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Saturday, December 20, 2014

The IRS Scandal, Day 590

IRS Logo 2The Blaze:  The IRS Must Be Put Down Like a Rabid Dog, by John Linder (former Member, U.S. House of Representatives, 1993-2011):

Since it was first disclosed that the IRS abused the taxpayers and the law, the Democrat refrain has been, “…it is clear that there was no White House involvement…” Well, now it is clear that there was White House involvement, but it is against the law to disclose it.

A watchdog group, Cause of Action, filed a Freedom of Information Act request for email between the IRS and the White House. They have been informed by the Treasury Department that 2,509 such emails exist, but: “These pages consist of return information protected by 26 U.S.C. § 6103 and may not be disclosed absent an express statutory exception. Because no such exception exists here, we are withholding those.”

So, it is a felony to disclose the information that the IRS disclosed to the White House unless Congress passes a statutory exemption that will not become law unless this president, who broke the law, agrees to sign the statute so that we can see how he broke the law. Fat chance!

That, dear reader, is why the much talked about tax reform in the new Congress will fail. Any tax reform that leaves a corrupt system in place will be abused again by future administrations as unscrupulous as the Obama administration. ...

[T]he IRS will be put down like a rabid dog. No agency of government should have the power to abuse our personal information for political gain, which the IRS has proven its willing to do.

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December 20, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, December 19, 2014

The IRS Scandal, Day 589

IRS Logo 2Forbes:  20 Facts About IRS Targeting, Those Emails And The White House, by Robert W. Wood:

The IRS scandal started 587 days ago in May 2013, but it actually goes back years earlier. President Obama’s testy “not even a smidgen of corruption” remark to Fox News in February 2014 showed fatigue. There was simply no evidence that the IRS was used for political targeting, he made clear. Maybe, but here are 20 things every American taxpayer should know about it: ...

What will item 21 be? Or 22 or 23? You don’t have to be a conspiracy theorist searching for a grassy knoll or second shooter to want to know. Whether the explanation is a spontaneous demonstration from a youtube video, conclusive evidence that some folks down at the IRS were confused, or something else, we should know. If those IRS employees were truly  self-starters, free-thinkers who were targeting without direction from their bosses, perhaps they shouldn’t get bonuses, not big ones anyhow.

Besides, computer crashes don’t mean anything, even if it was a full year into the federal investigation when the IRS revealed that all those emails from the key two year period had been long gone for some time. Now, they are back and we may soon be able to see them, as well as the even more important communications between the IRS and DOJ.

Everyone may have had the best of intentions here. No one may have intended any breach of law. And maybe the IRS should not have to administer our insanely complex tax law, but it does. And without regard to political party, every American should want to get to the bottom of this once and for all.

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December 19, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, December 18, 2014

The IRS Scandal, Day 588

IRS Logo 2Washington Times editorial:  Obama’s IRS Faces Scrutiny With Republican-led Congress:

The corruption of the Internal Revenue Service is still under investigation, but the public has learned a lot already: The IRS targeted conservative and tea party groups for extra scrutiny and harassment, Lois G. Lerner tried to hide behind the Fifth Amendment to avoid prosecution for violating the rights of taxpayers, and the president of the United States assured one and all that there was not even a “smidgen of corruption” at the agency when he knew better.

What the public did not know until recently was that the White House requested and received from the IRS the tax records of 2,500 taxpayers for White House inspection. President Obama is not the first president to try to use the IRS against his enemies, but he is the first to do it wholesale. President Kennedy shared tax information with The Washington Post about Sen. Barry Goldwater and senior members of his 1964 presidential campaign team. They were subjected to grueling audits. President Nixon tried to get the IRS to go after his enemies when he faced impeachment. ...

To argue that this is part of a cover-up is to argue the obvious. The arrogance of a government that abuses the rights of its citizens, ignoring specific laws to do so, must be held to account like everyone else, and if justice is done a flurry of subpoenas for a number of White House and IRS officials will follow soon after the Christmas holidays. Congress has disregarded oversight duties in this matter, and soon there will be a new Congress and the 114th Congress will have an opportunity to take these duties seriously.

