TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, September 22, 2017

The IRS Scandal, Day 1597: New Details Of Targeting Of Conservative Groups Emerge In Tea Party Lawsuits

IRS Logo 2Cincinnati Enquirer, New Details Emerge in Tea Party Suit Against IRS:

The IRS used the political views of conservative "tea party" groups trying to get nonprofit status as a reason for extra scrutiny and continued delaying applications until 2013 — long after they said they'd stopped — new federal court filings allege.

The new accusations counter previous IRS claims that agents did not consider political beliefs when slowing down tax-exempt applications from right-leaning groups in the months leading up to the 2012 presidential election.

The IRS had instead argued that it was merely monitoring whether the groups were conducting more political activity than was allowed.

The filings by conservative groups suing the IRS also state the agency continued the practice after IRS officials said it had stopped in 2011. ...

"By trying to make this about whether this was done to help Obama win is setting the goalpost artificially too high," Eddie Greim, a lawyer representing conservative groups in the class-action suit, said in an interview with The Enquirer. "All we have to prove is whether they had the intent and if they indeed treated a set of groups differently based on their ideology. ...

U.S. Sen. Rob Portman, R-Terrrace Park, who was one of the first in Congress to publicly complain in 2012 about the IRS' possible discrimination against conservative nonprofit groups, said that the practice was "an appalling abuse of power" in a statement to The Enquirer. “It’s clear that the Obama administration’s IRS illegally and intentionally targeted conservative groups for their ideological beliefs, and those responsible ... need to be held accountable," Portman said. ...

[O]thers testified in depositions that Lerner ordered IRS agents to send requests for additional information from the affected groups following that 2011 meeting. That included requests for donor information, normally considered off-limits. Lerner "wanted everyone to know that we are handling the cases as we should," testified Cindy Thomas, the top nonprofit official in Cincinnati at the time.

"So after they were told that this was possibly improper, they doubled down and kept going," Greim said. "This goes well beyond the narrative of what's been reported before."

Greim also said that the IRS removed two Washington agents who had raised questions about the extra scrutiny on the tea party cases. "These two found that ideology was indeed being used, raised questions about it and told their superiors about it and that it was going to cause delay," Greim said. "And wouldn't you know it, they were moved off the matter soon thereafter."

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September 22, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, September 21, 2017

IRS FAQs Are A Trap For The Unwary

IRSFAQMarketWatch, What the IRS Does on its Website That’s Unfair to Taxpayers:

Taxpayers can’t rely on Frequently Asked Questions (FAQs) and answers and other “unofficial” guidance that the IRS posts on its website, National Taxpayer Advocate Nina Olson recently explained in a blog post [IRS Frequently Asked Questions Can Be a Trap for the Unwary]. While tax professionals already know about this issue, you may find it unsettling. Here’s what you need to understand.

Unofficial guidance
The IRS puts out what it calls unofficial guidance in many forms. Unofficial guidance includes IRS tax forms and instructions (believe it or not), press releases, online publications, website articles, and website FAQs and answers. Such unofficial guidance is generally not subject to careful internal review or public commentary before being released. Worse yet, the IRS takes the position that taxpayers cannot rely on unofficial guidance even though the IRS has put it out there for public consumption. For example, FAQs and answers that are posted at www.irs.gov can be changed at any time and without any public notice. Ditto for information in IRS publications that are posted on its website. So if you rely on unofficial IRS guidance in taking a position on a federal tax return, the IRS can potentially audit you and assess additional taxes, interest, and even penalties because you did not “follow the rules” even though what you did was consistent with what the IRS said at the time. Not good!

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September 21, 2017 in IRS News, Tax | Permalink | Comments (0)

Friday, September 15, 2017

TIGTA: 64% Of The IRS's Information Technology Is Beyond Its Useful Life

TIGTAThe Treasury Inspector General for Tax Administration has released Sixty-Four Percent of the Internal Revenue Service's Information Technology Hardware Infrastructure Is Beyond Its Useful Life (2017-20-051):

The overall objective of this review was to determine the efficiency and effectiveness of key ongoing or planned activities aimed at addressing the IRS operational challenge of replacing its aged hardware infrastructure.

While the Sustaining Infrastructure Program spends on average nearly 99.7 percent of its allocated budget each year, the IRS has not yet achieved its stated objective of reducing its aged information technology hardware to an acceptable level of 20 to 25 percent. In fact, this percentage has steadily increased from 40 percent at the start of Fiscal Year 2013 to 64 percent at the start of Fiscal Year 2017. The IRS estimates that the current replacement cost for its aged information technology hardware is approximately $430 million.

Figure 1

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September 15, 2017 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

Thursday, September 14, 2017

The IRS Scandal, Day 1589: The Better IRS Reform

IRS Logo 2

Wall Street Journal editorial, The Better IRS Reform:

The long saga of Lois Lerner is coming to a close. Ms. Lerner was the infamous Obama Administration cat’s paw at the Internal Revenue Service, which harassed conservative political groups in the Tea Party era. Now the Trump Justice Department has decided there is no cause to pursue criminal charges against Ms. Lerner, and Congressional Republicans are howling. ...

Republicans are furious. But this mess happened because the Obama Administration used federal bureaucracies for raw political purposes. If Mr. Sessions’s Justice Department has found no way to prove criminal intent beyond a reasonable doubt, Republicans could begin the road back to accountability by respecting that decision.

What House Republicans should do now is create a structure that will stop assaults by bureaucrats on political activity. They’ve been putting riders in spending bills to bar the IRS from imposing restrictions on nonprofit speech. But this thumbs-in-the-dike approach does nothing about powers that IRS functionaries already have over political activity.

The solution is to get the IRS out of the political arena by limiting its role to the most basic administrative task of giving initial approval to nonprofits. Transfer to the Federal Election Commission the job of deciding whether a nonprofit is abiding by the existing rules governing political spending. The FEC’s commissioners would decide if complaints against the political activities of nonprofits had merit.

Democrats will rebel because the design of the FEC makes it difficult to sic the commission on political enemies. That’s why they made the IRS their political enforcer. Legislators designed the FEC to prevent partisans from turning it into a political weapon.

It takes a majority vote among its six bipartisan FEC commissioners to proceed with a judgment. Commissioners are confirmed by the Senate and operate in the open. The status quo gives this job—and power—to the IRS’s unconfirmed, unseen federal bureaucrats.

Campaign-finance fights make Republicans nervous, but they’ve got a political self-interest in permanently transferring this job to the FEC. Once back in power, Democrats will mobilize a crackdown against their single biggest obsession—“dark money.” Meaning the conservatives who fund their opposition.

Lois Lerner’s IRS operation was the swamp at its worst. The GOP would do the country’s politics a favor by draining these bureaucrats of partisan political power.

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September 14, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, September 13, 2017

Reforming Tax Administration

The current discussion about tax reform is focused on reforming substantive tax law and not tax administration.  Last April, however, a group of tax practitioner organizations put out a paper calling for tax administration reform.  You can find the proposal on the AICPA website here.

The nine practitioner organizations include the AICPA, the National Association of Enrolled Agents, and the National Association of Tax Professionals.  Notably absent from the list of practitioner groups are the main tax lawyer organization, the ABA Section on Taxation.

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September 13, 2017 in ABA Tax Section, IRS News, Tax, Tax Practice And Procedure | Permalink | Comments (1)

Tuesday, September 12, 2017

The IRS Scandal, Day 1587: Judicial Watch Says Trump Should Overrule His DOJ And Order A Full Review Of The IRS Scandal

IRS Logo 2

Town Hall, Judicial Watch: DOJ Giving Lerner a Pass is Bogus and Trump Should Order a Full Review of the Scandal:

Last week the Department of Justice, led by Attorney General Jeff Sessions, announced prosecutors will not pursue charges against former IRS official Lois Lerner. Lerner is infamous for her deliberate targeting of conservative tea party groups between 2010 and 2012 while leading the tax exempt department inside the agency.

The news was immediately met with outrage by House Ways and Means Chairman Kevin Brady, who said the failure to reopen the case against Lerner (which was closed without charges under the Obama administration) only proves that Washington bureaucrats are held to a much lower standard than every day Americans living outside the protective D.C. bubble. ...

Judicial Watch, which is still pursuing documents related to the IRS targeting scandal and has for years, proving Lerner was at the heart of the targeting, is buying none of it and calling on President Trump to intervene.

