In the Black: October 2025
I’ve written before about my concerns about the current administration politicizing the IRS, and with some excellent reporting from the NY Times, more has come to light. I’ve told you about all the cuts that have been made to the IRS, especially the new workers Biden had brought on to tackle businesses and the ultra-wealthy cheating on their taxes, where the majority of undercollected taxes are. Some of the strategies were so complicated that the IRS just didn’t have the manpower or the expertise to catch them, and now many of the people hired to do just that are gone. You know who they do have time and expertise to audit? All of us here in the middle, Cool, huh?
Anyway, in this month's episode of Yes, Virginia, the system is rigged, I present to you the Trump administration quietly rolling back enforcement on aggressive tax shelters used by the biggest multinational companies and the wealthiest people. The crackdown was projected to bring in over $100 billion (with a B) over the next 10 years. Maybe you’ve heard about our rolling government funding crisis? Seems like we could use the cash.
Even Larry Gibbs, who served as Reagan’s IRS commissioner, had this to say: “From the standpoint of the integrity of the system, I am concerned about it. It’s politicizing the tax process.” The IRS is also turning on its own - accusing folks working on the initiative of being part of the ‘deep state’ and biased against Republicans. Holly Paz, who was the highest-ranked official working on the initiative to address large-scale business tax evasion, was placed on leave in July. She’s currently suing the agency.
The Nitty Gritty
But HOW do they cheat Liz? I know you only ask out of deep tax law curiosity,and no nefarious intent so here you go: The concept is called “basis shifting”. Let’s say you and I open a nightclub together and we buy a $1 million sound system. We write off that most excellent sound system over a series of years through depreciation. Those depreciation deductions effectively erase $150k in profits every year. Now, 10 years later, there are no more deductions to take on this sound system, or are there? Let’s say through a series of complicated legal transactions, we restructure our partnership and all the assets, including our sound system. Then, these crooked companies would start expensing that sound system all over again, having lost the IRS in the paper trail. Shifty, right?