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December 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, December 17, 2014

The IRS Scandal, Day 587

IRS Logo 2Forbes:  Did You Hear The One About Lois Lerner Walking Into A Bar?, by Peter J. Reilly:

Judicial Watch has come out with the latest in the perennial never ending IRS scandal.  It has managed to pry loose from the Justice Department e-mails that show that Lois Lerner, who was imported into the IRS from the Federal Election Commission, met with the Justice Department to discuss whether people who had lied on their exemption applications about political activities should be prosecuted.  The Justice Department is not releasing further documents which would explain why it did not prosecute anybody.  As I’ve been following this drama, I’ve often found myself looking at it from a different angle than everybody else, which is what makes me think of this as a story about Lois Lerner walking into a bar.

The IRS is tasked with a pretty big job having to collect over $2 trillion dollars.  Since Congress has decided to use Title 26( Internal Revenue Code) as its go to title to encourage or discourage this that and the other thing, the IRS gets diverted quite a bit from its core mission of collecting revenue.  To work for the IRS as a revenue agent, the education requirement is a bachelors degree with 30 hours in accounting.  So your core enforcement people in the IRS are accountants.  Task twenty odd thousand accountants with collecting $2 trillion dollars and a bunch of miscellaneous stuff, some of the miscellaneous stuff is going to slide by.  So it is understandable that they did not do such a hot job on squelching 501(c)(4) organizations that were engaging in political activity.

Then along comes Lois Lerner who is not a career IRS employee.  She is excited about violations of the campaign financing laws and now can put numerous minions into zealously scrutinizing applications, thinking up more and more devious ways in which 501(c)(4) status can be abused.  None of the thing that my father always told me about how to behave in a bar was to never talk about religion or politics.  Lois Lerner apparently could talk of nothing other than politics and that may be what is behind this mess.  That’s why Lois Lerner walking into the IRS is like her walking into a bar.  It was not good for Lois Lerner and it was not good for the bar.ot being a career IRS employee, she did not have IRS culture embedded in her. ...

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December 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, December 16, 2014

The IRS Scandal, Day 586

IRS Logo 2Wall Street Journal op-ed:  Congress Can Pry Open a Clammed-Up IRS, by Charles Lipson (University of Chicago, Department of Political Science):

The agency pleads that it can’t share the documents that it may have shared illegally because that would be illegal.

The White House and IRS are entangled in a sticky court case with major political ramifications. It concerns allegations that the IRS illegally shared private taxpayer information with the White House related to conservative individuals or organizations. The Treasury Department said this month that although it has found a cache of documents that may be pertinent, it is not allowed by law to release them. The question now is who can find out whether the Obama White House has in effect weaponized the IRS, turning it into an agency that targets Americans out of favor with the administration.

Most likely, for reasons outlined below, Congress will have to be the one to find out. While we are far from knowing if any violations of the law have occurred, this is a serious issue. Misuse of the IRS was an article in Richard Nixon ’s impeachment—and he was only accused of trying to politicize the tax agency. ...

Treasury has clammed up again, trying to keep its contacts with the White House secret and reiterating that it is exempt from disclosure. The administration has offered a bizarre rationale: It would be illegal to turn over documents the IRS shared illegally since it is illegal for the IRS to share the files with anyone, including the court.

There still is a wide gap between our knowing that there is a cache of “responsive documents” and anyone establishing a direct connection between White House political operatives and the IRS. However revealing the documents may be, they would need to be followed up by interviews and depositions, which may lead to more documents. Only a thorough investigation can accomplish that.

A politicized Justice Department cannot be trusted to conduct an impartial investigation or to appoint a reliable outside prosecutor. This means that any serious inquiry is up to Congress.

