It’s the Mormon church. They just got fined $5 million dollars for hiding $32 billion (!!!) in assets behind various shell companies.
I have nothing to add other than my immense mathematical skills: $5 million is 0.016% of $32 billion. That’s not even a slap on the wrist, more of a tickle.
Oh, and that we should tax the fuck out of all churches.
That 32 billion is less than a third of the 100 billion in “charitable donations” they have hoarded away.
Hmm. That’s only the SEC fine. What about the IRS? Why hasn’t this resulted in the loss of tax-exempt status as a charitable organization, with the attendant tax bill? The penalties and interest add up fast.
It looks as if the OP link was the end result of this:
“The trove of documents the brothers submitted to the Internal Revenue Service in November alleges that the church has amassed about $100 billion in accounts intended for charitable purposes.
Their report accuses church leaders of misleading members — and possibly breaching federal tax rules — by stockpiling surplus donations instead of using them for charitable works. It also accuses church leaders of using the tax-exempt donations to prop up a pair of businesses.”
So the SEC did nothing useful or punitive, no big surprise there. But why hasn’t the IRS cracked down hard on what is clearly a case of tax fraud/evasion? Asking b/c that’s usually where the really big fines and bills come in.
Snarki, child of Loki says
So, what happens?
The IRS fines the LDS $20B or so, so the LDS whines their way up the Supremely Deplorable Six on the USSC, who turn out to be against taxing RW scams, in any form.
Better to just nuke ’em and be done with it.
I can add nothing, except that I agree (with taxing all religious institutions.)
silvrhalide @ #2 — Is the LDS exempt from income taxes as are (I think) most churches in the US? Also, their problem with the SEC isn’t “income” but failing to accurately report assets.
Maybe they want to buy out the catholic church ? I’m sure there is plenty of Wall Street banks that would love to organize such a corporate merger.
Or maybe the church leadership did read/watch the Expanse, and they are accumulating wealth to build the LDSS Nauvoo and go expand the church to Tau Ceti, waiting for the needed technology to exist.
Or maybe, since that church is the archetypal US religion, this is just pure greed, and without an army or papal states to pay for, the tithe is kind of a stupid idea.
Pierce R. Butler says
… we should tax the fuck out of all churches.
I know of no way to quantify this, but strongly suspect it would cost us less overall to leave them untaxed and (mostly*) out of electoral politics.
*Yes, in fact numerous churches violate their 501(c)(3) requirements regularly, and we would gain socially and politically by serious enforcement of “the Johnson amendment” – but letting them all cut loose with no disincentives for election machinations would do incalculable damage.
Oh fuck, @euclide, I love that idea and I hope you’re right.
Oh fuck, @euclide, I love that idea and I hope you’re right.
As I understand it, there is a single office in the IRS authorized to revoke a church’s tax-exempt status, but the last person in that position retired during Bush’s tenure, and has never been replaced. So there is nobody who can actually do that, no matter how blatant the violations committed.
Artor @ 10 — Yes, the GOP strategy on the Federal income tax, which they despise, has been to gut IRS enforcement, not end income tax. Working people who can’t afford the risk and hassle, pay their taxes automatically (payroll deduction) and file. The rich and rich institutions already own lawyers so they skirt around it.
Marcus Ranum says
There is a simple solution to the “tax the churches” issue, which is to encourage states and local jurisdictions to start assessing real estate taxes on all properties that have been exempted in the past: golf courses, non-public parks, non-profit hospital properties and, of course, private schools and churches. Some states would resist, of course, but others would not be able to pass by all that money.
This idea brought to you by Sun Tzu: “defeat your enemy’s strategy” – sheltering assets in real estate has been a long-term tax dodge of many organizations that should be paying taxes.
Matt G says
Give us money so we can give it to poor, deserving shell companies.
Just to put PZ’s calculation another way — this is like dodging tax on $32,000 and being fined $5.
