IRS comes up $385 billion short
Close to 15% of federal taxes -- or $385 billion -- went unpaid in 2006, according to new estimates by the IRS.
That's the net tax gap number -- meaning what didn't get paid even after the $65 billion the IRS managed to collect through audits.
And it's the closest proxy policymakers have to the country's annual revenue shortfall, said Mark Luscomb, the principal federal tax analyst at CCH, a tax information publisher.
What's driving the shortfall? A whopping 84% of the total tax gap is due to underreporting of income by corporations, small businesses and individuals.
But underreporting by small businesses and others who report business income on the individual tax return is the biggest single culprit, accounting for more than a quarter of the gap.
The distant second and third reasons for the gap are taxpayers who do not file a tax return at all or underpay what they owe.
Whether mistakenly or intentionally, some taxpayers underreport their income by not including all their receipts, overstating their expenses or claiming incorrect amounts of credits, deductions and exemptions.
IRS audited 1 in 8 millionaires
The IRS has noted that compliance among taxpayers is highest when there is third-party reporting of income. So, the basic W2 working Joe who has money withheld automatically from his paycheck typically has a very high compliance rate.
"A net of only 1 percent of wage and salary income was misreported. But amounts subject to little or no information reporting had a 56 percent net misreporting rate," the IRS said in a statement Friday.
Given the more than 140 million returns filed a year, the 22,184 employees working in IRS enforcement can't hope to close the tax gap on their own, especially given the frequently changing tax laws.
Last year, for instance, the agency audited more than 62,000 corporate returns and roughly 1.6 million individual returns, including one in 8 millionaires, the highest enforcement rate for that income group since 2004.
The tax gap, especially in a time of $1 trillion annual deficits, is one reason many on Capitol Hill are calling for tax reform.
"An improved tax code that's simple and fair to all Americans will help close the tax gap, boost our economy and create jobs," Senate Finance Committee Chairman Max Baucus said in a statement. "In an era when we're squeezing the federal budget for every dollar of savings, we have to make every effort to recover these lost funds."
While it's easy to be disconcerted over the size of the tax gap, two things are of note: The voluntary compliance rate among U.S. taxpayers has been fairly steady over the years, and Americans are among the best in the world at paying what they owe the tax man.
Activists: At Least 21 Dead in Syria Violence
Syrian activists say at least 21 people have been killed in clashes throughout Syria Saturday.
The British-based Syrian Observatory for Human Rights said the majority of the deaths occurred in the flashpoint central city of Homs and in the restive Idlib province in the northwest.
The clashes came as thousands of supporters of President Bashar al Assad joined a funeral ceremony in Damascus for 26 people killed in a bomb attack a day earlier.
The government called the devastating explosion Friday, which also wounded more than 60 people, a “terrorist” attack and accused opposition groups of being behind the killings. It also vowed to “strike back with an iron fist” against the perpetrators.
But opposition activists deny any involvement in the bombing and have suggested the authorities staged the explosion to create a backlash against those calling for a government removal.
Most of those killed in the attack Friday appeared to be policemen riding on a bus that was shattered by the blast. Syrian state media quoted an Interior Ministry official as asserting that a male suicide bomber triggered the blast in the central Midan district, but few other details were available.
Opposition activists said the Syrian regime's crackdown on protesters continued in several parts of the country late Friday in which 17 civilians were killed.
Arab League ministers are to meet in Cairo Sunday to review the work of an observer mission the league has sent to Syria two weeks ago. The observers were tasked with finding out whether the Assad government has lived up to its pledge that its long-running crackdown on civilian protesters was at an end.
Mr. Assad has pledged to withdraw security forces from cities, release political prisoners and allow anti-government protests. Government reports of mass prisoner releases have not been verified, in part because almost all foreign journalists are barred from access to the country.
A global, online activist group that supports “people-power” movements worldwide, Avaaz, says nearly 7,000 people were killed since March 2011, when the Syrian unrest began. Avaaz says its casualty count was confirmed through contacts with multiple sources in Syria.
The United Nations estimates 5,000 people have been killed in Syria, while the Damascus government accuses armed terrorists of driving the revolt and killing 2,000 security personnel.
Kenya: Airstrikes Kill 60 Militants in Somalia
Kenya said Saturday that airstrikes have killed at least 60 al-Qaida-linked militants in southern Somalia, as part of an ongoing effort to force them out of the country.
