Thursday, February 18, 2010

conflict with the U.S. agency for almost 30 years.

Joseph Stack, the software engineer police say flew a small plane into an Austin, Texas, building housing offices of the Internal Revenue Service, may have been in conflict with the U.S. agency for almost 30 years. Authorities said a suicide note posted on a Web site and signed "Joe Stack (1956-2010)" may have been posted by the 53- year-old suspected of deliberately crashing the plane today. The crash injured at least 13 people, with one federal employee reported missing. The writer said he lost "$40,000 and 10 years of my life" participating in what tax experts describe as an attempt to avoid taxes by claiming his home was a church. He said he later clashed with the IRS over a law targeting computer consultants suspected of abusing employment tax rules. In the Web posting, Stack wrote of raiding retirement accounts after suffering a loss of income following a move to Texas, struggling to report "a boatload of undocumented income" earned by his wife, and trying to write-off a piano, which he called "an expensive new business asset." Craig Etter, a tax lawyer at Greenberg Traurig LLP in McLean, Virginia, said the employment tax issue has been controversial in the technology industry since it was enacted as a last-minute inclusion in the Tax Reform Act of 1986, the last time Congress overhauled tax laws. "It caught everybody by surprise," he said. "It’s not often that legislation carves out one industry to pick on. There were a lot of angry people." Computer Consultants The law makes it harder for software engineers, computer consultants, and other technical services workers to act as independent contractors, rather than as employees. While some workers prefer to be classified as employees, meaning the employer pays half of Social Security and Medicare taxes that total 7.35 percent of salary, independent contractors can shelter more money from taxes by making larger contributions to retirement accounts and by deducting business expenses. Workers in the computer-consulting industry typically want to be classified as independent contractors for that reason, Etter said. President Barack Obama proposed a crackdown on employment tax fraud in his 2011 budget proposal with new rules to more clearly define when workers should be classified as employees or as independent contractors. In addition, the IRS this month is scheduled to begin auditing 6,000 companies to test compliance with employment tax laws. Businesses duck about $14 billion a year in taxes due to worker misclassification, the Treasury Department estimated in 2005. Church Exemption In his posting, Stack said his tax troubles began when he was working in Southern California in the 1980s. He describes becoming involved in an organization that sought to exploit a tax-code section that exempts churches from taxes. "We carefully studied the law (with the help of some of the ‘best,’ high-paid experienced tax lawyers in the business) and then began to do exactly what the ‘big boys’ were doing," Stack wrote in his note, referring to tax exemptions claimed by the Catholic Church. That "little lesson," he wrote, cost him "$40,000 and 10 years of my life, and set my retirement plans back to 0." In a statement today, IRS Commissioner Doug Shulman said his department is "working with law-enforcement agencies to fully investigate the events that led up to this plane crash." Stack’s posting, which was taken down from his Web site at the request of authorities, specifically mentioned the IRS as a target. "Violence not only is the answer, it is the only answer," it said. "Well, Mr. Big Brother IRS man, let’s try something different; take my pound of flesh and sleep well." J.J. McNabb, a Bethesda, Maryland, author working on a book about tax protesters who has testified before Congress twice on the subject, said the posting echoes the beliefs of such activists



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