Morality of a Financial/Tax Matter

[stjosephtomasi]

is this a sin?

You realize a significant financial gain on one transaction. You realize a completely offsetting financial loss on another transaction. Upon completion of the two transactions, you have exactly the same amount of money that you started with.

The tax law in this particular case is written so that you must pay taxes on the transaction where you realized a gain, and you get no tax benefit or relief from the transaction in which you realized a loss.

But because you ended up with the same amount of money that you started with, you are unable to pay the required tax on the first transaction unless you borrow the money or undergo a significant financial restructuring.

Is it a sin to fail to pay the taxes due?

 

[stinkcat_14]

I think the answer is quite clear: “Render unto Caesar, that which is Caesar’s”, It may not be pleasant, but I imagine Roman tax laws were unpleasant too.

 

[puzzleannie]

if you are in the US I would get a new tax advisor

if you do really owe the tax and don’t pay, confession will take care of the sin, but it won’t stop the IRS from hunting you down

 

[stjosephtomasi]

I think the answer is quite clear: “Render unto Caesar, that which is Caesar’s”, It may not be pleasant, but I imagine Roman tax laws were unpleasant too.

There are probably exceptions to the above, particularly when the law is either poorly written or excessively burdensome. Would you agree?

 

[puzzleannie]

There are probably exceptions to the above, particularly when the law is either poorly written or excessively burdensome. Would you agree?

doesn’t matter if we agree, would the IRS agree? I think not and you can’t afford to duke it out with them. pay the tax, and get better tax advice next time.

 

[stinkcat_14]

There are probably exceptions to the above, particularly when the law is either poorly written or excessively burdensome. Would you agree?

I would imagine that many during the time of Jesus thought that the tax code was excessively burdensome. I am not sure that Jesus gave us an out for such situations.

 

[stinkcat_14]

if you are in the US I would get a new tax advisor

if you do really owe the tax and don’t pay, confession will take care of the sin, but it won’t stop the IRS from hunting you down

I could be wrong here, but wouldn’t restitution be required here as well? If I stole someone’s car, wouldn’t I be required to return the car in order to get forgiveness?

 

[JohnnyK]

being a CPA, what i think you are describing is offsetting a gain with a loss of another sale during the same time period. This is allowed in the tax code. Losses can also offset ordinary income up to $3,000 in a year (ie if you have losses but no gains to net against). Given this is ok under the law, i would not think it to be sinful or dishonest, as you are not cheating anyone, just working within the law.

now, if you manufactured charitable contributions (ie --I gave $3k to charity this year, but have no receipts )-that i would consider sinful as it appears on is trying to defraud the system.

 

[stjosephtomasi]

Here is what my parish priest said (and I agree with this response):

Moral Theology evaluates matters like this interms of principles of the virtue of Justice. Justice, in turn, rests
on the principles or proportionality and equity. In plain
language, one’s moral fault or lack of fault comes from a
balancing of objective duty vs. internal moral intent.

 If there is an inner intent of the will to defraud and deprive
   an entity such as the government, to whom we have some natural
   obligations such as the payment of taxes,  one may never intend
   to defraud, lie, misrepresent, or misreport.  On the other hand,
   one may legitmately (in the moral sense of that word) choose the
   more favorable or more lenient interpretation of a law (tax law)
   if in fact there is cause for doubt about the application of the
   law to specific circumstances that fall out of the ordinary
   sphere of the legislation.  That is what is meant by fairness or
   proportionality.  Would the lawmaker apply the law strictly or
   more leniently in a given situation?

 Barring a court ruling in tax court, the matter of undergoing a
   loss for reporting strictly the benefit of a gain would seem

from
a moral justice viewpoint as unfair just from the side of human
principles of fairness (equity). The English Common Law of past
centuries often ruled in favor of the right of individuals to
protect themselves against unjust hidden penalties that arose
not
from their own fault but from the fault of a law which didn’t
foresee their circumstances of incurring an unnecessary loss
while
trying to do the right thing. Protecting against losses caused
not by one’s own doing but by a weakness in a law has some
justification from a moral point of view so long as there is no
intent to do harm to the tax law itself or the government as
such.
The principle applied in such cases is very like the general
principle of self-defense when one is under assault.

In the example you gave, my judgment would be that there is no 
  sin, morally speaking, in applying the capital gains/losses
  provisions favorably to oneself.  IRS might see things

differently.
Our faith position is that the supremest of all courts is God.
The best legal forum is that of a well-formed conscience.

  This is the best answer I can give from the point of view of
  Moral Theology.

 

[stjosephtomasi]

The chaplain of Catholic Answers gave me this answer. I also agree with this:

Not every law is just. It is not immoral to break an unjust law, but one must be willing to pay the price for breaking it should such an act be discovered by the civil authorities. On the other hand, sometimes the common good requires that we deny ourselves.

You need to decide which applies to your situation. You are in my prayers.

 

[rwoehmke]

It matters a lot what type of transactions we are talking about. If you sold two parcels of stock and had a gain on one and a loss on another there is an offset. If you win at gambling, the winnings can be offset by a gambling loss, but one cannot offset a gambling gain with a loss in the stock market. Nor can one use a gambling lioss to offset a gain in the market. Sounds to me like you need advice from someone other than who you have been working with. A good CPA or Tax consultant.