"I have zero confidence that the Justice Department did an adequate review of the IRS scandal. In fact, we’re still fighting the Justice Department and the IRS for records about this very scandal. Today’s [Friday's] decision comes as no surprise considering that the FBI collaborated with the IRS and is unlikely to investigate or prosecute itself," Judicial Watch President Tom Fitton released in a statement. "President Trump should order a complete review of the whole issue. Meanwhile, we await accountability for IRS Commissioner Koskinen, who still serves and should be drummed out of office."

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September 12, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Saturday, September 9, 2017

The IRS Scandal, Day 1584: Trump’s DOJ Won’t Pursue Criminal Charges Against Lois Lerner

IRS Logo 2

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September 9, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (9)

Thursday, September 7, 2017

Dealing With IRS Scammers (And How To Tell They Are Not Private Debt Collectors)

Readers will recall that Congress, in §32102 of the 2015 (FAST) Act, amended IRC §6306 to force the Service to outsource some collection inventory to private collection agencies.

Now, I have no doubt that readers of this blog are totally compliant in their taxes.   And if any happen to be delinquent in their taxes, I have no doubt they are not in the category of delinquent taxpayers who face collection from private collection agencies.   But I also suspect many readers have received questions about the program from clients, friends, family members, workplace colleagues, neighbors, and others.

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September 7, 2017 in Gov't Reports, IRS News, Tax, Tax Practice And Procedure | Permalink | Comments (0)

The IRS Scandal, Day 1582: Is The IRS Scandal About To Break Wide Open?

IRS Logo 2PJ Media, Is the IRS Scandal About to Break Wide Open?:

Lost emails, destroyed hard drives, foot dragging, stonewalling, and a smirking, sneering IRS commissioner doing his best to obscure the truth -- this has largely been the response by the Internal Revenue Service to investigations by Congress and FOIA requests from conservative groups trying to discover the truth about the IRS targeting scandal.

But one federal judge appears to be just as curious as the rest of us about what exactly the IRS was up to when it targeted conservative groups for special scrutiny in approving their tax-exempt status. ...

Although the arrogance of the IRS is breathtaking, it looks like they may have more than they can handle with Judge Walton. With the agency already proving that it tried to hide documents directly related to a FOIA request, how much nonsense will Walton put up with? He better have a low tolerance for word games and shenanigans by the IRS.

More names means more witnesses to be deposed under oath. Perhaps some promises of immunity are in order so that the truth can be wrung out of an agency that has been used to target the political opponents of a president and materially affect the ability of conservative groups to exercise their rights.

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September 7, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, September 6, 2017

The (Lack Of) Human Touch In Collecting Taxes

The National Taxpayer Advocate Nina Olsen has a blog post here that is well worth your time to read.  It's about the Service's automated levy program called FPLP (Federal Levy Payment Program).  

One way the Service tries to collect unpaid taxes is by looking for people who owe the delinquent taxpayer money and snagging those payments.  That's called a levy.    FPLP is a computer program designed to snags payments owed by the federal government to delinquent taxpayers.  Now, some people consider it an irony that one hand of the federal government actually sends payments to many delinquent taxpayers who owe the federal government money. Notably, however, FPLP hits what are commonly viewed as "safety net" payments from Social Security and Federal Retirement programs.  So other people consider it an irony that one hand of the federal government would partially undo the safety net payments made by the other hand.

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September 6, 2017 in Gov't Reports, IRS News, Tax, Tax Practice And Procedure | Permalink | Comments (0)

Tuesday, September 5, 2017

The Tax Consequences Of Hurricane Harvey (And Other Natural Disasters)

Hurricane HarveyThe Service has put up a very useful and comprehensive webpage titled "Help for Victims of Hurricane Harvey."  The page contains excellent information about all the different actions the Service takes in response to a natural disaster and has links to all kinds of useful sites. 

The Texas State Comptroller has a similarly useful webpage that describes the state and local tax relief (such as exemption from hotel taxes).

 

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September 5, 2017 in IRS News, Tax, Tax Practice And Procedure | Permalink | Comments (2)

The IRS Scandal, Day 1580: Conservative Group Hoping For 'Perp Walks' After Breakthrough In IRS Lawsuit

IRS Logo 2Washington Examiner, Conservative Group Hoping for 'Perp Walks' After Breakthrough in IRS Lawsuit:

One of the groups that sued the Internal Revenue Service over its targeting of conservative and Tea Party groups believes there has been a breakthrough that will help them draw a more complete picture of what went on behind the scenes at the agency, four years after it took its case to court.

In a lawsuit involving True the Vote, Judge Reggie B. Walton of the U.S. District Court for the District of Columbia ordered the IRS last week to release the names of employees involved in targeting conservative and Tea Party groups. Walton also told the IRS to explain why groups were targeted and search for additional records in agency databases from May 2009 to March 2015.

The IRS has until Oct. 16 to complete its records search.

Walton's order was a turning point for True the Vote President Catherine Engelbrecht in her legal battle with the IRS that began in 2013.

"We've come so far, and I believe that we are going to bring this thing to a head," Engelbrecht told the Washington Examiner. "I believe we will see the IRS correct its ways, and as to accountability, I'd love to see some perp walks." ...

Engelbrecht ... said just learning the names of those involved isn't enough for her. Instead, she wants the IRS to enact a policy prohibiting viewpoint discrimination. "That's our whole goal — it's to make sure this viewpoint discrimination can never occur again. It is procedurally prohibited," Engelbrecht said. "That they admit what they did was unconstitutional and won't happen to an organization, an individual, doesn't matter your political party preference. The IRS has been weaponized and needs to be put back in the box."

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September 5, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Friday, September 1, 2017

The IRS Scandal, Day 1576: Will Justice Come For IRS Lawbreakers At Last?

IRS Logo 2Investor's Business Daily editorial, Will Justice Come For IRS Lawbreakers At Last?:

The IRS scandal seemingly has lain dormant now for months, all but forgotten amid the spate of recent anti-Trump media spasms, the ongoing violent antics of the antifa leftists and, now, Hurricane Harvey's devastation. But even if much of Washington has forgotten about it, a Washington judge hasn't.

As reported by the Washington Examiner, Judge Reggie B. Walton of the Washington, D.C., District Court last week revived legal attention to the scandal, telling the IRS it has to reveal the names of IRS employees who targeted conservative, libertarian and Tea Party groups.

But Walton didn't stop there. He also gave the IRS until Oct. 16 to find all the records in IRS databases from May 2009 to March 2015 that are relevant to the case and to explain just why these groups were targeted.

All of this is the result of a suit against the IRS brought in 2013 by True the Vote and 38 other groups. The groups have doggedly pursued the IRS for four years after the tax agency held up their tax-exempt status before and during the 2012 election year for what appear to be blatantly political reasons. In their search for justice, the groups have had little help from the mostly apathetic, left-leaning media that wish conservative groups would just go away. ...

Paul Caron, dean of the Pepperdine University School of Law and himself a tax lawyer, has kept a lonely vigil at his blog on the IRS' questionable actions in all this, running a virtually day-by-day account of the news behind the scandal, which as of Monday by his count was in its 1,572nd day (and counting).

With so little action, on Monday Caron wondered plaintively, "Why did it go away?" Well, we've wondered that too.

Caron quotes a piece from the Nonprofit Quarterly that notes that since May 2013 there have been "several congressional and other investigations but no criminal indictments or known personnel actions against  anyone involved in the targeting. ... The U.S. Justice Department launched an investigation, but in the midst of that investigation, they announced there would be no indictments." ...

By seeking maximum disclosure, Walton is doing yeoman's duty in making the IRS accountable. We wish him success in prying open the IRS' chest of dirty secrets.

But that's not enough. At the very least, it's time the U.S. Department of Justice stopped defending the indefensible, and started forcing the rogue tax-collection agency and its former executives to answer for its politically motivated crimes. As the old saying goes, justice delayed is justice denied.

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September 1, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, August 31, 2017

Karen Hawkins Named Chair Of ABA Tax Section

HawkinsNews Release, Former IRS Official Karen L. Hawkins to Chair ABA Section of Taxation:

Karen L. Hawkins of Yachats, Ore., has been selected to chair the American Bar Association’s Section of Taxation, the nation’s largest organization of tax lawyers. Hawkins will serve a one-year term, to be succeeded by Eric Solomon, of Washington, D.C., who will serve this year as chair-elect.