Republican leaders are understandably cautious about this approach. When they take control of Congress in January, their overriding goal is to establish a track record for governing, not a pattern of investigating the Obama administration’s past transgressions. But this case should be an exception. Any White House interference with the IRS is a fundamental assault on the rule of law and the disinterested application of the tax code. If allowed to stand, it will serve as a pernicious precedent for future administrations. 

Congress should proceed carefully but steadily. ... If the documents show repeated, politicized contacts between the IRS and the White House—and only then—the House and Senate should vote to establish a joint congressional committee to investigate. ... The heavy lifting, particularly taking depositions under oath, should be done behind closed doors, beginning with lower-level people who might have seen unauthorized documents or their political uses. Give them transactional immunity and make clear they face serious legal peril if they fail to testify fully and truthfully. Then follow the chain of testimony up the organizational chain. A well-conducted investigation would either clear the White House’s senior political aides or implicate them in serious wrongdoing. 

The search for the truth here ought to be a bipartisan issue. It may yet become one as Democrats back away from the Obama White House.

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December 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (7)

Monday, December 15, 2014

The IRS Scandal, Day 585

IRS Logo 2San Diego Union-Tribune:  Is AG Ignoring Lessons From IRS Scandal?:

A Virginia-based conservative group filed a federal First Amendment lawsuit this week accusing California Attorney General Kamala Harris of engaging in the kind of activity that was the subject of the recent scandal involving the Internal Revenue Service. Are state officials trying to chill the speech of conservative nonprofits?

“Not only did IRS employees improperly target groups based on politics, but they also improperly demanded a host of details about the groups’ activities, according to a report on the abuses by a Treasury Department inspector general,” according to a Washington Post report about the federal scandal. The IRS even demanded information about some of these groups’ smallest donors.

Now the Americans for Prosperity Foundation is saying the state of California is improperly demanding information about its donors – and is threatening unusually harsh penalties if the group doesn’t comply. One other conservative group has filed a separate lawsuit against the attorney general, which is now in the Ninth Circuit. ...

Harris has long been touted as a rising national political star. If so, then she ought to learn some lessons from a scandal that gave the IRS such a black eye.

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December 15, 2014 in IRS News, IRS Scandal, Law Firm Tax Rankings, Tax | Permalink | Comments (3)

Sunday, December 14, 2014

The IRS Scandal, Day 584

IRS Logo 2Las Vegas Review-Journal editorial:  IRS Defies Order to Turn Over Tax Documents:

Back in February, President Barack Obama said the apparent targeting of conservative organizations by the IRS was not illegal or politically motivated, but rather the result of “some bone-headed decisions,” and that “not even a smidgen of corruption” was at play. A few months — and developments — later, however, the president’s words are even less believable than they were then.

First, nonprofit watchdog group Cause of Action filed a Freedom of Information Act request for documents from the IRS indicating that the agency had been sharing individuals’ private tax data with the White House. (The group was trying to obtain information proving the existence of an independent investigation into alleged unauthorized access to the Koch brothers’ tax returns by former White House senior economics adviser Austan Goolsbee.) When the agency dragged its feet and ultimately denied the request, Cause of Action sued. A judge ruled in Cause of Action’s favor, ordering the IRS to turn over all of the documents by December 1.

Despite the court order, however, the IRS has continued to stonewall, refusing to share the requested records. While the Treasury Inspector General for Tax Administration (TIGTA) claimed initially that the IRS would comply and turn over more than 2,000 pages of documents, it abruptly reneged, saying in a letter to Cause of Action on December 1 that, yes, they did indeed have 2,043 pages of documents relating to the FOIA request, but that Cause of Action couldn’t see them due to federal privacy laws.

So, if you’re keeping score at home, the IRS claimed that turning over the documents would be an invasion of privacy — despite the fact that the agency already invaded that privacy by having the documents in the first place.