To put this in even more perspective, the US has no tax-free income threshold (it should! this is appalling!), which means even a poor worker holding down 2 jobs to keep the kids fed who earns $32,000 has to pay around $3,600 in tax. That’s effing outrageous. They’re losing >10% of their subsistence level income to tax, while huge multi-billion entities like the LDS pay next to nothing and still try to cheat their way out of the tiny portion they owe.
@5 Pierce Butler is 100% correct that many 501(3)(c) organizations, including religious ones, frequently don’t follow the requirements to the letter. But most of them don’t manage to accumulate a portfolio worth billions either. Most charitable (or “charitable”) organizations fudge a few things or just outright forget a few things. It’s not worth anyone’s time, including the IRS’s, to chase these people down, screaming “I want my $2!!”
The LDS amassed an investment portfolio whose worth is measured in the billions. Specifically, $32 billion.
Not only did the LDS NOT give out money and/or assistance to those in dire need (part of their mission statement, FYI, as is true for most religious organizations), they specifically used that portfolio to benefit two individuals.
If a 501(3)(c) does not abide by the IRS’s rules and regulations regarding their 501(3)(c) status, they can lose their charitable (nontaxable) tax status. The IRS revokes it and there is definitely more than one person handling that–there would have to be. There are literally millions of charitable organizations, no one person could handle it all.
“To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.”
When the IRS revokes your tax-exempt status, all those taxes are due. Going back to when the egregious behavior first started. And the IRS charges rates that would make a loan shark blush. (If you actually admit wrongdoing and set up a payment plan, I’m given to understand that the rates are far more reasonable.) And they charge monthly.
There is also a separate fee for “substantial understatement of taxes”. In addition to any other penalties and interest charged.
This is fun reading too.
“The IRS has no time limit if you never file a return or if it can prove civil or criminal fraud.”
“Extending the Statute. The IRS typically must examine a tax return within three years, unless one of the many exceptions discussed here applies, but the IRS does track the three-year statute as its main limitation. Frequently, the IRS says that it needs more time to audit.
The IRS may contact you about two-and-a-half years after you file, asking you to sign a form to extend the statute of limitations. It can be tempting to relish your power and refuse, as some taxpayers do; however, doing so in this context is often a mistake. It usually prompts the IRS to send a notice assessing extra taxes, without taking the time to thoroughly review your explanation of why you do not owe more. The IRS may make unfavorable assumptions. Thus, most tax advisers tell clients to agree to the requested extension.”
Also, if some federal prosecutor decides that the LDS is a RICO, then the wheels really come off. At that point, there is functionally NO time limit because of the criminal aspect.
If the IRS removes the LDS tax-exempt status, that $32 billion isn’t going to stay $32 billion for long.
If the LDS is prosecuted for RICO, that $32 billion is going to vanish like snow on a hot stove.
The issue with the SEC may have been incorrect reporting. The issue with the IRS will definitely be income. Income and tax exempt status.
I have come around to the opposite position. I think the churches should be taxed like any other entity. I get your argument, and it’s not that I think it’s a bad argument, it’s just that what I see happening in the world is that the churches routinely abuse their non-political status all the time and never get punished for it. Given that many churches refuse to abide by the social contract that gives them tax-free status, I think it is far better to abandon that social contract. Tax them as corporations. Their charitable work can remain tax-free, provided it meets certain reasonable standards (e.g. no religious test for who gets the charity, and being actual charity work like community kitchens for the homeless rather than ministry work).
This is the IRS webpage on separation of religion and politics, with lays out some very good policy: https://www.irs.gov/newsroom/charities-churches-and-politics
But here’s what’s happening on the ground:
— A Crusade to Challenge the 2020 Election, Blessed by Church Leaders
— These 20 churches supported political candidates. Experts say they violated federal law.
— Churches are breaking the law and endorsing in elections, experts say. The IRS looks the other way
@14 The LDS hasn’t dodged taxes. At least not yet. The SEC blew them a kiss with that ridiculous fine.
