How to Defend Yourself Against the IRS, by Sandor Frankel and Robert S. Fink, New York: Simon & Schuster, 320 pages, $16.95
This is the kind of book I reflexively hate…or at least think I do. First of all, How to Defend Yourself Against the IRS is written by a couple of tax lawyers—obviously part of the present tax system and thus benefiting from it. The second problem—and it's a bad first impression, believe me—is that the two authors have gathered up endorsements (found all over their book jacket) from people like, ahem, a former commissioner of the IRS, a former Tax Division chief of the Department of Justice, and the general counsel for one of the Big Eight accounting firms. Zounds! Those people love the IRS and its associated enforcement machinery. Them recommending a book purporting to offer defense "against the IRS" is like germs recommending penicillin as protection from disease.
But wait! This really is a terrific little book, and it does just what it promises to do. Of course, some of that usefulness may be inadvertent, but—Sandy and Bobby, how could I doubt you, being fellow lawyers—why quibble over means versus ends?
For instance, the book starts out with a catalog of horrors: 15 stories about "tax cheats" who got caught, and why. That one chapter—entitled "Fail-safe Schemes That Failed, or Gotcha!"—is bound to be a big hit with the subterranean gauchos who don't want to make the same mistakes. Then there are successive chapters on how the IRS audit selection process works, how to handle an audit when you do get "picked," and then a big section (like about one-third of the entire book) on how to handle your whole interesting situation when you do "get caught."
The thing is, all the advice in the book is consistently good, clear, commonsensical stuff—but only the kind of info that expert, seasoned tax-trial lawyers could know about and give. Which is exactly what authors Sandor Frankel and Robert S. Fink are. And, being such—the legal profession's version of Old West hired gunslingers—they have this terrific, hilarious, cleansing, all-encompassing cynicism about the IRS and our tax system. That is to say, if the feds can't prove their case against you "tax cheats"—and I mean every last phoneme and morpheme of all the charges brought—then they don't deserve to have the fun of nailing you to a cross and feeding you vinegar.
This attitude results in consistently good inside advice that every taxpaying American should probably know about—for instance, how to "create" an accountant-client privilege when none is provided for under law. Or how to conduct yourself tactically in a very heavy audit situation that's threatening to get heavier by the minute: "If you have a hidden fraud problem, you are under no obligation to let the agent know of it, or to let him know you're concerned or frightened." Hidden fraud problem? Concerned or frightened? You kidding? I love these guys.
How about this one: "Neither the criminal nor the civil fraud provisions of the Internal Revenue Code punish good-faith mistakes. Nor do they punish honest but stupid errors.…If you can prove that you simply made a mistake, pure and simple, even a big mistake, you have not committed tax evasion or fraud.…What kind of honest mistake will suffice? Any kind, as long as it relates to the issue in question and is sufficiently credible either to be believed or to create reasonable doubt about the government's proof of willfulness." Yeah!
The book has excellent sections on how the government proves you cheated and on your defenses to that proof. And it also has a chapter on legal tax-reduction techniques, not to mention a 63-page section at the back featuring important excerpts from the IRS's own manuals on how to pick returns for audit, how to conduct an audit, and "collection activity" once the taxpayer's been nailed—all provided courtesy of the Freedom of Information Act.
But by far the most-important information these two tax-marauders provide is the simple fact that operating outside the tax laws is unnecessary, in addition to being dangerous. At the end of their little tome, the authors lend us a two-page chapter entitled "Some Friendly Advice": "So you still think you can cut corners and get away with it, don't you? Statistically, you're probably right. Most people who cheat on their taxes are never caught, especially if they're not piggish about it." But why do it, they ask: "Cheating the government is a crime. Cheating yourself is a shame.…Among those thousands of tax rules and regulations within that indecipherable mass of verbiage, numerous tax benefits are there for you to take, legally. The law allows what the law allows, and it allows you many tax benefits. You don't have to cheat to get what you're entitled to, you just have to know what's yours."
To a libertarian type, the answer to that last line is, "It's all mine; I worked for it and I own it." Fine, they say: then you can either jump into the subterranean economy and get a lifelong case of indigestion born of constant fear (if you're the fearful type, that is). Or you can do what Tim Condon and now Warren Salomon have told you in REASON's tax column for years. "Like it or not, you're in the tax business," Frankel and Fink truthfully point out. "Today the Internal Revenue Code is with you in all the old familiar places. You can ignore this reality year-round at your peril and try to do your best on the night of next April 14, wading through your disorganized collection of papers.…Or you can recognize the unhappy fact that the tax laws have something to say about too much of your life for you to ignore their consequences all year long. The fact is, the Internal Revenue Code and its accompanying regulations—thousands upon thousands of rules, several times longer than the complete works of Shakespeare and for the most part less comprehensible—have made a business out of life. Face it: The government has made everyday living into big business."
And you can make a handsome profit at it, if you'll just get your tax-act together. Thank you, Sandor. Thank you, Robert. Now, all you formerly wimpy taxpayers, get your tax records together, learn the ropes of the tax-game—and go out there and kick their asses!
Tim Condon, formerly REASON's Taxes columnist, is an attorney and tax specialist practicing in Florida.