The Internal Revenue Service is going after an 82-year-old woman for an outrageous $2.1 million in “penalties” because she didn’t use the right form to file her taxes, in a story that shows just how dangerous it is to be hiring 87,000 new IRS agents.
The grandmother from the Boston area had spent decades going to her local library and diligently filling out her IRS forms by hand and sending them in. But eventually she made a serious error, though it was one she had no way of knowing that she was making.
After Monica Toth’s family left Germany in the 1930s to escape Hitler’s fascist empire, they landed in Argentina, where Monica was born in 1940. By age 22, she had moved to the U.S. to start a family. Ultimately, in the 1980s she became a naturalized American citizen.
In 1999, Toth’s Holocaust-surviving father left her $4.2 million in a Swiss Bank account. Not being a tax accountant or tax preparer, Monica was not aware of the arcane rule that Americans who own bank accounts in foreign countries must file an annual one-page form known as the Foreign Bank and Financial Accounts report (FBAR). This form basically alerts the federal government to the existence of the bank account and lists the assets therein, the New York Post reported.
Toth had no clue that this form even existed and so, she spent years neglecting to file the form.
Eventually, though, the elderly woman was made aware of the form and in 2010 tried to retroactively file five years’ worth the forms to satisfy the obscure IRS rule.
According to the Institute for Justice, which has filed a lawsuit against the IRS on Toth’s behalf, the taxing agency went after her hammer and tong, Reason Magazine reported.
The IRS launched an audit of her finances in 2011, the year after she filed her retroactive FBAR reports. Initially, the agency claimed she owned $40,000 in back taxes.
So, Toth also paid the $40,000 of what she thought she owed in back taxes. This, she thought, would bring her up to date and she could then go forward in compliance.
But the IRS wasn’t done with her, not by a long shot. Instead of realizing Toth’s situation, and giving her the benefit of the doubt, the IRS decided to treat her as if she is an international criminal. They leveled both barrels at her and decided for confiscate half her wealth as “penalties” for breaking the law.
Still unsatisfied, the agency invoked the neglect of filing the FBARs calling her actions “reckless,” and decided to apply the most stringent punishment for the missed filings. The agency said that federal law allowed them to confiscate half her wealth as a “civil penalty” for not filing the paperwork because they decided that she was somehow trying to deceive the federal government. In Toth’s case, that amounts to a $2.1 million punishment.
Toth’s legal council maintains that the “civil penalties” is excessive and violates the Eighth Amendment barring excessive fines.
As Reason Magazine notes, “The fight here is not over whether the federal government and the IRS have the power to penalize people for trying to conceal bank accounts from tax collectors. Rather, it’s about whether taking $2.1 million from a citizen for simply not annually completing a one-page form can be considered an excessive fine that violates the Eighth Amendment of the Constitution’s Bill of Rights.”
But the IRS claims that a “penalty” isn’t actually a “fine” so they can charge whatever they want without violating the U.S. Constitution. Of course, the Institute for Justice counters that claim calling it an absurd formulation because there really isn’t any material difference between a government “penalty” and a government “fine.”
“The Eighth Amendment’s Excessive Fines Clause is a key check on the government’s power to punish,” said Institute for Justice Attorney Sam Gedge in a statement. “That is why the Excessive Fines Clause is part of the Bill of Rights, and that is why the federal courts need to take it seriously.”
In the utter absence of any proof that this elderly woman criminally sought to hide millions of dollars from the government as if she were an international drug dealer or hardcore criminal, her lawyers say that the initial $40,000 in back taxes paid and her compliance with the FBAR forms since 2010 should have been quite enough to satisfy the law.
Clearly the IRS is trying to use bureaucratic word play as an excuse to confiscate this woman’s wealth, and in so doing is violating every American’s rights and freedom.
“The Eighth Amendment is their protection. But if the government can escape judicial scrutiny of ruinous fines by clever wording, nothing would be out of the government’s reach,” attorney Brian Morris explained, the Post added.
Just imagine how much worse this outrageous behavior will get when Joe Biden’s new army of 87,000 IRS agents take to the streets to hand out the billions in “penalties” that the Democrats need to fund their massive tax and spend budgetary policies.
Monica Toth is a perfect example of how the IRS bends the rules and uses loopholes to impoverish Americans. And don’t for a second think they won’t be coming after those of us making less than $100,000 a year, either. That’s where the most money is in this country. Not with the “rich.” The middle class is where the money is and that is where Biden’s IRS army will direct its attention if given the billions of dollars in resources to do it.Commentary