Hawkins served as the director of the IRS Office of Professional Responsibility (OPR), where she oversaw the standards of practice for tax professionals. Prior to government service, she was a partner in the San Francisco law firm of Taggart & Hawkins PC, where she specialized in civil and criminal tax controversy. ...

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August 31, 2017 in ABA Tax Section, IRS News, Tax | Permalink | Comments (2)

Wednesday, August 30, 2017

The IRS Scandal, Day 1574: Why Are Trump’s Justice Department Appointees Protecting The IRS?

IRS Logo 2The Daily Signal, Why Are Trump’s Justice Department Appointees Protecting the IRS?

Various media sources have reported that federal District Court Judge Reggie Walton has ordered the IRS to finally respond to various legal requests for information and documents made by the conservative tea party organizations that sued the agency.

But the question that no one is asking is why that order was even necessary, and why the Justice Department, which is now supposedly under the control and authority of the new administration, hasn’t reversed its obstinate, inflexible, and stubborn defense of the IRS. ...

[T]he Tax Division of the Justice Department, which is currently headed by acting Assistant Attorney General David A. Hubbert, has put up a mulish fight defending the IRS, including doing everything it can to prevent the IRS from having to provide any of the information and documentation that the plaintiffs are seeking about the targeting.

[T]he IRS — after four years of delays — is going to finally have to tell us who (in addition to Lerner) planned, organized, and participated in the abuse of the government’s tax power to target Americans for their participation in the political process, their opposition to Obama and liberal policies, and their support for the Constitution and the rule of law.

Walton’s order is a significant victory for the plaintiffs in this lawsuit. But why were this hearing and this order even necessary in the first place?

As soon as President Donald Trump was inaugurated and the first members of the Trump transition team landed at the Justice Department, one of the first steps they should have taken was to order the Tax Division to stop its deliberate litigation strategy of fighting all attempts to ferret out what exactly happened at the IRS, and who was responsible for it.

Instead, the Justice Department has continued to obstruct discovery in this lawsuit that has been going on for four long years, resulting in Walton’s Aug. 17 order against the IRS and the Justice Department. ...

What are the political appointees at the Justice Department doing? Why are they continuing to protect the IRS? Why are they trying to stop the efforts to find out who at the IRS was responsible for this abusive behavior?

And while we are on the subject of the IRS scandal, why haven’t Trump’s political appointees at the Justice Department reversed the refusal of Ronald Machen, former U.S. attorney for the District of Columbia, (who was an Obama appointee) to enforce the contempt citation issued by the House of Representatives against Lerner for her refusal to cooperate with the congressional committee investigating this abusive conduct?

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August 30, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, August 28, 2017

The IRS Is Mining Taxpayer Data On Social Media In Violation Of Federal Privacy Law

Social Media IRSKimberly Houser & Debra Sanders (Washington State), The Use of Big Data Analytics by the IRS: Efficient Solutions or the End of Privacy as We Know It?, 19 Vand. J. Ent. & Tech. L. 817 (2017):

This Article examines the privacy issues resulting from the IRS’s big data analytics program as well as the potential violations of federal law. Although historically, the IRS chose tax returns to audit based on internal mathematical mistakes or mismatches with third party reports (such as W-2s), the IRS is now engaging in data mining of public and commercial data pools (including social media) and creating highly detailed profiles of taxpayers upon which to run data analytics. This Article argues that current IRS practices, mostly unknown to the general public are violating fair information practices. This lack of transparency and accountability not only violates federal law regarding the government’s data collection activities and use of predictive algorithms, but may also result in discrimination.

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August 28, 2017 in IRS News, Tax | Permalink | Comments (10)

The IRS Scandal, Day 1572: Why Did It Go Away?

IRS Logo 2Nonprofit Quarterly, Whatever Happened to the IRS Tax Exemption Scandal?:

On Friday, May 10, 2013, IRS Exempt Organizations Director Lois Lerner told a stunned audience of tax attorneys in Washington that the IRS had delayed and obstructed the tax exemption applications from conservative-sounding organizations. Later that month, the U.S. Treasury Inspector General made public a report confirming and detailing the nature of the targeting. What began as a governmental investigation had become a legal battle between nonprofits seeking what they believed to be information and resolution on the one hand and the federal government asserting claims of protecting taxpayer and employee confidentiality on the other.

As NPQ has chronicled in dozens of articles, the ensuing four years and counting since May 2013 have included several Congressional and other investigations but no criminal indictments or known personnel actions against anyone involved in the targeting. ... The U.S. Justice Department launched an investigation, but in the midst of that investigation, they announced there would be no indictments. Various Congressional committees attempted to ferret out what happened and who did it but were stymied by the IRS’s slow responses to records requests and, in some cases, destruction of computer media which might have contained important information.

The Congressional investigations rapidly became partisan, with Republicans insistent that crimes had been committed and that senior officials had to be held accountable for actions which affected hundreds of organizations and may have even affected the conduct of the 2012 elections. Democrats saw the GOP-led investigations as a partisan witch hunt targeting career IRS employees and used as a political talking point to harass President Obama specifically. Democrats also objected to the continued use of the IRS budget as a coercive tool to force IRS officials to cooperate in the investigations, and justifying decreasing funding for IRS operations by pointing to what Republicans said was obstruction. The investigations didn’t so much end as they petered out as politicians moved on to other topics. ...

Meanwhile, nonprofit organizations like Judicial Watch, Cause for Action, the American Center for Law and Justice (ACLJ), and others have used Freedom of Information Act (FOIA) requests and legal challenges to aggressively pursue the facts and circumstances surrounding the actions of IRS personnel. In addition, many of the targeted nonprofit organizations (most were eventually approved for tax exemption after awaiting a decision for up to seven years) have pursued their own legal cases in federal court.

Bloomberg BNA recently published a status report on the litigation. The text of the article has since been removed in favor of an audio report, but Paul Caron’s TaxProf Blog includes snapshots of the key cases: ...

Détente in this intergovernmental cold war will likely come only when change and accommodation comes from the IRS or when Congressional control switches parties. In the meantime, the continuing lawsuits and the long memories (not to mention political interests) of some elected officials portend more budgetary and regulatory stress at the IRS for the indefinite future.

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August 28, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, August 24, 2017

The IRS Scandal, Day 1568: (Still) Seeking IRS Accountability

IRS Logo 2Wall Street Journal editorial, (Still) Seeking IRS Accountability:

The Obama Justice Department dismissed the IRS political targeting scandal as no big deal, and the Trump Administration hasn’t been any better. At least the judiciary is still trying to hold someone to account for this government abuse.

In a little noticed decision last week, federal Judge Reggie Walton ordered the IRS to answer a series of questions by Oct. 16. Notably, the tax agency must finally explain the specific reasons for the specific delays in approving each of dozens of conservative nonprofit applications—delays that stifled free speech during a midterm and presidential election. Judge Walton is also requiring the IRS to name the specific individuals that it holds responsible for the targeting.

These are basic questions of political accountability, even if the IRS has stonewalled since 2013. President Obama continued to spin that the targeting was the result of some “boneheaded” IRS line officers in Cincinnati who didn’t understand tax law. Yet Congressional investigations have uncovered clear evidence that the targeting was ordered and directed out of Washington. ...

The Trump Administration also has a duty to provide some answers. The Justice Department and IRS have continued to resist the lawsuits as doggedly as they did in the Obama era. Attorney General Jeff Sessions can change that by ordering government attorneys to quickly and fully comply with Judge Walton’s orders. Seven years is too long to wait for answers over abuses of the government’s taxing power.

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August 24, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, August 19, 2017

The IRS Scandal, Day 1563: Judge Orders IRS To Disclose Names Of Employees Who Targeted Conservative Groups And To Prove That It Has Stopped The Practice

IRS Logo 2Washington Times, Lay It on the Line’: Judge in Tea Party Case Orders IRS to Disclose Employee Names, Reasons:

A federal judge on Thursday ordered the IRS to name the specific employees the agency blames for targeting tea party groups for intrusive scrutiny and said the government must prove it has ceased the targeting.

Judge Reggie B. Walton also said the IRS must explain the reasons for the delays for 38 groups that are part of a lawsuit in the District of Columbia, where they are still looking for a full accounting of their treatment.

Judge Walton approved another round of limited discovery in the case and laid out six questions that the IRS must answer, including the employees’ names, why the groups were targeted and how the IRS has tried to prevent a repeat.