A military spokesman told reporters that al-Shabab militants were killed in Friday's airstrikes in the town of Garbaharey in Somalia's Gedo area. He said the military was tipped off about the militants' whereabouts, and that he expects the death toll from the attack to rise.
In a related development, Britain said Saturday that London believes there is a heightened terrorist threat in Kenya. A Foreign Office statement says Britain believes terrorists may be “in the final stages of planning attacks.”
The statement warns that terrorist attacks may be indiscriminate and could target places frequented by expatriates and tourists.
Somalian media reported Saturday that al-Shabab forces had withdrawn from Buurdhuubo District of Gedo Region in southwestern Somalia. The reports quote witnesses as saying that insurgents carrying weapons moved out of the area together with their armored vehicles. Reports also say that transitional government troops backed by Kenyan forces have advanced to the area.
Also Saturday, international aid group Doctors Without Borders made a renewed call for the safe release of two Spanish workers who were kidnapped in Somalia in October. The Swiss-based group is currently considering whether to continue its humanitarian work in Somalia, one of the world's most dangerous places for humanitarian workers.
Al-Shabab is known for enforcing a strict brand of Islam in the areas under its rule. The group has blocked most international aid workers from accessing parts of Somalia suffering from drought and famine. Kenya has accused it of kidnappings of foreigners on its soil.
Kenyan forces entered Somalia in October to push back al-Shabab, which controls large sections of southern and central Somalia, and is blamed by Kenya for a series of cross-border kidnappings.
US Republican Presidential Hopefuls Focus on New Hampshire
As the U.S. Republican Party presidential nomination race moves to New Hampshire, the two frontrunners are turning their verbal fire toward President Barack Obama.
At campaign events Thursday, former Massachusetts governor Mitt Romney and former Pennsylvania senator Rick Santorum accused the president of steering the United States away from its tradition of self-reliance and free enterprise.
Santorum said the health care reform Mr. Obama championed shows he does not trust Americans to take care of themselves. And, speaking in South Carolina, Romney accused the president of giving favors to his friends instead of allowing everyone to earn opportunities based on their own merits.
Santorum lost by just eight votes to Romney in Tuesday's Iowa caucuses, the first nominating contest of the 2012 presidential election. It was a surprisingly strong performance for Santorum, launching him to the forefront of the race.
The six remaining candidates' next challenge is the January 10 primary in New Hampshire, a state where Romney has a wide lead, and another the following week in South Carolina.
Romney got a boost after his narrow victory in Iowa, with an endorsement from Senator John McCain, the 2008 Republican presidential candidate. However, he has struggled to get more than 25 percent support in national opinion polls.
Ron Paul, a Texas congressman and anti-war advocate, placed a close third in Iowa, and has been finishing second behind Romney in the polls in New Hampshire.
Former House speaker Newt Gingrich continues his campaign, making stops at four town halls Thursday in New Hampshire. Gingrich finished in fourth place in Iowa.
Texas Governor Rick Perry also vowed to continue his campaign despite a poor showing in Iowa, while Minnesota Congresswoman Michele Bachmann withdrew her candidacy after placing sixth there.
Former U.S. ambassador Jon Huntsman came in last with 1 percent in the Iowa polls, but he hopes to do better in New Hampshire, where he has been focusing his efforts.
President Obama made his first campaign stop of 2012 in Ohio on Wednesday. The president faces a difficult campaign to win a second term because of the sluggish economy.
Obama Unveils Strategy for Smaller, Agile Future US Military
President Barack Obama and U.S. defense officials have unveiled the results of a new strategy review to maintain U.S. military superiority with leaner and more efficient forces capable of responding to global challenges.
The strategic review was ordered by President Obama last year to help guide Pentagon decision-making and setting of priorities in an atmosphere of budget austerity, and sharp partisan debate over deficits and debt.
In recognition of its significance, Obama appeared with Secretary of Defense Leon Panetta and the military Joint Chiefs of Staff Chairman Martin Dempsey as the results were formally announced at the Pentagon.
Obama pointed to the end of U.S. combat operations in Iraq, the drawing down of forces from Afghanistan, the killing of Osama bin-Laden, and the successful NATO operation in Libya. He said these have brought the United States to a moment of transition.
