Bidens shorted IRS $500,000 in Medicare taxes over two years, non-partisan group says

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WASHINGTON, DC- Democrats have been obsessed with the tax returns of former President Trump.

Perhaps they should refocus their magnifying glass inside.

The New York Post reports that according to a nonpartisan report issued this week, old sleepy Joe may be in hock for something in the neighborhood of $500,000—that’s half a million—dollars in back taxes.

Part of Biden and the Democrat’s push for an inflation-fanning, debt busting $3.5 trillion spend-a-palooza includes targeting so-called “tax avoidance” schemes, while raising tax rates on “higher income” Americans in order to have the “rich” pay their “fair share.”

It is one of those “tax avoidance” schemes which Biden seems to have taken advantage of, although even under the current rules it appears he owes the back-taxes anyway.

According to a House Ways and Means Committee draft of the proposed behemoth, it would end the accounting scheme used by Biden and would also increase funding for the IRS to harass American taxpayers by a significant sum, adding hundreds if not thousands of new employees to suckle off the government teat.

However the report, drafted by the nonpartisan Congressional Research Service (CRS) and provided to the Post shows that Biden would owe taxes even under the current rules, according to Rep. Jim Banks (R-IN), chairman of the conservative Republican Study Committee.

Banks said, “Joe Biden wants to raise taxes by $2.1 trillion while claiming the rich need to pay their ‘fair share.’ But in 2017, multimillionaire Joe Biden skirted his payroll taxes—the very taxes that fund Medicare and Obamacare.”

“According to the criteria CRS provided to my office, he owes the IRS and the American people hundreds of thousands of dollars in back taxes,” Banks said. “Every American should know about Joe Biden’s tax hypocrisy.”

According to Banks, the report shows Joe Biden and his wife “Doctor” Jill used “S” corporations to illegally avoid paying Medicare taxes on speaking fees and book sales in 2017 and 2018.

The Biden’s directed over $13 million through S corporations while counting under $800,000 of that amount as salary eligible for the Medicare tax, while exempting the rest from what should have been a 3.8 percent rate, according to the Wall Street Journal.

While the CRS report doesn’t specifically name Biden, it looked at cases whereby the IRS won a judgment against taxpayers who paid themselves suspiciously low salaries from S corps and counted most of the revenue as “distributions,” exempt from Medicare taxes.

While the IRS doesn’t specifically designate a percentage of a S corporation’s profits that should be paid as salary, it does say the salary must be “reasonable.” The fact sheet does say that, “S corporations should not attempt to avoid paying employment taxes by having their officers treat their compensation as cash distributions, payments of personal expenses, and/or loans rather than as wages.”

The IRS guidance also says that factors to be used when determining compensation include:

  • Training and experience
  • Duties and responsibilities
  • Gross receipts and net income of the business
  • Existing compensation agreements and compensation paid in previous years
  • Dividend and bonus history
  • Typical employee wages for similar services

One small business site, StartingYourBusiness.com says that “the basic idea her is that salary should never be less than distributions.” Clearly, Biden didn’t follow that rule.

CRS cited the case of an accountant named David Watson, who ran approximately $200,000 of his company’s revenue through an S corp while only claiming $24,000 as taxable salary. Courts determined that was a drastic underpayment of his taxes.

The CRS noted that presidential tax returns are subject to an automatic audit only for years when a president serves in official office. The White House now claims that Biden’s S corps are “dormant,” meaning the IRS won’t automatically review them.

Biden as a typical hypocritical Democrat who is often referred to as “lunch bucket Joe” or “The Scranton Kid” to give off the appearance that he’s just “one of the people” has enriched himself in public office, as have most of his family. Biden continually argues that the rich need to “pay their fair share,” even as he skims money off his income to avoid doing so.

According to Chris Jacobs, a Capitol Hill insider who pays attention to these things, he said:

“Joe Biden wants to expand IRS’s funding and authority so they can audit more Americans. Given that the liberal Tax Policy Center and the nonpartisan Congressional Research Service both have raised questions about the way Biden handled his taxes, why doesn’t he ask for his own taxes to get audited first?”