At a hearing earlier this week, Judge Walton said it was time to get everything on the table. “Lay it on the line. Put it out there,” he told attorneys for the IRS, who are continuing to fight some tea party groups’ demands for full disclosure. ...

Judge Walton came down in the middle, writing his own set of inquiries for the IRS. “Why hide the ball?” he asked the tax agency. “If there’s nothing there, there’s nothing there.” Mr. Walton told the IRS to go beyond searching a basic agency database for records and ordered it to scour “other relevant resources containing documents from the relevant time period.”

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August 19, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, August 17, 2017

The IRS Scandal, Day 1561: Why Hasn't Trump Drained The IRS/DOJ Swamp?

IRS Logo 2Wall Street Journal:  Trump’s IRS Swamp: Obama-era Lawyers Are Still Obstructing Lawsuits to Hold the Agency Accountable, by Kimberley A. Strassel:

Donald Trump promised to drain the swamp, and here’s a seven-month progress report: The Washington bog is still as wide and fetid as ever. Consider that Mr. Trump’s Justice Department has inexplicably continued to defend the IRS’s misdeeds under President Obama.

Voters put a Republican in the White House in part to impose some belated accountability on the scandal-laden Obama administration. And the supreme scandal was the IRS’s assault on tea-party groups—a campaign inspired by congressional Democrats, perpetrated by partisan bureaucrats like Lois Lerner, and covered up by Mr. Obama’s political appointees. This abuse stripped the right to political speech from thousands of Americans over two election cycles. To this day, no one has answered for it.

The groups targeted are still doggedly trying to obtain justice through lawsuits that have dragged on for years. They believed Mr. Trump’s election would bring an end to the government obstruction. It hasn’t. “The posture of the DOJ and the IRS under the Trump administration is identical to the posture under the Obama administration,” Mark Meckler, president of Citizens for Self-Governance, tells me. “Nothing has changed.” ...

The problem is that the same old Obama-era lawyers have been left to run these cases in the same old hostile ways. Who are these people? Laura Beckerman, one of the lead lawyers defending the IRS in the Ohio class action, left government only this month. Her LinkedIn profile says she is now pro bono coordinating counsel at Citizens for Responsibility and Ethics in Washington. CREW is among the most liberal outfits in the capital, fanatically devoted to taking down conservatives. That’s the type still calling the shots in Mr. Trump’s bureaucracy.

The Justice Department’s job is to defend the government, but it is also supposed to pursue justice. And there is no question the IRS did wrong. It has been documented by the Treasury Department’s inspector general and admitted by the IRS itself. It’d be one thing if the plaintiffs were demanding a billion-dollar payout, but they aren’t. Their main request is that the IRS come clean on what happened, and the government is resisting with all its power. The real question is why the Justice Department is even fighting this suit, when it ought to be leading a renewed investigation into what happened and how it got covered up.

It’s time for some judgment. Senior leaders in the Justice Department may be wary of replacing or redirecting attorneys on the IRS cases, fearing it might provoke another round of media caterwauling. The White House may be wary of canning Mr. Koskinen, thinking it would be cast as another high-profile firing. But Mr. Trump was hired to impose exactly that sort of accountability. If he’s going to get rapped for dramatic moves, it might as well be for doing something that serves justice.

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August 17, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, August 16, 2017

Death Of Harry Grubert

GrubertHarry Grubert, longtime Senior Research Economist in the Office of Tax Analysis at the U.S. Treasury Department, has died at age 81 after a long illness.  From Dan Shaviro:

Harry had more knowledge about U.S. international taxation than any other living individual. I'm not referring to legal knowledge, of course, as he was an economist — albeit, an exceptionally well-informed one about the law. But his long years of research and study regarding U.S. multinational firms, based on tax data that he understood better than anyone else, made him an extraordinary resource, almost like a public utility in light of his kind generosity and willingness to share what he knew.

He was also a leading scholar who developed a number of interesting and important international tax reform ideas (often in coauthored work with Rosanne Altshuler), and one whose research yielded innumerable consequential empirical findings — for example, regarding the costs associated with U.S. multinationals keeping their funds tied up abroad.

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August 16, 2017 in IRS News, Obituaries, Tax | Permalink | Comments (0)

Tuesday, August 15, 2017

The IRS Scandal, Day 1559: Checking In On IRS-Tea Party Lawsuits

IRS Logo 2Bloomberg BNA, Checking in on IRS-Tea Party Lawsuits:

Republicans continue to call for restricting IRS funding and restructuring the agency to ensure there isn’t a repeat of a scandal caused when IRS employees stalled some applications of conservative groups seeking tax exemptions. The IRS has said it worked to resolve the issue.

Still, several lawsuits are pending between the agency and conservative groups seeking tax-exempt status. The IRS declined to comment on them. As part of occasional updates on the status of the disputes, here is where some high-profile cases stand now:

NorCal Tea Party Patriots  The IRS Aug. 2 defended its actions in the class action, saying it was within its rights to review exemption applications carefully, but it also acknowledged that it delayed some applications inappropriately (NorCal Tea Party Patriots v. IRS, S.D. Ohio, No.1:13-cv-00341, 8/2/17). ... A trial is set for Feb. 5, 2018.

True the Vote   ... True the Vote in April withdrew two discovery requests: evidence of the IRS using viewpoint-based criteria in tax administration and evidence of the political positions of IRS employees (True the Vote, Inc. v. IRS, D.D.C., No. 1:13-cv-00734, 4/5/17).

Linchpins of Liberty  An Aug. 15 hearing is scheduled on a motion requiring the government to release documents the Linchpins groups requested (Linchpins of Liberty v. United States, D.D.C., No. 1:13-cv-00777, 7/26/17). ...

Freedom Path  The Freedom Path case is set for a June 18, 2018, trial (Freedom Path, Inc. v. IRS, N.D. Tex., No. 3:14-cv-01537, 8/9/17). ... The IRS initially said Freedom Path didn’t qualify as a social welfare group, exempt under Section 501(c)(4) because it didn’t operate just to promote social welfare. The group applied for its exemption in 2011 and sued the IRS in 2014.

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August 15, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, August 13, 2017

WSJ: Number Of Americans Caught Underpaying Estimated Taxes Surges 40%

Wall Street Journal Tax Report, Number of Americans Caught Underpaying Some Taxes Surges 40%:

Attention gig workers, retirees, business owners and investors: Double-check your estimated-tax payments to Uncle Sam.

For reasons that aren’t clear, a growing number of people who pay taxes quarterly are getting their payments wrong and incurring penalties as a result. These taxpayers often owe estimated taxes because they have income that’s not subject to the same withholding as wages earned by employees.

According to Internal Revenue Service data, the number of filers penalized for underpaying estimated taxes rose nearly 40% between 2010 and 2015 — to 10 million from 7.2 million. 

WSJ

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August 13, 2017 in IRS News, Tax | Permalink | Comments (0)

Thursday, August 10, 2017

The IRS Scandal, Day 1554: Why Is Trump's Justice Department Still Fighting Disclosure Of Documents Revealing IRS Targeting Of Conservative Groups?

IRS Logo 2Wall Street Journal op-ed:  Obama IRS Abuse Should Unite Trump and Sessions, by Jerome Marcus:

[H]ere’s an issue on which Messrs. Trump and Sessions should be able to find common ground: The Justice Department should stop defending Obama administration corruption.

I’m referring to the cases, still on file today, challenging or seeking to expose Internal Revenue Service policies that delayed applications for tax-exempt status from conservative groups. That’s viewpoint discrimination, a clear First Amendment violation.

The Obama Justice Department fought these cases intensely. It tried to get them thrown out of court before the plaintiffs had the chance to gather evidence. When that failed, Justice lawyers resisted discovery, to prevent disclosure of documents showing what the Obama administration was really doing.

That’s normal behavior for a defendant in a lawsuit. But since Jan. 20, the Justice Department has reported to Mr. Trump, who denounced each of the corrupt policies at issue in these cases.

So why is the department handling the cases as if it were still run by Eric Holder or Loretta Lynch? Because many of the career lawyers who were put on these cases by Obama Justice Department officials continue working on them, with no supervision from this administration. Those lawyers are still doing now what they have always done: fighting as hard as they can to prevent disclosure of what the Obama IRS, and the rest of the Obama administration, was doing to the country. ...