These new developments highlight a very cozy and, in all likelihood, very much illegal relationship between the Obama administration and the IRS. We still don’t know the full extent and depth of the IRS targeting scandal, but this case could provide evidence of coordination. For now, we are left with a ton of questions:

What, exactly, was the White House doing with more than 2,000 pages of documents containing private tax data of various Americans? Is the IRS helping the Obama administration go after the “dark money” groups the president and his party have long condemned? And what are we to make of the fact that as many as 30,000 supposedly destroyed emails from former IRS Exempt Organizations Director Lois Lerner have suddenly turned up — emails from January 2009 through June 2011, the time period during which the IRS was ramping up its conservative targeting efforts?

Does the IRS just have really bad luck with computers? Are those in charge of finding the emails incompetent? Or is there something more coordinated and corrupt going on? And, if so, how much did President Obama know about it?

When President Obama took office, he swore that his would be “the most transparent” presidency in history, but his administration’s hostility regarding actual transparency, as well as the free press, remains alarming and unacceptable. All of the requested IRS records need to be made public, and if the Obama administration and the IRS won’t do it, then the Republican-led Congress needs to push for hearings to get to the bottom of the matter.

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December 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, December 13, 2014

The IRS Scandal, Day 583

IRS Logo 2The Blaze:  Did the IRS Share Confidential Taxpayer Data With the White House? It May Take Several More Months to Find Out:

A government watchdog group has been forced to ask a federal court to insist that the government hand over thousands of documents that could show the IRS gave confidential taxpayer information to the White House.

The Treasury Inspector General for Tax Administration, an internal oversight arm of the Treasury Department, indicated last month it was willing to hand over up to 2,500 documents that could show the IRS improperly shared this information with the Obama administration.

TIGTA had collected these documents after Austan Goolsbee, the former chair of the White House’s Counsel of Economic Advisers, implied that Koch Industries doesn’t pay any corporate income tax, which raised questions about how Goolsbee would know that.

But last week, TIGTA told Cause of Action, the group seeking those documents, that it could not hand them over after all. TIGTA said the rules of the tax code would prevent it from making them public. TIGTA said the documents contain confidential taxpayer data that cannot be released.

As a result, Cause of Action filed a new motion in the U.S. District Court for the District of Columbia that asks the court to dispute TIGTA’s decision. That motion indicates a resolution of the fight could still take several months.

Under Cause of Action’s proposed motion, the group would file a motion for summary judgment in late January, TIGTA would file its own arguments in late February, and all replies would be due by early April.

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December 13, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, December 12, 2014

The IRS Scandal, Day 582

IRS Logo 2Columbus Dispatch editorial: ‘Lost’ IRS Emails Might Reveal Truth:

It’s unsurprising that the “lost” email messages of former IRS official Lois Lerner, the disappearance of which conveniently coincided with her being investigated for the improper targeting of conservative groups, have been located by the Treasury Department’s inspector general.

Tech experts, as well as common sense, suggested from the outset that it was implausible that the emails just happened to vanish when they did, and were unrecoverable.

But that was the administration’s story, and it was sticking to it — at least until after the midterm elections.

The inspector general reported that 30,000 of Lerner’s emails have been recovered from the period of January 2009 to June 2011, the critical time when she and her colleagues were going after nonprofit groups whose ideology they didn’t like.

The content of the emails is unknown; investigators have said it might take months to sift through them.

For those who have lost track: Politically active conservative groups had their applications for nonprofit status delayed leading up to the 2012 elections and were asked improper questions about their affiliations, beliefs and even the content of their prayers. Some cried foul, but largely were ignored for months.

The Internal Revenue Service denied the targeting until after the election, and only when it became clear the issue wasn’t going away.

In May 2013, Lerner staged a limited confession in response to a planted question at a conference, in apparent attempt to limit the damage.

President Barack Obama at first expressed anger and vowed to get to the bottom of the issue ... until he felt it had blown over enough to dismiss the whole affair as a “phony scandal” without a “ smidgen” of corruption involved.

Meanwhile, IRS Commissioner John Koskinen, appointed about a year ago, went before Congress insisting that the agency had bent over backward to recover Lerner’s emails, but “confirmed that backup tapes from 2011 no longer existed because they have been recycled, pursuant to the IRS normal policy.”

