A story of taxes.
Writing prompt: The Anomalous Entity Department of the Internal Revenue Service has a 70% annual casualty rate and a singular mandate; to find, assess, and when needed seize the assets of dragons, leprechauns, and other supernatural entities that fail to properly declare and itemize their hordes.
It’s a little known fact about the Criminal Investigation division of the Internal Revenue Service’s Small Business/Self-Employment Division that the minimum amount of recoverable money necessary to launch an investigation is around $40,000. That is, if, on an initial mail audit we believe that the amount of money we can recover during a successful audit is less than $40,000, then it’s not worth launching a full audit because it would cost the U.S. government more money to recover it.
It doesn’t mean we don’t audit people who owe less. We have a wide array of instruments to force compliance–ranging from a mail audit to an in-person audit, where the threshold costs are far lower. (For an in-person audit the threshold is around $8,000.) Sometimes we will kick off audits for less–but only if we think we can make headlines. We use stories of fear to force compliance–it’s why every year we slip the press stories about how some taxpayers are “unfairly” treated.
Those stories about how someone lost their business unfairly? Yeah, that’s us, leaking the stories. Generally they have something else going on–one story about how a mom-and-pop shop was forcefully closed at gunpoint (complete with videos of the two being perp-walked) actually started with them holding our agent at gunpoint.
But we withheld that last part when we leaked the story. Because we want you to be afraid of us. How else will we get people to file their taxes?
My division, however, the story is a little different. Once a mail audit is referred to us, our threshold is around $1 million.
We don’t do in-office audits. (Well, we tried that once, until the office was destroyed. And I don’t mean “a bunch of pictures tossed and the desk flipped” destroyed. I mean “smoking crater where the building and parking lot once stood” destroyed.)
Once the computer kicks the audit information to our division, a few things are true.
First, the taxpayer is not a traditional taxpayer. It’s not a corporation, trust, or actual person. Second, the nature of the taxpayer entity is considered “high risk.”
Keep in mind our division did not handle Al Capone. He wasn’t high enough risk for our division.
I first received the e-mail from the SB/SE’s computerized audit system. It looks for discrepancies within a tax filing form–and if there are huge gaps (such as a taxpayer who stops paying taxes, or a 1040 where line 22 is significantly larger than line 43 despit not declaring a business, or if there are bank transfers which suggest a higher estimated wealth than implied on schedule E), the system kicks the report to us regardless of the threshold.
Because that threshold is an unwritten rule.
We’ve lost too many agents (and buildings) trying to audit some of these taxpayers. And I’m not sending someone out to die just for a measly few dollars.
The e-mail was with a batch of other e-mails; May is usually our busiest month as everyone files by April 15th. I glanced through them, and this one stood out at the top. The amount of wealth this taxpayer had apparently gathered (as implied by prior filings) seem to suggest a total net wealth in excess of $250 million–yet they only paid $3,000 in taxes (apparently paid in gold coins), and line 8a showing no income from interest.
Even a 5% return on $250 million is around $12.5 million, implying they owe at least $4.5 million in taxes.
Then I looked at the address on the form and searched that address in Google Earth.
“Hey, Jon,” I yelled to my co-worker in the adjacent cubicle. “We’ve got one, and you better bring your fire-retardant pants because I think it’s a dragon.”
The drive to the audit site was relatively uneventful, though the last mile showed a lot of scorched earth and burnt trees. It had to be a dragon. Jon, sitting next to me in the cab of our MRAP (we get the best toys from the military, for good reason) surveyed the landscape.
“Looks like a big one.”
I was thinking the same thing.
Dragons were our worst customers. Handling dark sorcerers is not that dissimilar to handling CEOs of Fortune 500 companies, except you use other sorcerers instead of lawyers to go after them. Leprechauns are basically annoying assholes; tricksters who are hard to pin down, but if you keep the paperwork straight you can perp-walk them to the justice department. (It’s important to use the magic-resistant paper to print all records first, of course. One time an intern put regular paper in our office printers, and it just played hell with about two dozen audits.)