He continued, “Biden doesn’t really believe in expanding programs like Medicare and Obamacare because he thought about buying a second multimillion dollar mansion and renting a third, was more important than helping to fund those laws.”

If the $3.5 trillion albatross Biden is trying to jam through Congress in a partisan manner passes, he would end the very tactic he used to avoid paying Medicare taxes just a few years back. The bill also would increase IRS funding by $80 billion over 10 years to add more IRS agents to harass the American public. However that bill is receiving a lot of push back, including from banks. 

The Post was told by tax law experts that the report from CRS puts a magnifying glass on the long-standing controversy, however it isn’t new news. They noted that the IRS doesn’t have the resources to make sure that all S corporations aren’t trying to cheat system where it concerns what counts as salary.

Bob Willens, a corporate tax expert and adjunct professor at Columbia University’s business school says that each case is “unique” and “the question remains whether the compensation exacted from his corporation was ‘reasonable.’”

Willens said, “…in my view, the case can easily be made that reasonable compensation should be multiples of $300,000. Whether the IRS would be willing to make that case, however, is questionable given the identity of the shareholder.”

In other words, if you’re a politically connected hack like Biden, the rules likely don’t necessarily apply to you.

John Bogdanski is a former member of the IRS Commissioner’s Advisory Group and a professor at Lewis & Clark law school. He said that the political debate of the use of S corps had gone on for decades and had previously impacted some prominent politicians including former Sen. John Edwards (D-NC) and former Republican Speaker of the House Newt Gingrich (R-GA).

He noted that Biden wouldn’t have to pay Medicare taxes on the portion of income made off the labor of other people, which he noted can be impossible to determine. He said that wealthy people generally skew things in their favor and are able to get away with it.

“There are millions—literally millions—of S corporations. So there might be a half a million S corporations that are playing this game. And the IRS doesn’t have anywhere near enough of a budget to bring a half a million cases every year.”

Meanwhile David Gamage, a tax law professor at Indiana University Bloomington said:

“…the general view among tax experts is that it’s quite easy for taxpayers to get away with this form of tax planning to the point of it being very abusive. This is not the sort of tax planning that should be going on as a matter of tax policy, but it’s very hard for the IRS to police,” he said.

“I hope that increased attention to this issue, whether that be through focus on a President Biden using this form of fax planning or more generally, would increase the case for reform. I think the case for both increased IRS funding and for substantive law reform this area is overwhelmingly strong,” Gamage said.

The Post reached out to the White House for comment, and no immediate response was received. Biden’s campaign previously said that “the salaries earned by the Bidens are reasonable and were determined in good faith.”

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Law Enforcement Today actually reported something similar to this last November just days before the election based on some outstanding work from The Federalist. For more on that, we invite you to:

DIG DEEPER

The following article contains editorial content written by a retired Chief of Police and current staff writer for Law Enforcement Today

WILMINGTON, DE- We have heard ad-nauseum Democrats claiming that President Trump has “avoided” paying income taxes and had only paid $750 in taxes, while ignoring the fact that the president had in fact paid millions of taxes in the form of the AMT or Alternative Minimum Tax.

That point was ignored by Fox News’ Chris Wallace in the first presidential debate in September. What Wallace should have been doing is investigating Joe Biden’s own skirting of paying taxes. We’ll explain.

Prior to the debate, Biden conveniently released his 2019 tax returns. This was of course a publicity stunt, so Biden could say that he made his tax returns public. However, as always, the devil is in the details.

Christopher Jacobs in The Federalist, however found those details. If you’ve been following Biden’s “campaign,” one common theme that he’s been complaining about is a claim that President Trump is going to gut Obamacare. Biden has continuously claimed  to be a strong supporter of the so-called Affordable Care Act. However, Jacobs found out that Biden does not put his money where his mouth is.

Jacobs had noted in 2019 that based on Biden’s 2017 and 2018 tax returns, the Biden’s implemented a tax avoidance strategy which enabled them to avoid over half a million dollars in Medicare and Obamacare taxes. After digging in to the Biden’s 2019 tax returns, they did the same thing last year.

For all of Biden’s wailing about President Trump not paying taxes, he has his own tax avoidance strategies to answer for. So, how did this work?