The IRS has not said anything about this case, which is the part I find really interesting.
Keep in mind that the IRS didn’t go after Trump and everyone was pissing and moaning about “why not”. Then it did. They aren’t finished yet either, apparently.
The IRS is like a glacier. It takes a long time to get where it’s going but when it finally arrives, it will absolutely fuck up your world.
Also, your statement “the US has no tax-free income threshold” is incorrect. The standard deduction or itemized deduction on your individual income tax return is the threshold. There is also a threshold below which you are not required to file a tax return.
Pages 8-11 are what you want.
The real reason that there is such a discrepancy between what the rich and the poor pay in taxes is because investment income is taxed at a much lower rate (IF it’s taxed AT ALL–some of it is exempt) than people who actually work for a living. Also, if you have investments or own a business, you can get taxes back from the federal government via the legal magic of something called a carryback.
If you have a bad year and own a business or have investments, you can whine to the federal government and they will write you a check for taxes you previously paid.
If you work for a living and have a bad year, you are shit out of luck.
I should add that IMHO the only test for tax-free status should be charitable work*, which religious groups often do very effectively and humanely and should be encouraged to continue. The non-political rule should still apply to charitable work, so here I am in perfect agreement with you, Pierce. But I fail to see why a person flying a private jet, as the successful evangelicals do, should be allowed to count their income as tax-free even if they do stay away from political endorsement.
*…and for personal circumstances; that is, there should be an income tax-free threshold at ~1.25x the poverty line and it is an absolute crime that the US tax system hits people in severe poverty with a 10% income tax.
You’re both missing technicalities.
@17 is correct about the threshold for what is formally declared “income tax” effectively being the value of the standard deduction…
…unless one can be claimed as a dependent on someone else’s return (most commonly, children on parents’ returns), in which case that essentially goes away. Sort of.
@17 is also correct that there’s a threshold below which one need not file a federal income tax return (again, though, complicated by the dependent-on-another’s-return issue).
But Social Security, Medicare, and “self-employment” (the equivalent of those two from “payroll”) are due starting at $600, which is well below the minimum for filing a return in the first place (but if you owe self-employment tax, you have to file anyway). You have no idea the number of ill-paid started-in-October delivery/ride-share drivers who’ve found this out the hard way…
@14 Your single parent with two kids and an income of $32,000 does not pay $3,600 in tax.
Just for fun, I looked up the standard deduction for head of household (which is the filing status of a single parent with two kids.)
32,000 – 19,400 = 12,600 taxable income
The tax on 12,400 for head of household is 1,258
2 kids–single parent can claim the child tax credit of 2,000 per kid, or 4,000
4,000 – 1,258 = 2,742
So ZERO taxes are owed.
Also, the single parent with two kids will get that 2,742 back as a REFUND. From Uncle Sam.
A single parent with two kids can claim the Earned Income Tax Credit, since your hypothetical single parent is probably not living off of 32,000 in trust fund money or investments.
Looking at the EIC chart in the 2022 instructions for Form 1040, the credit is 3,659
So your example of a single parent with two kids owes ZERO in taxes and the federal government will give that single parent a refund around $6,401, plus whatever federal withholding was taken out of their paycheck. They will get it all back, plus the extra 6,401.
This is not to imply that it is easy or comfortable to live on $32,000 a year with two kids. But I do take exception to your assertion that a single working parent with two kids making 32K per year pays 10% of their income in taxes. Clearly they don’t.
Also, it is to the benefit of the single parent in your example to file a tax return, since they are getting back 100% of their federal withholding AND extra money from the feds.
That base refund of 6,401 is a 20% BONUS on their income of 32,000. And if they’re raising 2 kids on 32K, they will certainly need it.
@19 Yes, I completely agree with your assertion about the delivery/ride share drivers. Those companies SUCK and need to die in a fire.