Not only would that have violated standard government records policy, according to testimony from the head of the National Archives, it turned out not to be true.

In light of all this, it’s alarming that after extracting the Lerner emails from the recovered files, the IG plans to send them to the IRS for redactions of confidential information. That would be the definition of allowing the fox to guard the henhouse.

It’s good news that the American public might finally get some answers in this investigation.

But it’s another dismaying example of how the administration that promised to be the “most transparent in history” has routinely misled, delayed and obfuscated in an effort to make its actions look better, especially before an election.

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December 12, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, December 11, 2014

IRS Is Big Loser in Government Funding Bill

Wall Street Journal, Funding Bill: The Losers:

House and Senate negotiators unveiled Tuesday evening a $1.1 trillion agreement to fund the U.S. government for the next fiscal year, and some federal government agencies, their staffs and the people they serve got some bad news. ...

The 3.1% reduction in the budget of the Internal Revenue Service — bringing its funding below its 2008 level — comes amid Republican outrage over allegations IRS officials targeted conservative political groups for extra scrutiny of their filings for non-profit status.

Losers

Mother Jones, Rich People Cheer As Republicans Cut IRS Budget, by Kevin Drum

December 11, 2014 in IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 581

IRS Logo 2Forbes:  Obama Justice Department Was Involved In IRS Targeting, Lerner Emails Reveal, by Robert W. Wood:

Sadly, the 18 month investigation into the IRS targeting of conservative groups isn’t over, and it may be worse than anyone thought. A federal judge has broken loose more emails that the DOJ had surely hoped would never surface. The picture it reveals isn’t pretty. The documents prove that Lois Lerner met with DOJ’s Election Crimes Division a month before the 2010 elections.

It has to be embarrassing to the DOJ, which may not be the most impartial one to be investigating the IRS. In fact, the DOJ withheld over 800 pages of Lerner documents citing “taxpayer privacy” and “deliberative privilege.” Yet these internal DOJ documents show Ms. Lerner was talking to DOJ officials about prosecuting tax-exempt entities (yes, criminally!) two years before the IRS conceded there was inappropriate targeting. ...

[I]t is getting harder and harder to simply accept President Obama’s ‘no smidgen of corruption’ remark made to Fox News in February, no matter how sincere and forthright his delivery.

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December 11, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, December 10, 2014

IRS Releases 2015 Standard Mileage Rates

IRS Logo 2The IRS today released  (IR-2014-114) the standard mileage rates for 2015 (Notice 2014-79,  2014-53 I.R.B. ___ (Dec. 29, 2014)):

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

  • 57.5 cents per mile for business miles driven [up 1.5 cents from 2014]
  • 23 cents per mile for medical or moving purposes [down 1/2 cent]
  • 14 cents per mile for charitable organizations [unchanged]

December 10, 2014 in IRS News, Tax | Permalink | Comments (0)

GAO: IRS's 24% Error Rate in Making $14 Billion/Year of Improper EITC Payments Is 2d Worst Among All Federal Programs, Violates Law

GAOGovernment Accountability Office, Improper Payments: Inspector General Reporting of Agency Compliance under the Improper Payments Elimination and Recovery Act (Dec. 9, 2014):

Improper payments—such as duplicate or erroneous payments, payments to ineligible recipients, or payments for ineligible services—have been a long-standing challenge of the federal government and have annually totaled billions of dollars. For fiscal year 2013, federal agencies reported an estimated $105.8 billion in improper payments, a decrease of $1.3 billion from the prior year revised estimate of $107.1 billion. Based on our review of Office of Management and Budget (OMB) data, the $105.8 billion estimate was attributable to 84 programs across 18 agencies (see enc. I). Fiscal year 2013 marked the 10th year of implementation of the Improper Payments Information Act of 2002 (IPIA), Five programs accounted for approximately $82.9 billion, or 78 percent of the total improper payments estimate in fiscal year 2013 (see enc. II for a list of the five programs with the largest estimates for fiscal years 2011 through 2013).