"As we look beyond the wars in Iraq and Afghanistan, and the end of long-term, nation-building with large military footprints, we will be able to ensure our security with smaller conventional ground forces," said the president. "We will continue to get rid of outdated Cold War-era systems so that we can invest in the capabilities we need for the future, including intelligence, surveillance and reconnaissance; counter terrorism; countering weapons of mass destruction; and the ability to operate in environments where adversaries try to deny us access."
Obama said military forces will be "agile, flexible and ready for the full range of contingencies and threats." The U.S. presence in the Asia-Pacific region will be strengthened, and Obama said, as he did in Australia in November, that reductions "will not come at the expense of this critical region."
Secretary Panetta said the new strategy is aimed at cutting defense spending in a balanced way by about $487-billion over 10 years, but should not mean a choice between national security and fiscal responsibility.
Panetta said a "smaller, ready and well-equipped" joint force would focus on the Pacific, and the Middle East.
"This region is growing in importance to the future of the U.S. economy and our national security,' he said. "This means, for instance, improving capabilities that maintain our military's technological edge and freedom of action. At the same time, the U.S. will place a premium on maintaining our military presence and capabilities in the broader Middle East."
Panetta said the U.S. military must be able to fight in several conflicts at the same time, and "confront and defeat more than one adversary at a time."
Joint Chiefs of Staff Chairman Dempsey was asked by a reporter what message the results of the defense review would send to Iran.
"The message that we have had consistently for Iran is that we expect them to be a responsible member of the community of nations, not deny freedom of navigation, freedom of movement, freedom of access, and we are determined that they will not acquire a nuclear weapon," he said.
In his remarks, President Obama said details would be emerging in coming weeks.
"I would encourage all of us to remember what President Eisenhower once said. That “each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs.” After a decade of war, and as we rebuild the source of our strength, at home and abroad, it is time to restore that balance," he said.
Obama said the U.S. defense budget will grow more slowly over the next 10 years, but it will meet U.S. global responsibilities.
Asked about force reductions in specific areas, such as Europe, Secretary Panetta said the United States will maintain commitments to Europe, and Joint Chiefs Chairman Dempsey said the countrty will always act on the foundation of traditional strategic partnerships, such as NATO.
Runaway US girl Jakadrien Turner deported to Colombia
Immigration officials are attempting to unravel the mystery of how a 14-year-old American runaway was deported to Colombia despite having no Colombian ID and speaking no Spanish.
When arrested for theft in 2010, Jakadrien Turner gave Houston police the name of a 21-year-old Colombian.
She maintained this identity through a court case and the deportation process.
Colombian officials say she is now in protective custody but they plan to release her to US officials on Friday.
They had been working to confirm her identity before agreeing to hand her over. On Thursday Bogota said the US embassy had submitted documents to allow for her return.
Ms Turner's grandmother, Lorene Turner, had contacted Dallas police when she found Jakadrien's Facebook page under an assumed name.
The teenager had run away from home in 2010 and was reported missing on 19 November that year. Her information was on record with the National Center for Missing and Exploited Children.
She was arrested by Houston police in April 2011 on the charge that eventually led to her deportation after she claimed she was called Tika Lanay Cortez, the name of a Colombian woman born in 1980.
"They didn't do their work," Lorene Turner told a local TV station. "How do you deport a teenager and send her to Colombia without a passport, without anything?"
'Worst end'
US immigrations officials said they found nothing after her arrest that contradicted her story or assumed name, but were investigating the circumstances which led to the accidental deportation.
A spokesman for the the Immigration and Customs Enforcement (ICE) said the agency "takes these allegations very seriously".
During the deportation process a representative from a Colombian consulate reportedly interviewed her and issued a travel document, the Associated Press reports.
Once she had arrived in Colombia, Ms Turner appears to have spent several months living and working in the capital Bogota.
Johnisa Turner, her mother, said she was devastated when Jakadrian first went missing.
"When your child doesn't come home from school, of course you go to the worst end of the spectrum," she told the Associated Press.
Now that Jakadrien appears to be returning to the US, she said she wanted to put the incident behind her.
"I want her home so we can move from this day forward."
US Sentences Pakistani Man to 50 Months for Supporting Taliban
A U.S. court in Washington, DC Thursday sentenced a Pakistani man to 50 months in prison for conspiracy to provide material support to the Tehrik-e Taliban Pakistan, often referred to as the Pakistani Taliban.
