The Fresno Bee from Fresno, California • 26

piywy C4 SUNDAY JULY 26 1998 THE FRESNO BEE H'Wwmw mw ff1 IRS: Experts fear the law will help cheaters avoid taxes Mistakes a big part of success fi Dairy: New law changes operations CaAfomla Is the nation's leading dairy producer and the San Joaquin Valley plays a major role in the Industry's ability to outproduce every other stats The eight vaHey vaHey counties from San Joaquin down to Kern combined for two-thirds of the dairy revenues In 1997 All eight rank among the state's top 10 counties In dairy cows cows per dairy and dairy revenues- 7 'V- San Joaquin Vallay dairy countiaa (Ranked by number of dairy cows) notice will allow a taxpayer to hide assets In addition so-called financial reality audits those of people who have lavish lifestyles but report modest incomes will be restricted to mm in which the agency has of unreported income Until now the IRS has had almost unlimited authority to conduct such audits New rules will also apply to property seizures a step the IRS takes about 10000 times a year In addition to requiring judicial review before the principal residence of a delinquent taxpayer or any member of his immediate family can be seized the legislation prohibits seizure of a home when $5000 or less is owed The measure also makes IRS to County Tulare Merced Stanislaus Kings Diky cows A Af 1 292500 160400 139200 103500 i A' San Joaquin Fresno Kern Madera Total viM'nViA-Miik Vu 85600 73700 43900 23100 921900 Xu 4 nltS i 8auroaKCaHtomiaDapartnwraafFo(xlandAgriouRurslU-8DspartnMntaf AgricuNum county agricultural commMonara Continued from Page Cl policies and strengthens the role of the taxpayer advocate ombudsman an internal omt Hie law also includes a tax cut of sorts a provirion that cuts to 12 months from 18 months the period that investors must hold stocks or other assets to qualify for the lowest capital gains tax rate now 20 for most people But Rep Bill Archer R-Tex-as who heads the House Ways and Means Committee and other sponsors of the legislation say its most important protection is in the shift of the Durden of proof from the taxpayer to the IRS in cases that reach United States Tax Court Archer says this change is intended to make the agency treat taxpayers with more re-the provision will spect though 1 directly affect no more than one tax return in 4500: only 28000 or so cases a year are brought in tax court and individuals filed 122 million returns this year The shift in the burden will ply only to those taxpayers have kept proper records and have cooperated folly in auditing before the case reaches tax court For taxpayers who prevail there the new measure will provide greater opportunities to recover accounting and legal costs Tax experts however say these changes will come at a price: Because IRS auditors know they will have to prove their case if it goes to court they will make greater demands on audited taxpayers to provide documentation to support their returns Other provirions in the law raise the ceiling to $50000 from $10000 for taxes in dispute in small-claims cases in which taxpayers typically represent themselves in tax court and authorize up to $6 million a year for tax clinics to help low-income people with their returns The law also vastly expands relief for joint filers who contend that they were unaware of tax cheating by spouses Taxpayers who can establish that they are "innocent will be liable only for taxes due on their own income the rule will apply both to new cases and to those now in dispute The measure also ban contact between auditors and appeals officers of the IRS unless the taxpayer is also present And tax agents must tell taxpayers if thqy are going to make contact with third parties such as employers or neighbors except in criminal cases or where the agency has reason to believe that such a Continued (him Page Cl Thqy are also seeking help from other federal agencies that include the Farm Service Agency and the Natural Resource Conservation Service I Daily operators are also tak- ing classes given by University of California form advisers and Mo- desto-based Western United Dairymen In those classes they learn of steps they can take including testing more and putting less nitrogen on their fields They are the first to point out they have no desire to waste nitrogen and that they as much as anyone are dependent on water that is not being poisoned "This industry should not expect to be treated any differently than any manufacturing industry" said third-generation daily-man Tony Oliveira of Lemoore who will become a member of the Kings County Board of Supervisors in January "For a long time we have op-tofs erated out of sight out of mind Now we have a lot more dairies and have gone from way down the ladder in national rankings for milk production all the way to the top At the same time in an urban state that is growing by leaps and bounds started out as a negative thing will be a positive thing because doing what we have