EITC

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December 10, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

TIGTA: IRS Has 25-30% Error Rate In Refundable Child Tax Credits, Mistakenly Pays $6-7 Billion

TIGTA The Treasury Inspector General for Tax Administration yesterday released Existing Compliance Processes Will Not Reduce the Billions of Dollars in Improper Earned Income Tax Credit and Additional Child Tax Credit Payments (2014-40-093):

The Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) are refundable credits designed to help low-income individuals reduce their tax burden. The IRS estimated that it paid $63 billion in refundable EITCs and $26.6 billion in refundable ACTCs for Tax Year 2012. The IRS also estimated that 24 percent of all EITC payments made in Fiscal Year 2013, or $14.5 billion, were paid in error. ...

The IRS has continually rated the risk of improper ACTC payments as low. However, TIGTA’s assessment of the potential for ACTC improper payments indicates the ACTC improper payment rate is similar to that of the EITC. Using IRS data, TIGTA estimates the potential ACTC improper payment rate for Fiscal Year 2013 is between 25.2 percent and 30.5 percent, with potential ACTC improper payments totaling between $5.9 billion and $7.1 billion. In addition, IRS enforcement data show the root causes of improper ACTC payments are similar to those of the EITC.

New York Times, Billions in Child Tax Credits Were Invalid, U.S. Audit Finds

December 10, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (3)

The IRS Scandal, Day 580

IRS Logo 2Judicial Watch:  Judicial Watch Lawsuit Forces Release of DOJ Emails Showing IRS’s Lois Lerner Met with DOJ Officials Just Before 2010 Elections:

Judicial Watch today released internal Department of Justice (DOJ) documents revealing that former IRS official Lois Lerner had been in contact with DOJ officials about the possible criminal prosecution of tax-exempt entities two full years before what the IRS conceded was its “absolutely inappropriate” 2012 targeting of the organizations. According to the newly obtained documents, Lerner met with top Obama DOJ Election Crimes Branch officials as early as October 2010. ...

“These new documents dramatically show how the Justice Department is up to its neck in the IRS scandal and can’t be trusted to investigate crimes associated with the IRS abuses that targeted Obama’s critics.  And it is of particular concern that the DOJ’s Public Integrity Section, which would ordinarily investigate the IRS abuses, is now implicated in the IRS crimes.  No wonder the Department of Justice under Eric Holder has done no serious investigation of the Obama IRS scandal,” said Judicial Watch President Tom Fitton. “It is shameful how Establishment Washington has let slide by Obama’s abuse of the IRS and the Justice Department.  Only as a result of Judicial Watch’s independent investigations did the American people learn about the IRS-DOJ prosecution discussions of Obama’s political enemies and how the IRS sent, in violation of law, confidential taxpayer information to the FBI and DOJ in 2010.  Richard Nixon was impeached for less.”

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December 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, December 9, 2014

The IRS Scandal, Day 579

Horrible BossesForbes:  Horrible Bosses, IRS Edition, by Robert W. Wood:

People joked about horrible bosses long before Horrible BossesHorrible Bosses 2, and The Office. I’m guessing that at least some employees over at the IRS may not be too impressed with their own leadership. I mean big issues, not relatively harmless but kitschy things like Star Trek, Gilligan’s Island or line dancing videos. Perhaps there may have been some mistakes from regular employees, but the bosses surely have the most explaining to do.

The news that the lost or destroyed Lois Lerner emails were actually not lost or destroyed, for one. Remember, when the IRS brass said they looked really hard, and spent $10 million (of taxpayer money!) trying to find those emails? After a year of investigation, they belatedly said they were lost, hard drives were recycled, etc. Anyhow, now they will be sorted, cataloged and released, which is good.

