"his control" of state-owned companies.[42] Opponents of his regime claim that he has used money amassed through
weapons sales, narcotics, international loans, and confiscation of private property to enrich himself and his political
cronies who hold his dictatorship together, and that the $900 million published by Forbes is merely a portion of his
assets, although that needs to be proven.[43]

https://en.wikipedia.org/wiki/Political_corruption