Data Bases • Custom Term Papers • Free Term Papers • Free Research Papers • Free Essays • Free Book Reports • Plagiarism? Links • Top 100 Term Paper Sites • Top 25 Essay Sites • Top 50 Essay Sites • Search 97,000 Papers @ DirectEssays.com • Search 101,000 Papers @ ExampleEssays.com • Search 90,000 Papers @ MegaEssays.com Free Essays • Term Paper Sites • Chuck III's Free Essays • Free College Essays • TermPaperSites.com • My Term Papers • Get Free Essays • Essay World • Planet Papers	Search Lots of Essays Back to Subjects - Sociology Corperate Tax Evasion Corperate Tax Evasion A growing trend in our society today is corporate tax evasion. It has become increasing more common for corporations to pay no or little income tax, and in some cases actually receive money back from the government. It is illegal and therefore deviant by that definition. Corporate tax evasion (using borderline legal means) is widespread. White-collar crime is a term that is usually applied to crimes associated with business that do not involve violence or bodily injury to another person. Corporate tax evasion falls into the category of white collar crime. There are 3 types of corporate income taxes as follows: National 30% of taxable income, Local 20.7% of National Tax, and Enterprise 10.08% of taxable income. The calculated effective tax rate of 42.05% although they simply add up to 46.29% (30.0% + 30.0%X20.7% + 10.08%). It is because Enterprise tax is deductible for the other tax purposes only when it becomes due. Tax evasion involves fraudulent or criminal behavior, conduct involving deception, concealment, or destruction of records. Tax evasion occurs when the taxpayer fraudulently or criminally avoids the payment of taxes otherwise due and owing under the tax laws. There are many tax crimes under the Internal Revenue Code. The criminal violations cover the same territory as the civil fraud penalties, although the government has a higher burden of proof in the criminal cases. The criminal cases, however, reach a far greater spectrum of potential defendants. Unlike the civil penalties which target only the taxpayer, the criminal penalties reach anyone engaging in the defined offense, including employees, accountants, lawyers and tax preparers. Under IRC Sec. 7206(2), a person is guilty of a crime if he willfully: aids or assists in or procures, counsels, or advises the preparation or presentation … of a return, affidavit, claim or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim or documents. Shelters reduce the corporate tax base and thus raise the burden on other taxpayers. Shelters undermine the vitality of our voluntary tax system. Companies feel obliged to follow the lead of competitors who abuse the tax code in a "race to the bottom". The New York State Bar recently highlighted the "corrosive effect" of shelters, stating: "The constant promotion of these frequently artificial transactions breeds significant disrespect for the tax system, encouraging responsible corporate taxpayers to follow the lead of other taxpayers who have engaged in tax advantaged transactions." And shelters divert resources from productive investment in the real economy. As a former tax official, now a leading member of a well-known law firm has said, "You can't underestimate how many of America's greatest minds are being devoted to what economists would all say is totally useless economic activity." These evasion shelters include; Lease-In Lease-Out (LILO) shelters whereby companies attempted to avoid tax through circular transactions. In one extreme case, a company leased a town hall from a Swiss municipality and leased it back the same day. This measure saved the corporation $10.2 billion. Another type of shelter is the BOSS shelter where companies can generate an artificial tax loss that can be used to offset other income. This action can be expected to save billions of dollars form the tax system. Company’s today also use what is called a "debt straddle". This is a shelter designed to create an artificial tax loss by setting up two debt instruments, the interest rate on one of which resets to zero, generating a loss, while the interest rate on the other doubles. The debt straddle is reminiscent of the old butterfly straddles in the commodity markets and is best described as "heads I win, tails I win". The theorist I believe best gives explanation to corporate tax evasion is Edwin H. Sutherland. Edwin H. Sutherland was a pioneer in research dealing with White Collar crime in a time when the study of street crime was of primary interest and White Collar crime or corporate deviance was all but ignored. The Differential Association Theory is Edwin H, Sutherland’s chief contribution to the study of Sociology. Differential Association is an Interactionist Theory. The theory analyzes the process by which a particular person comes to engage in criminal behavior. The basic principle of Differential Association is that deviance is a learned behavior like all other social behavior. When there is an excess of definitions favorable to deviance or law violation deviance (or in our case, corporate tax evasion) occurs. Differential Association states that criminal behavior is learned in interaction with other persons in a process of communication and that the principal part of the learning of criminal behavior occurs within intimate personal groups. Undoubtedly there can be a connection drawn from the intimate settings where the decisions to commit tax evasion are made and the above state definition. When a people are in small group setting the person inevitably assimilates into the surrounding culture, in this case tax evasion. Bibliography: Construction of Deviance; page 75, Edwin H. Sutherland http://www.ustreas.gov/press/releases/ps421.htm http://www.taxhound.com/ Word Count: 893
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