The government lawyers in all these cases are working hard to prevent anyone from finding out what the Obama administration was doing. Cleta Mitchell, who has represented tea-party organizations in the IRS viewpoint-targeting scandal, says Justice Department lawyers “have been stalling, obfuscating and doing all they can in these cases to avoid holding the IRS accountable.”

That’s true even though all these lawyers now work for President Trump. And it’s true even though Mr. Trump knows full well that the Obama IRS violated the Constitution by discriminating against opposing viewpoints. ...

Messrs. Trump and Sessions, as well as Deputy Attorney General Rod Rosenstein and Associate Attorney General Rachel Brand, should all be able to agree on this. The executive branch, through the Justice Department, can on its own agree to release the desired information and end these cases, without any permission from Congress or CNN. That would lighten the workload at Justice and shine sunlight on clearly improper Obama policies.

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August 10, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Wednesday, August 9, 2017

TIGTA: The IRS Continues To Rehire Hundreds Of Former Employees With Conduct And Performance Issues

TIGTAThe Treasury Inspector General for Tax Administration has released The Internal Revenue Service Continues to Rehire Former Employees With Conduct and Performance Issues (2017-10-035):

From January 1, 2015, through March 31, 2016, the IRS hired nearly 7,500 employees, of which more than 2,000 had been previously employed by the IRS. ... The IRS has not effectively updated or implemented hiring policies to fully consider past IRS conduct and performance issues prior to making a tentative decision to hire former employees, including those who were terminated or separated during an investigation of a substantiated conduct or performance issue.

While most employees who are rehired do not have prior conduct or performance issues, TIGTA found that more than 200 (approximately 10 percent) of the more than 2,000 former employees who were rehired between January 2015 and March 2016 were previously terminated from the IRS or separated while under investigation for a substantiated conduct or performance issue.

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August 9, 2017 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

Tuesday, August 8, 2017

GAO: IRS Provides Only 'Minimal Oversight' Of Low Income Housing Tax Credit Program, Refuses To Collect Data That Would Allow It To Impose 'Basic Accountability'

GAO (2016)NPR, Housing Program Worth Billions Lacks 'Basic Accountability':

An $8 billion federal program to build housing for the poor is so lacking oversight that virtually no one in government knows how it is working, a government auditor testified before Congress today [Low-Income Housing Tax Credit: Actions Needed to Strengthen Oversight and Accountability (GAO-17-784T) (Aug. 1, 2017)].

IRS and no one else in the federal government really has an idea of what's going on," said Daniel Garcia-Diaz, an auditor with the Government Accountability Office while testifying before the U.S. Senate Committee on Finance. "These are basic accountability requirements we would expect of any program, especially one as important as this one."

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August 8, 2017 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1552: The IRS's Email Retention Policies Still Do Not Ensure That Emails Are Retained And Produced When Requested

IRS Logo 2Treasury Inspector General for Tax Administration, Electronic Record Retention Policies Do Not Consistently Ensure That Records Are Retained and Produced When Requested (2017-10-034):

IRS policies do not comply with certain Federal requirements that agencies must ensure that all records are retrievable and usable for as long as needed. For example, IRS e-mail retention policies are not adequate because e-mails are not automatically archived for all IRS employees. Instead, the IRS’s current policy instructs employees to take manual actions to archive e-mails by saving them permanently on computer hard drives or network shared drives.  

This policy has resulted in lost records when computer hard drives are destroyed or damaged. In addition, a recently instituted executive e-mail retention policy, which should have resulted in the archiving of e-mails from specific executives, was not implemented effectively because some executives did not turn on the automatic archiving feature.

For certain cases that TIGTA reviewed, IRS policies were not implemented consistently to ensure that all relevant documents were searched and produced when responding to external requests for records. TIGTA’s review of 30 completed Freedom of Information Act requests found that in more than half of the responses, the IRS did not follow its own policies that require it to document what records were searched. TIGTA also found that IRS policies for preserving records from separated employees were not adequate.

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August 8, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, August 7, 2017

Senate Confirms David Kautter As Assistant Treasury Secretary For Tax Policy

KautterFollowing up on previous posts (links below):  the Senate has confirmed David Kautter as Assistant Secretary of the Treasury for Tax Policy.  From President Trump's nomination announcement:

Mr. Kautter currently serves as Partner-in-Charge of the Washington National Tax practice for RSM, an audit, tax, and consulting services firm. He was also previously the Managing Director of the Kogod Tax Center and Executive-in-Residence at the Kogod School of Business at American University (AU).

Prior to his work at AU, Mr. Kautter spent over 30 years at Ernst and Young, including serving as Director of National Tax for over 13 years. Mr. Kautter also worked on Capitol Hill as Tax Legislative Counsel for former Senator John C. Danforth of Missouri. He is a high honors graduate of the University of Notre Dame and received his J.D. from Georgetown Law Center. 

From his webpage at American University's Kogod Tax Center:

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August 7, 2017 in Congressional News, IRS News, Tax | Permalink | Comments (0)

Monday, July 31, 2017

The IRS Scandal, Day 1544:  How Lois Lerner Begat Robert Mueller

IRS Logo 2Wall Street Journal:  Mueller Is Trumping Congress, by William McGurn:

Did Congress learn anything from Lois Lerner? Judging from Capitol Hill’s self-abasing deference to Special Prosecutor Robert Mueller, the answer is no.

You remember Ms. Lerner. She was the official at the center of an Internal Revenue Service effort that denied conservative political advocacy groups tax-exempt status, or at least held up approval long enough that these groups could not be a factor in the 2012 election.

Back when Republicans were holding hearings on the matter, time and again they were lectured not to do anything that might affect the FBI’s investigation — which eventually ended with no charges against anyone. Though Ms. Lerner was found in contempt by the House for her refusal to testify, it proved all for show.

The tip-off came when then-Speaker John Boehner, rather than use Congress’s inherent contempt power to jail Ms. Lerner until she talked, opted for classic swamp symbolism — by passing the buck to an Obama Justice Department everyone knew would never prosecute her.

The result? Ms. Lerner avoided having to answer any hard questions. The IRS merrily continued to lose or destroy crucial documents. And John Koskinen, the awful replacement IRS commissioner who stonewalled and misled, remains in office.

The Lois Lerner fiasco offers a sobering lesson for a Congress whose various committees are holding hearings on Russia’s intervention in last year’s elections as Mr. Mueller investigates the same. While Mr. Mueller’s office is a watered-down version of Ken Starr’s or Lawrence Walsh’s , it remains true that special prosecutors corrupt even if they don’t corrupt as absolutely as independent counsels. The main headlines of the past week — Is Donald Trump attempting to undermine Mr. Mueller? Will Trump Fire Mueller? — all speak to the challenge a special prosecutor poses to the constitutional authority of the president.

Far less scrutiny has been devoted to the challenge Mr. Mueller poses to the authority of the legislative branch. In this case, ironically, the challenge stems less from the aggressiveness of the special prosecutor than from the meekness of Congress. In between their public tributes to Mr. Mueller’s sterling character, too many in Congress seem to worry more about how they might be affecting his investigation than about what his investigation might be doing to theirs.

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July 31, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Tuesday, July 4, 2017

One Of The Best Investments The Government Can Make: Give More Money To The IRS

Fiscal Times, One of the Best Investments the Government Can Make: Give More Money to the IRS:

The Internal Revenue Service is the agency of the federal government that most people love to hate. As a result, it has been used as a political punching bag on and off for almost as long as it has been in existence. The most recent trend in politicians demonstrating their contempt for the national tax collector — other than trying to get its commissioner impeached — is to starve the agency of funding.

However, despite major budget reductions — or perhaps partly because of them — the agency had been doing more with less over the past several years. One of the metrics the IRS uses to measure its performance is by comparing the amount of money the agency receives from Congress to the amount it collects in taxes due, expressing the result in the cost to collect $100.

In 2015 and 2016, that figure stood at $0.35 per $100, down from $0.53 as recently as 2010. It’s also the lowest cost per $100 collected that the agency has recorded since at least 1981, according to the IRS 2016 Data Book.