Fortunately we don’t get a lot of demons or shape shifters; demons tend to live off the largess of the Devil, and most shape shifters are just too screwed up to make a lot of income in the first place. (Imagine spending your teens accidentally shifting ages and genders before you learn how to control your powers. Most of them are lucky to hold a steady job, poor bastards.)
But dragons; nasty pieces of work. Greedy, willing to kill to gain their hoards, and extremely intelligent.
As an IRS agent I didn’t care how they made their income; previous court rulings prohibit us from passing taxpayer income information to other agencies without a warrant, and our own charter is limited to making sure all taxes are paid on-time. (Which means if you’re a bank robber, and you declare all the money you steal somewhere on your 1040 and pay the right taxes–there is nothing we can do about it.)
But fail to pay? Ask John Dillinger. The only thing the FBI had on him that would stick was failure to pay his taxes.
We pulled up to the address on the form. A large mansion, almost castle-like, topped a hill. From the front the mansion looked perfectly normal, but as we came up the windy road we could see from the side the mansion had a gigantic hole ripped out of it. I felt sorry for the poor bastard whose mansion this was. My partner did a search in the local MLS to estimate the price of the mansion and added it to the estimated net worth of the dragon, which of course added to the deficit the computer thought this taxpayer owed.
After parking our armored car, we went in back and donned our suits: fire-proof and bomb-proof, it would allow us to survive an initial confrontation with our taxpayer client. My partner also grabbed an elephant gun, though frankly it was too heavy to swing into position before the dragon grabbed us if he decided to kill us. Besides, an elephant gun would only piss the dragon off.
I knocked on the door. “Treasury Department!” I announced.
Nothing. My partner had less experience with tact (as demonstrated by his choice of weapon), and banged on the door even harder. “Treasury Department, Open Up!” he shouted.
I shook my head. I didn’t want to train a new partner.
Inside the mansion I heard a rumbling, as a great terror rising from below the Earth. Then, to my surprise, the door opened. I unconsciously jumped back as a well dressed man–a butler–opened the door.
“May I help you, sirs?” he spoke in a proper British accent.
“May we come in?” I asked.
Without changing his expression, somehow the Butler managed to sneer at us. “I’m afraid the master of the house is not home.”
“We can wait.”
“Sirs, I’m afraid I must insist you leave the premises.”
I resorted to lying. As law enforcement we are permitted to lie. “We’re from the Internal Revenue Service, and I can come in there and start impounding your master’s possessions if you don’t let me in right now.”
“Sirs, I must insist that unless you have a warrant, you need to leave the premises now.” The butler then bent in towards us, a hint of fear? “It’s really for your own good.”
Back at the MRAP I asked my partner to do a quick search of the previous filing records for this taxpayer. “What am I looking for?” he asked.
“Look for evidence of a 1099 or a W-2 filing for a butler or man-servant.”
A few taps later: “Nothing. I don’t see anything here.”
“Did you see the fear in the butler’s eyes?” I asked.
“Yeah, come to think of it, I did. Right there at the end.”
My partner looked at me quizzically.
When you’ve been around the Anomalous Entity group long enough, you learn the tricks. And Dragons require heavy artillery, though you can’t just call in the troops unless you have a reason. We’ve lost more than half our department to dragons at one point or another, and I wasn’t about to die or lose my partner over this one.
I called back to the office. To the investigation liaison we have with the military.
“Henry, we have a live one. We have at least one human which I believe is being held captive. We have a dragon who has done substantial property damage. And my partner and I fear for our lives if we move forward with this audit. Please pull a warrant and call Fort Bragg; we need to mobilize a compliance team.”
As I hung up after repeating what I said to a judge, I could hear the massive flapping of gigantic wings passing overhead. A shadow briefly blotted out the sun.
“Hang on Jon, the calvary is coming.”