to do to grow an industry that will sustain itself Oliveira has already cut the a fifth 1 size of his herd by of anticipated enforcement At a meeting of the American Society of Farm Managers and Rural Ap-in Visa lia days after praisers sentence Oliveira warned real estate as agents and lenders against entering into deals in which dairies lack the capability to handle their waste Along with Gary Conover vice president for governmental relations with the Western United Dairymen he warned of the consequences of increased enforcement that could also mean man dated purchase of more property to accommodate larger Conover said the stepped-up enforcement has caught many dairy operators off guard particularly because of years of laxity Conover was interviewed from Sacramento where he was working to press for legislation to help dairy operators cope with the stricter regulation He said thb increased enforcement has grown out of what he calls zero tolerance at the federal level that Bgys shall not not just ag but also applies to municipalities" he Baid kljfMMMn1i4na mum mm Am $La 4au can go to the taxpayer for assistance We agriculture need additional help be yond what the marketplace is offering in order to practice ronmental stewardship Conover and Oliveira fear small- to medium-sized dairies could be most hurt by increased enforcement because they lack the means to finance the steps toward compliance Conover likened the plight of those smaller dairies to that of small "mom and pop gas driven out of business in the 1980s by environmental requirements on underground tanks A California Dairy Quality Assurance Program developed by Western United has been in place for more than a year edu- 1937 (tomMlofts) $7187 '1' s' 375 3742 i 7 Ift'lt'M -V Ass 293 P'4- 2772 165 J45 4f 2322 1929 1184 a tv- V- 633 1578 $24178 6 THE FRESNO BEE "3V4 His region holds 650 dairies Though his staff has not encountered what he would term egregious abuses Wass suspects "there have been such "If we find something egregious take it as far as we can take he said Assistant US Attorney Richard Cutler who prosecuted Hettinga the Oakdale dairyman is equally zealous Cutler argues that the Hettinga case did not amount to opening against dairy operators out was "an indication the federal state and local government is taking seriously the issue of dairy Cutler pointed out that Hettinga was a multiple offender pleading guilty to 10 violations of the Clean Water Act "Some people understand subtle messages some people understand direct messages and some have to be hammered with a he Baid is not the only dairy fined Nor is it the first Last November the Central Valley Water Quality Control Board fined Silva Dairy of Modesto $50000 In January San Joaquin County fined two Acam-po-area dairies $80000 In six months some 30 citations have led to clean-up and abatement orders civil actions and criminal actions in the northern part of the Central Valley- And now the glare of enforcement is shining in the south end of the big Valley Hie Associated Press contributed to this report First 30 often said the greatest mistake a person can make is to oe afraid to make one To be successful you be afraid to make mistakes In fact you often need to increase your failures to become more successful Mistakes MANAU1M PEOPLE make you a failure Throughout history there have famous mistakes I remember an IBM story where a vice president took the initiative to develop a HantyMaikay new product that ended up costing the company $10 mil-nder Thomas lion IBM fou Watson called the executive to his office Certain he was about to lose his job the VP said guess you want my Watson replied "You must be kidding just spent $10 million educating you" If you think that was a big mistake consider the company that won the bid to construct the 100 miles of track for the Washington DC Bubway system for an estimated $793 million When it was finished it cost $66 billion The same company was awarded a contract to build the Saudi Arabian city of Jubail The initial cost projection was $9 billion but upon completion the bill came to $45 billion Henry Ford forgot to put a reverse gear in his first car -Thomas Edison once spent more than $2 million on an invention that proved useless These were colossal mistakes but face it everyone makes mistakes When Bette Nesmith of Dallas got a job as an executive secretary at a bank in 1951 she had a hard time getting used to the touch of electric typewriters With her experience as a holiday window designer she knew that artists erase over them So she mixed up some paint in a small bottle for the office and bought a watercolor brush Soon other typists wanted their own bottles Within a few years she was Belling 100 bottles of Liquid Paper a month Just try and get along without it now Now with computers we have undo delete cut-and-paste keys spell checkers and more The wizards at Microsoft know going to goof up and giving us every electronic option to fix it Mistakes are OK as long