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July 4, 2017 in IRS News, Tax | Permalink | Comments (2)

Friday, June 30, 2017

National Taxpayer Advocate Releases 2018 Objectives Report To Congress

NTA 2National Taxpayer Advocate Nina Olson has released her FY 2018 Objectives Report To Congress:

Ms. Olson states that the IRS ran a generally successful filing season. But she says taxpayers who require assistance from the IRS are continuing to face significant challenges obtaining it. While taxpayer services and enforcement activities are both essential for effective tax administration, Ms. Olson says taxpayer services require more emphasis than they are currently receiving. She recommends the IRS expand its outreach and education activities and improve its telephone service and that Congress both provide the IRS with sufficient funding to provide high quality taxpayer service and conduct more oversight to ensure the IRS is spending the funding as intended.

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June 30, 2017 in IRS News, Tax | Permalink | Comments (0)

Saturday, June 24, 2017

Debt Collectors Urge Taxpayers To Raid 401(k)s, Use Credit Cards To Pay Delinquent Taxes

NY Times Dealbook (2013)New York Times Deal Book, Outside Collectors for I.R.S. Are Accused of Illegal Practices:

Raid your 401(k). Ask your boss for a loan, load up on your credit cards, or put up your house as collateral by taking out a second mortgage.

Those are some of the financially risky strategies that Pioneer Credit Recovery suggested to people struggling to pay overdue federal tax debt. The company is one of four debt collection agencies hired by the Internal Revenue Service to chase down late payments on 140,000 accounts with balances of up to $50,000.

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June 24, 2017 in IRS News, Tax | Permalink | Comments (0)

Monday, May 22, 2017

Private Investigator's Attempt To Obtain Donald Trump's Tax Return Led IRS To Shut Down FAFSA Data Retrieval Tool; Who Hired Him?

FAFSAIRSFollowing up on my previous posts:

Diverse Issues in Higher Education, FAFSA Hacker Targeted Trump Tax Info:

The person accused of a 2016 attempt to use a web-based federal student-aid tool to illegally obtain taxpayer information is a Louisiana-based private investigator who used the tool to target then-presidential candidate Donald J. Trump, court records obtained by Diverse show.

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May 22, 2017 in IRS News | Permalink | Comments (0)

Monday, May 15, 2017

Grewal:  Congress Handcuffs The IRS

Andy Grewal (Iowa), The IRS Gets Handcuffed by the Congress, Yale J. on Reg.: Notice & Comment (May 3, 2017):

The House and Senate recently reached agreement on a comprehensive spending bill and expect to pass it soon. Regarding the IRS, the bill freezes the agency’s budget at $11.2 billion and thus does not, as some feared, make substantial cuts to its funding. Nonetheless, the IRS may face hardships, because its funding remains significantly below its 2010 level ($13.6 billion) while its responsibilities have greatly expanded in recent years, especially because of the Affordable Care Act.

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May 15, 2017 in Congressional News, IRS News, Tax | Permalink | Comments (2)

Saturday, May 13, 2017

President Trump Nominates David Kautter To Be Assistant Secretary For Tax Policy

KautterFollowing up on my April 3 post, David Kautter To Be Named Assistant Secretary For Tax Policy: White House Press Release, President Donald J. Trump Announces Key Additions to his Administration:

David J. Kautter of Virginia to be an Assistant Secretary of the Treasury, Tax Policy. If confirmed, Mr. Kautter will serve as Assistant Secretary of the Treasury for Tax Policy.  Mr. Kautter currently serves as Partner-in-Charge of the Washington National Tax practice for RSM, an audit, tax, and consulting services firm. He was also previously the Managing Director of the Kogod Tax Center and Executive-in-Residence at the Kogod School of Business at American University (AU).

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May 13, 2017 in IRS News, Tax | Permalink | Comments (0)

Saturday, May 6, 2017

IRS Seeks Grant Applications For Funding Low Income Taxpayer Clinics

LITC (2017)The IRS has announced (IR-2017-94) that it is accepting grant applications through June 20 for Low Income Taxpayer Clinics  for the 2018 grant cycle (Jan. 1 - Dec. 31, 2018):

The LITC program is a federal grant program administered by the Office of the Taxpayer Advocate at the IRS, led by the National Taxpayer Advocate, Nina E. Olson. The LITC program awards matching grants of up to $100,000 per year to qualifying organizations to develop, expand or maintain an LITC. An LITC must provide services for free or for no more than a nominal fee.

 

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May 6, 2017 in IRS News, Tax | Permalink | Comments (0)

Thursday, May 4, 2017

The IRS Scandal, Day 1456:  The Impact Of The Sixth Circuit's Decision In NorCal Tea Party Patriots

IRS Logo 2Haley A. Stence (J.D. 2017, Cumberland), Comment, United States v. NorCal Tea Party Patriots: Has the IRS's Ability to Engage in Political Activities, Negatively Target Nonprofit Organizations, and Hide Behind 26 U.S.C. § 6103 Ended?, 40 Am. J. Trial Advoc. 201 (2016):

In the wake of the 2016 United States presidential election, it is difficult to think that debates, billboards, and television commercials are not the only sources of political uproar. Although it is common knowledge that the media can often times portray and even promote a political agenda, it is disturbing to uncover litigation accusing government entities of promoting their own positions on public policy and hiding behind statutory law to protect those decisions. In 2013, the Internal Revenue Service (IRS) and its employees were accused of improperly targeting conservative political organizations that apply for tax-exempt status as nonprofit organizations. To protect its internal actions regarding the alleged improper targeting, the IRS invoked 26 U.S.C. § 6103 in order to keep controversial documents confidential and out of the hands of disgruntled plaintiffs. Section 6103 asserts that tax returns and the information contained within them are confidential and that no representative of the government can disclose this information unless one of the specific and limited exceptions within the statute has been met. Using 26 U.S.C. § 6103 as a shielding device, the IRS claimed the information disgruntled plaintiffs sought-mostly applications and internal documents- was taxpayer "return information" and thus "protected from disclosure by § 6103."' Giving deference to tax courts, circuit courts have historically upheld this determination in similar situations.

Nonetheless, on March 22, 2016, in the case of United States v. NorCal Tea Party Patriots, the United States Court of Appeals for the Sixth Circuit disagreed with this interpretation and determined that tax exempt application information is not "return information," and thus not protected from § 6103 disclosure. The Sixth Circuit's ruling directly contravenes a previous District of Columbia Circuit ruling on the issue and is likely to expose attempts by the IRS to intervene in United States politics via the tax-exemption application process and 26 U.S.C. § 501(c)(3). This Comment discusses the basics of §§ 501(c)(3) and 501(c)(4), the attempts by the IRS to engage in politics using § 501(c), the conflicting holdings and United States circuit courts' various interpretations of § 6013 protection for the IRS, and the future implications of the circuit split created by the Sixth Circuit's holding in NorCal. ...

Conclusion:  The Possible Impact of the Sixth Circuit's Interpretation of "Return Information
"The fervent hope of many is that the Sixth Circuit's decision in United States v. NorCal Tea Party Patriots will force into the light any possible wrongdoing on the part of the IRS. Although the Sixth Circuit's holding is considered a narrow interpretation, some believe practitioners should not get the impression that much has changed outside the Sixth Circuit. An important item of note is that the holding would apply only to documents already in the possession of the IRS that include upon submission "names, addresses, and taxpayer-identification numbers of applicants for recognition of exemption, not to other information included in their applications." IRS Commissioner John Koskinen has expressed concern that such personal and identifying information on other types of IRS filings might not be covered by § 6103 after the Sixth Circuit's holding. "Additional filings with the IRS that may not be returns under section 6103 include requests for taxpayer advocate service assistance (Form 911) and applications for filing extensions...."

Admittedly, it is possible that additional information that had previously been determined confidential under § 6103, may not remain confidential, even if the taxpayer would prefer that it did. Primarily, the interpretation of the Sixth Circuit was in regards to information provided on applications for tax-exempt status. "[F]ormer IRS Exempt Organizations Division Director Marcus Owens has suggested ... the decision should not reach identifying information for applicants under section 501(c)(3) because such applicants are required to file to claim tax-exempt status .... Thus, it is possible the information provided within a 501(c)(3) application would have been information previously filed in a tax return, and thus considered return information protected from disclosure by § 6103. Additionally, the Sixth Circuit's interpretation "only applies to identifying information for the applicant, not the rest of the information contained in the application." Lastly, NorCal arguably only applies within the Sixth Circuit, and the many cases from other jurisdictions may instead follow the D.C. Circuit's precedent or may undertake the issue as a matter of first impression.