According to Jacobs, Joe and Jill Biden took income from book royalties and speaking fees and channeled it through two S-corps—CelticCapri Corporation and Giacoppa Corporation. The Biden’s made sure to pay themselves small, modest salaries through the corporations and paid Social Security and Medicare taxes on that modest income.

The book and speech income—which amounted to over $13.5 million—was taken not as wages, but as profits from the two corporations. What did that accomplish? It allowed the Biden’s to avoid paying payroll taxes on that $13.5 million. Pretty nice little windfall. It works as follows.

Social Security taxes, Jacobs says, is only applied to the first $132,900 of income in the year 2019, they didn’t avoid paying taxes that fund SS.

However, Medicare taxes apply to ALL income, as well as the 0.9% “high-income” tax which was created in Section 9015 of Obamacare, which is levied on all wage income over $200,000 for an individual, $250,000 for a family.

By taking their income as corporate profits, Jacobs said, Joe and Jill Biden avoided paying the combined payroll tax of 3.8% on the $13.5 million in income received between 2017 through 2019.

Bidens shorted IRS 0,000 in Medicare taxes over two years, non-partisan group says
Biden 2017-2019 Taxes Avoided info obtained https://thefederalist.com/2020/09/30/why-doesnt-anyone-ask-joe-biden-why-hes-dodging-obamacare-taxes/

The reason for the apparent significant drop last year is likely attributed, Jacobs says, to reduced speaking fees after Biden began his presidential campaign.

So, for all Biden’s whining and moaning about President Trump not paying “income tax,” and trying to gut Obamacare, Joe and Jill Biden have been avoiding paying into Obamacare like the rest of Americans are stuck with.

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As Jacobs notes, over three years the Biden’s avoided paying over half-a-million dollars in taxes, a significant amount.

In laymen’s terms, the Biden’s avoided $391,912 in Medicare taxes between 2017-2018, while the Urban Institute found a couple with average earnings, retiring this year would pay a combined $161,000 in Medicare taxes during their working career.

The above graph should be run by the Trump campaign twice an hour, every hour on every major network in the country. Americans are getting played by the Democrats and the Biden campaign about the tax issue when Biden himself has been gaming the system.

Still, the Biden campaign, Jacobs said, continues to run ads in which Biden claims that Obamacare “is personal to me.”

Democrats are hoping to create fear in people by claiming the Supreme Court will overturn the ACA and Biden has given the illusion that the act is “personal” to him. If that is truly the case, Jacobs posits, why did the Biden’s go out of their way to avoid paying Obamacare taxes?

Democrats have been demanding the release of Trump’s tax returns and the attorney general in New York filed suit in order to gain access. They claim it is for what they call “nonpartisan oversight purposes,” however where is the call for an IRS audit of Biden’s taxes?

In 2017, Biden earned $10 million in corporate profits, yet paid himself a measly salary, which Jacobs notes might actually be a violation of IRS compensation guidelines.

Biden has also been making the claim that President Trump is attempting to “gut” Social Security. When the president implemented a partial suspension of the payroll tax earlier this year, Biden called it:

“…the first shot in a new, reckless war on Social Security. Our seniors and millions of Americans with disabilities are under enough stress without Trump putting their hard-earned Social Security benefits in doubt.”

As Jacobs noted in a Wall Street Journal op-ed in August, the maximum payroll tax that would have been $1984—which was less than 1/250th the amount Biden circumvented in 2017-2018.

Jacobs said that in 2017 and 2018, Social Security tax only applied to the first $127,200 of income in 2017 and $128,400 in 2018. Under Biden’s tax plan the 12.4% Social Security tax would apply on income over $400,000, which means the same loophole he used in 2017-2018 would protect him from his own tax. How convenient.  

Biden is a hypocrite, plain and simple. He takes the typical “good for thee, but not for me” mantra and applies it to his taxes. He wants everyone else to pay for Social Security, Medicare, and Obamacare but not he and his wife.

Unfortunately, we do not have a media who is interested in facts and truth. They are only interested in propping up Biden, a clearly cognitively declining man who should be sailing into the sunset of his years instead of running for the most important position in the world. They focus on the president’s tax returns and ignore Biden’s. And that is a crime.

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