What Would The IRS Do If This Happened To You?

You’ve just arrived home from work. As you walk through your front door, your wife hands you a cocktail.

“No problem,” you respond, as you take a sip from your cocktail. “I’ll just call up Federal Reserve Chairman Janet Yellen tomorrow. I’m sure she can help us make good on the shortfall. After all, the Fed has the authority to create money out of thin air.”

Of course, this scenario would never occur. While the Fed can create monetary reserves “ex nihilo” — literally, “out of nothing” — it acts on behalf of the US Treasury, not private citizens.

On the other hand, if you’re the Pentagon, losing $6.5 trillion is just another day at the office.

Indeed, in a report released in June, the Defense Department’s inspector general admitted that just one branch of the military, the Army, made $6.5 trillion in wrongful adjustments to accounting entries. In many cases, the Army had no receipts or even invoices to support those expenditures.

Incredibly, according to the report, in some cases the Army simply invented the adjustments out of thin air.

Just like the Fed.

In case you are wondering, this isn’t exactly a new problem. Back in 2001, former Department of Defense Secretary Donald Rumsfeld made this astonishing admission:

“According to some estimates, we cannot track $2.3 trillion in transactions.”

At the time, that amount represented more than $8,000 for every person living in the US. For the “lost” $6.5 trillion, the loss per US resident exceeds $20,000.

Obviously, $6.5 trillion is a lot of money. But what’s amazing is that almost no one in the Land of the Free is talking about it.

You can imagine the reaction of the IRS if you’re audited and it discovers you had $6.5 trillion in unreported income that you suddenly “lost.” Heck, even unreported income only one-billionth that size — $6,500 — could get you in trouble with the taxman.

I’d wager that $6.5 trillion is just the tip of the iceberg. How many trillions have the Air Force and Navy lost? What about expenditures by other federal agencies?

Now, it’s true that the military has unique difficulties when it comes to keeping track of expenditures. After all, US military forces are stationed in more than 150 countries. That fact, combined with the sheer scale of the Pentagon’s budget — $573 billion in 2016 alone — makes nailing down spending to the nearest penny or even the nearest dollar next to impossible. But it should be able to do better than the nearest $6.5 trillion.

It turns out that this cash actually came from Iraqi oil sales, surplus funds from the UN oil-for-food program, and seized Iraqi assets. But whatever its origin, it demonstrates the incredibly lax oversight the Pentagon exercises over multi-billion-dollar operations.

And consider what would happen if you decided to do something similar. Anyone entering or leaving the US with more than $10,000 in cash must complete a Treasury Form 105. And if you fail to do so? In that event, you face:

But that’s just not how it works at the Pentagon nor throughout the federal government. I’ve never heard of anyone being held accountable for the loss of the $6.6 billion in cash, must less the “missing” $6.5 trillion. Those who create the money out of thin air make the rules, and the recipients of those funds break them with impunity.
Maybe it’s time to consider your “Plan B.”

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.