All things considered, for plaintiffs hoping to bring IRS political activity into the public light, the Sixth Circuit appears ready to take on in-depth analysis in order to help shine light into the dark recesses of historical targeting by an agency that should not be engaging in politics.

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May 4, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, May 2, 2017

Papers From The 2016 IRS-TPC Research Conference On Tax Administration

TPCIRSThe IRS has released the papers from the 2016 IRS-TPC Joint Research Conference: on Tax Administration (program, abstracts, research bulletin):

Foreword

1. Interventions: Influencing Taxpayer Compliance

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May 2, 2017 in Conferences, IRS News, Scholarship, Tax | Permalink | Comments (0)

Sunday, April 23, 2017

The IRS Scandal, Day 1445:  'True The Vote v. IRS' Lawyer: 'The Deep State Is Still Operating'

IRS Logo 2PJ Media, 'True the Vote v. IRS' Lawyer: 'The Deep State Is Still Operating':

A prominent constitutional attorney is sounding the alarm over Obama administration-style behavior by attorneys in President Trump's new administration. Jim Bopp, Jr., the attorney for the plaintiff in the landmark Citizens United suit, told PJ Media that he has seen no change in the attitude of government attorneys since Trump's inauguration:

The Deep State is still operating, no question. ...

I see no evidence the attitude of the IRS has changed. We have a new attorney general, and the Department of Justice is providing the lawyers to defend the IRS in this case. We've seen no change.

Bopp is currently involved with two similarly high-profile suits against the federal government and he says the Trump administration's defense attorneys are presenting arguments indistinguishable from those he faced during Obama's tenure.

In True the Vote v. IRS, election integrity watchdog True the Vote sued the federal government in 2013 over its targeting of pro-liberty non-profit groups for extra scrutiny. This case has wide implications for all non-profits that claimed their tax status was denied or delayed by Lois Lerner and a rogue IRS. ...

It boggles the mind that the IRS in a Trump administration would still be defending the actions of Lois Lerner and the notorious branch in Cincinnati. They had burdened groups with "Tea Party," "Liberty," "Constitution," and other related words in their title with mountains of extra paperwork to affirm their non-profit tax status. Yet, according to Bopp, that is indeed the case. ...

Bopp's observations come amid a renewed push by House Republicans to reopen the case against Lerner for possible prosecution. On April 9, House Ways and Means Committee Chairman Kevin Brady and Tax Policy Subcommittee Chairman Peter Roskam sent a letter to Attorney General Jeff Sessions requesting he reopen the probe.

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April 23, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, April 22, 2017

The IRS Scandal, Day 1444:  Judicial Watch Sues IRS Over Email Preservation

IRS Logo 2Press Release, Judicial Watch Sues IRS Over Email Preservation:

Judicial Watch today announced that it filed a Freedom of Information Act (FOIA) lawsuit against the Internal Revenue Service (IRS) to obtain records relating to the agency’s “preservation and/or retention” of the email records of officials who have left the agency since January 2010. (Judicial Watch v. Internal Revenue Service (No.1:17-cv-00596)). The suit was filed as part of Judicial Watch’s continuing efforts to gain information about the IRS’ targeting of conservative groups and citizens during the Obama administration.

Judicial Watch filed the complaint after the IRS failed to respond to a November 15, 2016, FOIA request seeking:

  • All records concerning the preservation and/or retention of email records generated by IRS officials and employees upon their departure from the IRS; and
  • All records related to any changes, updates, or modifications to IRS policies and procedures for the retention of email records generated by IRS officials and employees.

The timeframe for the request is for records from January 1, 2010, to the present.

“Judicial Watch doesn’t trust the IRS, especially given its dishonesty about Lois Lerner’s emails,” said Judicial Watch President Tom Fitton. “The IRS was used by Obama and his allies to suppress his political opposition in a way that helped guarantee his re-election. Now we need to make certain that the IRS is not continuing to try to cover its tracks by destroying records.”

Judicial Watch’s litigation forced the IRS first to say that emails belonging to Lois Lerner, former director of the Exempt Organizations Unit of the IRS, were supposedly missing and later declare to the court that the emails were on IRS back-up systems.  Lerner was one of the top officials responsible for the IRS’ targeting of President Obama’s political opponents.

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April 22, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, April 21, 2017

Weekly Tax Roundup

Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog):

Monday, April 17, 2017

Diane Ring, Panama Papers: The One-Year Anniversary (Surly Subgroup). "At its core, the leak revealed the true ownership of over 200,000 offshore entities, thereby raising a host of tax and political questions regarding many of the entities’ owners."

Jack Townsend, Court Denies Motion to Dismiss Counts Against Tax Shelter Lawyer. “I will cut and paste Judge Rakoff’s discussion about § 7212(a) which I think offers good review for tax crimes lawyers.”

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April 21, 2017 in IRS News, Tax, Weekly Tax Roundup | Permalink | Comments (0)

NY Times:  The IRS Enlists Debt Collectors To Recover Overdue Taxes, 'Placing A Bull’s-Eye On The Backs Of Low-Income Taxpayers' And 'Putting Out Barrels Of Honey For Scammers'

IRS Logo 2Following up on Tuesday's post, The IRS's Use Of Private Debt Collectors Will Not End Well (Again):  New York Times, I.R.S. Enlists Debt Collectors to Recover Overdue Taxes:

The Internal Revenue Service is about to start using four private debt-collection companies to chase down overdue payments from hundreds of thousands of people who owe money to the federal government, a job it has handled in house for years.

Unlike I.R.S. agents, who are not usually allowed to call delinquent taxpayers by telephone, the outside debt-collection agencies will have free rein to do so. Consumer watchdogs are fearful that some of the nation’s most vulnerable taxpayers will be harassed and that criminals will take advantage of the system by phoning people and impersonating I.R.S. collectors.

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April 21, 2017 in IRS News, Tax | Permalink | Comments (0)

Thursday, April 20, 2017

The IRS Scandal, Day 1442:  Editorial Calls For Firing IRS Commissioner Koskinen

IRS Logo 2Washington Examiner, Fire IRS chief John Koskinen:

President Trump needs a win. The public would benefit from reassurance about the institutions of government. Luckily, both can be achieved with a single action. Trump should dismiss IRS Commissioner John Koskinen.

By telling the taxman he's fired, the president would re-energize his young administration. More importantly, he would also significantly reform the most loathed agency in Washington. Tax Day provides a perfect chance for this sort of principled populism. ...

So long as Koskinen stays in his job, taxpayers have no such assurance. He was brought in by President Obama to clean up the IRS in 2013, but has succeeded only in making the agency more corrupt. A political crook and a liar, Koskinen has no place working in the Trump administration. ...

But Koskinen set himself above the rules. Trump vows to drain the swamp, and the IRS boss is an especially capable and devious swamp monster. House Republicans have tried shaming, censuring, and even threatening to impeach him. But each time, he's found a way to survive.

The failure of past lawmakers provides Trump a perfect opportunity. As the head of an administrative agency, Koskinen serves at the pleasure of the president. A word from Trump would send him packing and bring closure to the controversy.

A principled power move, firing Koskinen would also provide the White House with a needed influx of political capital. What's more, it would signal the beginning of a new era of good government during the Trump era.

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April 20, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, April 19, 2017

The IRS Will Issue Tax Refunds This Year In Forever Stamps Rather Than Cash

Forever 2The Onion, IRS Announces Refunds Will Come In Form Of Forever Stamps This Year:

Stating that the policy change represented the kind of reform taxpayers have long demanded, the IRS announced Tuesday that all refunds for the 2016 fiscal year will be disbursed in the form of Forever stamps. “Persons anticipating a refund will receive a ream of Forever stamps equal to the expected amount within six to eight weeks of filing their taxes,” said IRS commissioner John Koskinen, explaining that someone with a $500 tax refund, for example, will receive an envelope containing 1,020 stamps, or roughly 51 booklets of the 49-cent postage.

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April 19, 2017 in IRS News, Tax | Permalink | Comments (5)

Tuesday, April 18, 2017

Chodorow:  The IRS's Use Of Private Debt Collectors Will Not End Well (Again)

Slate (2017)Slate:  The IRS Is Using Private Debt Collectors Again. And It May Not End Well, by Adam Chodorow (Arizona State):

Last year, Congress authorized the Internal Revenue Service to use private debt collectors to go after unpaid tax liabilities — and this month, if you are one of the unfortunate, you may have already had the pleasure first-hand. The U.S. Treasury hopes to assign up to 1,000 delinquent accounts a month to each of four different companies, which will be able to keep 25 percent of the tax bills they collect.