If the ride share driver is willing to be their own CPA, they should functionally owe nothing, when you factor in gas costs, vehicle depreciation, etc. It is a ridiculous pain in the ass to do it, which is why most people don’t.
Taxes aside, the wear and tear on your car, contributing to its early demise should be reason enough to never work for those companies. Not only can you not make an actual living doing it, but the extra gas, car repairs, maintenance, etc. make the gig completely not worth it.
John Morales says
The working poor.
Ugh, You would have to do the math. I knew the percentage was infinitesimally small with out getting the calculator out.
Many in our organization have always had horrible, immoral and abusive experiences when dealing with the LyingDeceitfulSociopaths. They put on a mask of strict virtue. We have even archived an article where a LyingDeceitfulSociopath bishop says that lying for the ‘church’ is good and acceptable. THEY ARE AN INSIDIOUS EVIL CULT. Many here have pointed out other of their abuses so I won’t go into more detail.
• This is a better explanation but still does not engage with the Social Security and Medicare (and self-employment tax) issues. That $32k in self-employment income generates a self-employment tax — the combined “employer’s share” and “taxpayer’s share” of Social Security and Medicare — of:
0.153 * .9235 * $32,000 = $4,522
And although this is not literally “income tax,” note that the “standard deduction” doesn’t apply; it’s based ON income; and it acts to reduce any income-tax refund.
The Social Security and Medicare amounts are pulled directly out of the paycheck for employees, and are invisible on a tax return — they’re subtractions one just does not see. Gross and taxable income are NOT reduced by the amount of Social Security and Medicare amounts withdrawn from the paycheck.
• An Uber driver should not need to be his/her own “accountant.” It’s frequently not possible to know in advance even what records need to be kept (consider trying to figure out whether to take the “standard mileage deduction” or actual expenses, especially in an area with unusually high fuel or maintenance costs; consider accurate billing for tolls in an area with lots of tolls but inconsistent transponder use so they don’t show up on the ride-service summary).
• None of this is arguing that “taxes are too high” or anything; it is only noting that claims that lower-income taxpayers “owe no tax based on their income” are inaccurate. If anything, it points out that Social Security and Medicare taxes need to have a floor for minimum payments, not a ceiling for maximum payments (if a married/joint-filing taxpayer makes $175k a year, they pay no more self-employment/Social Security tax than does someone making $147k; there’s a 0.9% Medicare “surcharge” over $200k for the self-employed, but that’s it). It’s the deception that irritates me the most, not the tax rates.
A couple of picky clarification points:
A church can’t “be a RICO.” It might be “a RICO enterprise”: it might be “a RICO defendant”; it can’t be both in the same proceeding (although it could be part of a RICO enterprise). An example from film might help.
“The Corleone crime syndicate” is a RICO enterprise-in-fact; if it was “Corleone Corp.,” it could be a RICO enterprise. Michael, Sonny, and Fredo are all RICO defendants. A corporation owned by the syndicate could also be a RICO defendant, if it has a significant role in operating the entire enterprise. However, “the Coreleone crime syndicate” cannot be the RICO defendant. (One of the potential remedies in RICO matters is divestiture, which is how Tony Soprano ended up in control of his own little criminal enterprise, but we’re really getting into the weeds here.)
Yeah, I will second the IRS being glacier like. But, what do you expect from an organization that has been gutted so badly that they have to use like 90% of their staff to just go after 1-2 hard targets every decade or so, and can otherwise only maintain the sense that they do anything at all by sending out the other 10% to harass random people over $5 errors in their tax returns (while praying that the person in question doesn’t have hidden assets, or any real mistakes in their claims, which will result in them having to spend real time on them). Its sickening. But then, this is how the GOP wants everything to work – big offenders get to “pray to god” to get “absolution”, but all the peasants can be rounded up and hung for even the most minor offense, at a moments notice, so as to preserve fear of the God Only Party – which they also want to be the, “We are so different from the Communist Party in China. They don’t believe in God!!!” (as though that was the only actually important criteria for “different”).