Paying Fair With the IRS Can Be an Infuriating Experience

Hello, sucker.

Yeah, you. And me.

It’s April 15. You have until midnight to come clean and lay open your checkbook to the IRS, or to open your tax shelter in the Cayman Islands.

What? You haven’t set yours up yet? What kind of American are you, anyway?

An American like me. A gutless wimp. A meek schlemiel who plays by the rules.

Why can’t I copy the swash and buckle of corporate pirates like Tyco’s Dennis Kozlowski? That guy not only had the nerve to run an “American” company out of a tax-haven HQ in the Bahamas, but evidently conned his stockholders into paying for his $6,000 shower curtain and his wife’s million-dollar birthday party.

Why can’t I be as arrogant and cunning as ImClone’s Sam Waksal, Martha Stewart’s buddy, who dodged a million-dollar tax bullet by cleverly having his new Lichtenstein and de Kooning paintings shipped from the New York gallery to his New Jersey factory, to avoid $1.2 mil in N.Y. sales tax!

Why can’t I have the chutzpah of Kenneth Lay -- “Kenny Boy” to George W. Bush -- who soothed his employees that Enron stock was flush, while in fact it was in the flusher, and he was dumping his stock faster than ballast off the Titanic?

And who wouldn’t want to be a god of industry like the Rigas clan, boldly dipping into the billion-dollar till of publicly held Adelphia Communications to stake themselves to private jets and a private golf course?

OK, my heroes have feet of clay. Kozlowski is under indictment, Waksal pleaded guilty to some things and faces more, and the Rigases are looking at two and a half centuries in prison, each.

Of course they’re not really my heroes. And I’m not much cheered by this pinstriped perp walk. For every Waksal they catch, three probably get away. A Waksal will likely spend less time in stir than a kid who steals a second-hand Toyota. A Syracuse University study found that although there’s far more white collar crime than there was 10 years ago, only half as many tax cheats are taken to court. (I believe this; Syracuse won the NCAA title and can do no wrong.)

Exactly a week ago today -- nice timing -- the government admitted that “salary increases and unexpected expenses” have eaten up the money the IRS was going to spend to “track tax evaders.” Wa-hoo. Bermuda, anyone?

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This last year was not one to inspire confidence in playing by the tax code, all 40,000-some pages of it, which is why I went to the Eagle Rock post office to see whether anyone else was as mad as I am. Or maybe as dumb.

People in the long, soggy line did look peeved; it could have been the rain, or it could have been that distinct IRS-sized envelope. There’s something especially vicious about being asked to open a vein AND pay for the stamps to mail in the blood.

I’m perfectly glad to pay my taxes, because I like stop signs, I like library books and homicide detectives and free breakfasts for poor kids. I like Social Security and alternative energy tax credits and the Centers for Disease Control. But none of us likes being made out a taxpaying chump.

First I buttonholed Li-Han Lin, a student at Art Center College of Design in Pasadena, and he’s been filing his 1040 for two or three years now. I asked whether he was ticked off. What ticks him off, he said, “is that we’re dropping 20,000 bombs on Iraq and THAT” -- he flapped his tax-form envelope -- “is where my tax money is going.” (Yes, but I already wrote that column. Next.)

Ron Kuramoto’s “probably” getting some money back, but not much. “It’s so easy to take your money and everything offshore; even with all the homeland security, those who can, do, and it seems like the administration doesn’t have a problem with that.”

Until nine years ago, Laura E. Mora was a State Farm employee, drawing a paycheck. Now she owns an insurance business and makes out the paychecks. “Mad? I get mad every year. I’m a small-business owner, and I pay every year. Everything’s expensive ... workers’ comp, medical -- and whatever you do, you owe the rest to the IRS.”

So what about other American companies, I ask, like Ingersoll Rand, whose jackhammer drills hewed the faces on Mt. Rushmore? By paying a mere $2,800 for a Bermuda post office box, I-R opts out of paying $40 million in U.S. taxes. Mora laughed. “I need to know how to do that!”

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A while back, an auditor for the state Franchise Tax Board went on the QT to Assemblyman Dario Frommer, and tipped the Los Feliz Democrat that “they were having problems prosecuting offshore entities and tax shelters” -- which cost California as much as $500 million a year of the estimated $207 billion in taxes that offshore U.S. corporations dodge by going Caribbean.

“When the people who are trying to fight the bad guys are telling you their hands are tied, that gives you great pause,” Frommer said. “And here we are being asked to cut billions of dollars from programs for public education and health care.”

The difference between Frommer and me is that I just get to rant, and he gets to propose laws, which he did -- AB 1601, to raise fines for abusive tax shelter promoters and tax dodgers. “It’s an incredibly bad message here -- working families paying their taxes, obeying the law, and someone who’s very wealthy ... basically taking a hike on paying his or her share.”

Sometimes the difference between legal tax avoidance and illegal tax evasion seems to come down to having a really sharp tax attorney. That won’t do when the tax system operates not just on lottery-sized odds that you won’t get caught, but on a kind of faith.

“Fairness” is a word that’s slipped into disrepute. I heard a radio talk show host mock fairness as a wimpy Jimmy Carter word, a schoolyard whine, not robustly Darwinian American. But fairness is the predicate to persuading people to play your game, from baseball to taxpaying.

Outside the post offices, at tonight’s midnight mailbox lineup, there’s usually a desperately giddy party atmosphere. Free coffee gets poured. Sometimes there are free doughnuts. If anyone offers you one, just say no thanks -- you’re already getting the crumbs.

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Patt Morrison’s columns appear Mondays and Tuesdays.