We’ve been here before — twice, in fact — and the government actually lost money. It is not at all clear why this time should be different. And even if the program does save the government money, as its proponents promise, turning over delinquent tax accounts to private debt collectors raises a host of issues that should give us pause. ...

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April 18, 2017 in IRS News, Tax | Permalink | Comments (3)

Monday, April 17, 2017

Camp:  Are We Ready For A Federal Ready Return System?

Camp (2017)TaxProf Blog op-ed:  Are We Ready for a Federal Ready Return System? Or Who Ya Gonna Call?, by Bryan T. Camp (Texas Tech):

This is the time of year where thoughtful people raise what seems like a very basic question: why does preparing taxes have to be so complicated? For example, in a recent New York Times op-ed [Filing Taxes in Japan Is a Breeze. Why Not Here?], Mr. T.R. Reid opines that our government should be able to what governments in other countries do: pre-populate tax forms. Mr. Reid says that in these other countries (Japan and the Netherlands are the two he cites),

[t]he taxpayer just has to check the numbers. If the agency got something wrong, there’s a mechanism for appeal. Our own Internal Revenue Service could do the same for tens of millions of taxpayers. For most families, the I.R.S. already knows all the numbers — wages, dividends and interest received, capital gains, mortgage interest paid, taxes withheld — that we are required to enter on Form 1040.

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April 17, 2017 in IRS News, Tax | Permalink | Comments (2)

Sunday, April 16, 2017

The IRS Scandal, Day 1438:  Sessions Is Noncommittal On GOP Request To Reopen DOJ Probe Of Lois Lerner

IRS Logo 2WND, Sessions 'Will Evaluate' Request to Probe IRS Boss: GOP Lawmakers Charge Lois Lerner Criminally Targeted Tea Party:

Attorney General Jeff Sessions was noncommittal when asked in an interview whether he would fulfill a request by Republican lawmakers to review evidence that former IRS official Lois Lerner engaged in criminal misconduct by targeting tea-party and conservative groups for their political beliefs.

“Are you inclined to open an investigation of Lois Lerner and the IRS?” asked Boston talk-radio host Howie Carr Thursday.

Sessions hesitated.

“Well, I would, I’m, uh, interested in that letter,” he said.

“We’re going to respond to it, and I think it would be appropriate to review certain cases, and we’ll evaluate this one for possible review,” the attorney general said.

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April 16, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, April 15, 2017

The IRS Scandal, Day 1437: Lois Lerner Fears For Her Life, Asks Federal Court To Seal Her Upcoming Deposition Testimony

IRS Logo 2Washington Times, Lois Lerner Demands Secrecy, Blames Death Threats Over IRS Tea Party Targeting:

Former IRS senior executive Lois G. Lerner told a federal court this week that she faces the possibility of death threats if her role in the tax agency’s tea party-targeting becomes public, and asked a judge to forever seal her upcoming deposition in a class-action lawsuit brought by hundreds of groups that were targeted.

Mr. Lerner and Holly Paz, another figure from the IRS tea party targeting, told the judge they’ve already faced “harassment and death threats” before, and said they fear another media firestorm if their version of events from the tea party targeting were to become public.

The two women said they are willing to testify, but said they could be putting “their lives in serious jeopardy.”

“Mss. Lerner and Paz have demonstrated that the public dissemination of their deposition testimony would expose them and their families to harassment and a credible risk of violence and physical harm,” they said in documents submitted by their lawyer to Judge Michael R. Barrett. ...

The class action lawsuit involves 428 groups who were snared by the IRS targeting procedures. That case, which is being heard in a federal court in Ohio, is in the discovery phase, and Ms. Lerner and Ms. Paz are supposed to give testimony. ...

Meanwhile, in Washington, D.C., two cases brought by tea party groups are proceeding. A judge on Wednesday granted limited discovery in those cases, ordering the IRS to detail its past and current approval processes for tax-exempt organizations. Judge Reggie B. Walton also said the groups could depose Tamera L. Ripperda, a former IRS employee who ran the Cincinnati office that processed the applications. The groups also can depose the unnamed IRS employee who currently holds that same post.

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April 15, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (11)

Thursday, April 13, 2017

The IRS Scandal, Day 1435: House GOP Tax Writers Ask Attorney General To Reopen Criminal Investigation Of Lois Lerner

IRS Logo 2Letter from Kevin Brady (Chair, Ways & Means Committee) & Peter Roskam (Chair, Subcommittee on Tax Policy) to Attorney General Sessions (Apr. 12, 2017):

On April 9, 2014, the House Committee on Ways and Means voted to send a letter to the Department of Justice referring former IRS Exempt Organizations Division Director Lois G. Lerner for criminal prosecution.  As indicated in the attached letter, the Committee’s nearly three-year investigation uncovered evidence of willful misconduct on the part of Ms. Lerner.  Despite this fact, and for what many believe were purely partisan reasons, the prior Administration refused to review Ms. Lerner’s misconduct.  For the reasons described below, I respectfully request the Department of Justice to take a fresh look at the evidence presented in the attached referral in order to restore taxpayers’ trust in the IRS.

In particular, the Committee found that Ms. Lerner used her position to improperly influence IRS action against conservative organizations, denying these groups due process and equal protection rights under the law.  The Committee also found she impeded official investigations by providing misleading statements in response to questions from the Treasury Inspector General for Tax Administration.  Finally, Lerner risked exposing, and may actually have disclosed, confidential taxpayer information, in apparent violation of Internal Revenue Code section 6103 by using her personal email to conduct official business. 

As you know, your predecessor brought no charges against Ms. Lerner or any other IRS employees involved in the improper targeting of organizations applying for tax-exempt status. 

Disturbingly, in February 2014, while the investigation by the Department of Justice (DOJ) was ongoing, President Obama stated there was “not a smidgeon of corruption” at the IRS, preempting a fair investigation in which he had political equities.  It is clear that when the DOJ announced in October 2015 that it would not bring charges against Lois Lerner, the agency was following President Obama’s signal on how he wanted the investigation to be handled. 

Taxpayers deserve to know that the DOJ’s previous evaluation was not tainted by politics.  Again, I respectfully request that the Department of Justice to take a fresh look at the evidence presented in the attached referral in order to assure the American people that DOJ’s prior investigation was handled fairly and to restore taxpayers’ trust in the IRS.

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April 13, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Wednesday, April 12, 2017

The IRS Scandal, Day 1434:  How To Prevent The Next IRS Targeting Scandal

IRS Logo 2Tax Revolution Institute, How to Prevent the Next IRS Targeting Scandal:

We now know beyond a doubt that the Internal Revenue Service targeted and denied the nonprofit status of hundreds of organizations — mostly Tea Party and constitutionalist groups, but also those across the spectrum like Coffee Party USA — just in time for the 2012 presidential election. What we don’t know is whether anyone will be punished for this grand-scale corruption. ...

The 695-page release (PDF) of documents on April 4 — acquired thanks to a Freedom of Information Act request from Judicial Watch — is the final nail in the coffin, if there were any doubters still around. The fact that these documents remained under wraps during congressional hearings is itself worthy of condemnation.

Judicial Watch President Tom Fitton says there is no wonder why the IRS was reluctant to release these files: “The new smoking-gun documents contain admissions by the Obama IRS that it inappropriately targeted conservative groups.” Further, even when coming under scrutiny, “the abuse continued — as the Obama IRS tried to force conservative applicants to give up their First Amendment rights in order to finally get their applications granted.” ...

Not only will going after a few visible individuals not root out the bad faith, “American taxpayers are at risk for similar treatment in the future” — as noted by the Cause of Action Institute, another DC-based watchdog. CAI asserts that the targeting of politically relevant nonprofits with Special Case Reports (PDF) was and remains standard procedure. Their case rests on the little-known nonprofit red flags from Part Seven of the Internal Revenue Manual for IRS employees, which include whether the group might “generate significant publicity or controversy.” ... [W]e have to change incentives for the IRS and find solutions that go beyond the normal partisan brinkmanship. ...

What is politically plausible remains to be seen, be that a reworking of IRS procedures by the Congress or a more fundamental tax reform that places revenue collection in the hands of state governments. Perhaps the former can be an intermediate step before the latter.

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April 12, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)