as you learn from them and repeat them As Confucius said "A man who has made a mistake and correct it is making another This was never more evident than in the story of the fellow who was explaining to his neighbor how he got a burn on his right ear was getting ready to my shirts and the phone rang I picked up the iron iron rang I picked up The neighbor replied then how did you burn your left ear?" same guy called back five minutes Mistakes are also OK as long as you lose too much an old East Texas Baying that adopted: "It matter how much milk you spill just so long as you lose the cow" Everyone makes plenty of mistakes You learn from them You change And you move forward The main thing to remember in making mistakes is that they should be a learning experience You must take risks and know you're going to win some and lose some Mackey's Moral: One mistake will never kill you The same mistake over and over will eating dairy operat salesmen and others in the in store feed dustry on the many regulations enforced tty more than a dozen 1 federal state and federal agencies Oliveira said it will likely be necessary to a definition for compliance dairy by "That means identifying what has to be he said "Many dairymen have no idea out of Riverdale dairyman Tom Mendes said "some dairies are reevaluating their long-term capabilities of staying in the "It has put a damper on any growth plans until we have a better sense of what going to Mendes said "Studies we have done with an outside consultant show us to be in The non-compliance that was noted in the 30 letters sent out by the Water Quality Control Board in Fresno included standing water and vegetation in areas said the ESK "None was a serious WaBS said In many it was simply a matter of pumping out standing water arranging for Boil tests or doming away vegetation that could be a tat for mosquitos Dairy farms commonly use large lagoons to store millions of gallons of waste water and ma- nure before distributing it on fields While proximity of surface water is a greater concern at the north end of the San Joaquin Valley the south end holds the prospect of ground-water pollution "We saw a lot of water standing in corrals and a threat to ground Wass said The notices of violation stipulated deadlines by which violations were to be corrected In many cases those in violation were told to supply photographs or other documentation that corrections had been made Followup inspections were ordered some instances Wamings went to dairies Tulare Chowchilla Hanford in Le moore Tipton Laton Visalia Strathmore Bakersfield River-dale and Madera The inspections and notices are not a one-time matter Wass said He expects his staff of inspectors will nearly double to collection agents subject to ttiatl laws similar to those that bar private-collection agents from making harassing or abusive telephone calls Further the interest rate for taxpayers who are owed refunds for more than 45 days will be increased by one percentage point the rate itself varies with the general level of interest rates to match the rate that the government charges those wno underpay or whose payments are past due Archer the chief tax writer in the House said the new law David the taxpayer a stronger slingshot to use against Goliath the Still though the law has been praised for earing strains on honest taxpayers caught up in disputes it has been criticized on another front: It will help tax cheats two former tax commissioners say changes will make it more difficult and more expensive to enforce the tax laws against people who pay" said Donald Alexander who was IRS commissioner in the Nixon and Ford administrations "And unless Congress provides more funds for enforcement which it then three changes will help some people get away with not paying" Sheldon Cohen who was IRS commissioner in the Johnson administration agreed time you give a deadbeat a Cohen said "it hurts me because I pay my taxes promptly and those who do are being Lee A Sheppard who critiques tax policy for the magazine Tax Notes said the mil would hamper IRS enforcement and collection efforts to such an extent that it "should be called the mobsters and drug dealers tax relief jlAi it ii i Celebration of Lifelong Learning EntoourMiq taws No Unit? Second 40 Thin) 30 Students through grade 12 mdy enter either or both aMnpetitions The theme for both competitions is Knows Ho Umits" Winners will be kdtured in a liresno Bee special section onSepL 10 GiadR7 8Dhi3 lbgnd(6 Essay Contest Please type Wleapritneaiiif oiMpfeLlirityov essay to dne IMKirMV JbtCoBtfst teign tie cover till Bee's riig bowhLjrfspecrisetirilke wiring etfrywl also fooKitat (mJlftfortslnrikBiifalngli riOidKwrioiperlig((iNgk tilemakardrtIhFelayoriKse i Divisions: Dkl Gndn9 12Di2 ir Zrn'mrn Harvey Mackay can be reached at: e-nudl Har-veyMackaycom Web rite or Mackay Envelope Corporation 2100 Kim St MlnriMpnlla MN 55414 I The Fresno Be8 Central CaRomiat Learing Newspaper tor 75 fears HElWe ye AM it A tl.