Irfan Ul Haq was sentenced by U.S. District Judge John Bates, who last month sentenced two co-defendants — Qasim Ali and Zahid Yousaf — on the same charge to 40 and 36 months in prison respectively.
On September 12, 2011, each defendant pleaded guilty to one count of conspiracy to provide material support to the TTP — a designated terrorist organization. As part of their plea deal, the three agreed to a stipulated order of returning to Pakistan upon the completion of their criminal sentences.
Ul Haq, Ali and Yousaf were arrested in Miami on March 13, 2011. They admitted that between January 3 and March 10, 2011, they conspired to provide false documentation and identification to the TTP, knowing that the group engaged in terrorism.
According to court documents, law enforcement agents directed confidential sources to ask the defendants, who were residing in Ecuador at the time, for their assistance in smuggling an individual they believed to be a Pakistani Taliban member into the United States.
Ul Haq allegedly said “it was not their concern what this person wanted to do in the U.S. — sweep floors or blow something up.” The defendants accepted payment from the confidential sources for the operation and procured a false Pakistani passport for the individual.
Assistant Attorney General for National Security Lisa Monaco said “the case underscores our continuing commitment to dismantle networks that facilitate terrorist travel.”
John Morton, Director of U.S. Immigration and Customs Enforcement, said his agents “will continue to use every available resource to protect the American public from terrorist organizations and individuals who support them.”
Pastor: Gunmen Kill 10 in Northern Nigeria Church
The pastor of a church in northern Nigeria says gunmen burst into a Thursday night service, killing six worshippers and wounding 10.
Pastor Johnson Jauro of the Deeper Life church in Gombe says his wife is among the dead. No one has claimed responsibility for the attack and police have not yet commented.
The radical Islamic group Boko Haram, whose name means “Western education is a sin” in the Hausa language, has said it was responsible for other deadly attacks against Christians. They included the Christmas Day bombing of a Catholic church in Abuja that killed more than 30 people.
Nigeria is divided between a mainly Muslim north and a chiefly Christian south.
Boko Haram gave Christians in the north a three-day deadline this week to leave the area or face death.
Nigerian President Goodluck Jonathan declared a state of emergency in 15 regions last week, closing parts of the borders with Niger, Chad, and Cameroon. Mr. Jonathan has vowed to crush Boko Haram. But his critics complain that he has done little to rein in the group.
Apple to launch iPhone 4S in the TCI & other International Countries
The iPhone 4S is set to launch in China and 21 additional countries across the world on Friday, January 13, as Apple continues the rapid international roll-out of its latest smartphone.
Apple announced the forthcoming debut of the iPhone 4S in China in a press release yesterday. The announcement brings to an end months of speculation as the device made its way through China’s regulatory approval process.
“Customer response to our products in China has been off the charts,” Apple Chief Executive Tim Cook said in a statement. “With the launch in China next week, iPhone 4S will be available in over 90 countries making this our fastest iPhone roll-out ever.”
In addition to China, January 13 will also mark the launch of the iPhone 4S in Anguilla, Antigua and Barbuda, Bolivia, Botswana, British Virgin Islands, Cameroon, Cayman Islands, Central African Republic, Dominica, Dominican Republic, Ecuador, Grenada, Guam, Guinea Conakry, Ivory Coast, Jamaica, Kenya, Madagascar, Mali, Mauritius, Niger, Senegal, St Vincent and The Grenadines, Trinidad and Tobago, Turks and Caicos and Uganda.
Samsung expects bumper profits on smartphone sales gain
Samsung Electronics has said it expects to report a big jump in profits for the final three months of last year, thanks largely to record smartphone sales.
The South Korean firm said it expects operating profits for the period to be 5.2tn won ($4.5bn; £2.9bn), 73% higher than a year a earlier.
Samsung overtook Apple as the world's biggest-selling smartphone maker in the second half of last year.
The firms have been locked in a number of patent battles in recent months.
Analysts said Samsung's profits were likely to grow again this year.
"Samsung is likely to continue record-breaking earnings this year as earnings from flat screens and memory chips will improve, making up for any potential slowdown in handset growth rates," said Lee Seung-woo at Shinyoung Securities.
"I'd expect profits to grow by another 5tn won this year."
The company is due to publish its official results for the fourth quarter of 2011 later this month.