Some people are upset that money is being spent on a ‘witch hunt’ that reveals not even a smidgen of corruption. Others aren’t so sure. The Treasury Inspector General for Tax Administration has confirmed that, on top of the backed-up email horde, there are also nearly 2,500 documents relating to investigations of the improper disclosure of confidential taxpayer information by the IRS to the White House. ...

Lois Lerner–the former IRS official at the heart of Tea Party targeting–supposedly didn’t even direct them, though she remains silent. She was held in contempt of Congress for refusing to testify, but hasn’t been prosecuted. Yet after her long silence, in an exclusive interview with Politico she said did nothing wrong and considers herself the victim.She bristled at any suggestion she had anything to do with destroying emails, switching to texts, or letting her own political views influence her treatment of Tea Party “a__holes.”

In the midst of all this, many Americans could use a little reassurance on key points:

  • We Want To Be Dealt With Fairly ...
  • We Don’t Want Others To Get Away with Anything ...
  • We Want Our Private Information Kept Private ...
  • We Want IRS Employees To Be Policed ...
  • We Don’t Want More Complex Tax Laws ...

Since the IRS is made up of humans, sometimes the IRS is unreasonable or wrong. Richard Nixon supposedly asked the IRS to audit his political enemies. There has been no proof yet that President Obama tried to influence the IRS in the Tea Party targeting scandal. But it’s not unreasonable to want to get to the bottom of it once and for all. ...

The IRS has a very hard job to do, and in general, does it well and fairly. But that is precisely why this is so important. We need fairness and faith in the tax system restored. We shouldn’t need a Freedom of Information Act lawsuit to get it.

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December 9, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Monday, December 8, 2014

The IRS Scandal, Day 578

IRS Logo 2Roll Call:  Fresh Round of Controversies for IRS:

The IRS faces growing pressure from critics on both sides of the aisle to come to grips with the role that tax-exempt “dark money” groups play in elections.

The challenge for the beleaguered IRS, which is bracing for a fresh round of controversies early in 2015, is that Republicans and Democrats regard both the problem and the solution in starkly opposing terms.

To Republicans, the problem is that the IRS has policed tax-exempt groups, particularly those run by conservative activists, too aggressively. Republicans on Capitol Hill are poised to redouble their investigation into the agency’s self-admitted targeting of tea party groups and others seeking tax-exempt status.

The GOP probe has been newly energized by a Treasury inspector general’s recent unearthing of thousands of emails previously declared “lost” from former senior IRS official Lois Lerner’s account. Also fueling the investigation is the GOP’s Senate takeover, and a conservative group’s recent lawsuit alleging the agency improperly shared taxpayer information with the White House.

To Democrats, the problem is that undisclosed political spending, popularly dubbed “dark money,” continues to soar. According to the latest estimate from the Center for Responsive Politics, political spending by outside groups that fail to publicly disclose some or all of their donors jumped to at least $219 million in this election cycle, up from $160.8 million in the 2010 midterms.

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December 8, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Sunday, December 7, 2014

The IRS Scandal, Day 577

IRS Logo 2Town Hall:  IRS Scandals Update:, by Daniel J. Mitchell (Cato Institute):

I generally don’t feel a special degree of animosity for the internal revenue service. After all, it’s the politicians who have created the 74,000-plus page monstrosity of a tax code. Blaming the IRS for enforcing that system is like blaming the police for the drug war.

This isn’t to say the IRS is blameless. Just as cops sometimes take misguided laws and enforce them is bad ways, the IRS periodically will go beyond its legal mandate because of an enforcement-über-alles mentality.

But what gets me most upset is when the IRS allows itself – either with glee or reluctance – to become politicized. ...

For instance, the Washington Times reveals that the IRS may have violated taxpayer privacy by giving confidential taxpayer data to the political operatives in the White House. ...

One possible example deals with the Obama Administration’s attack on the Koch brothers. As the Washington Examiner reported, Obama’s top economist at the time was the subject of an investigation. ...

It’s worth noting, by the way, that this isn’t the first White House to get in trouble for using the IRS as a political weapon.

Section 6103 of the Internal Revenue Commission’s criminal code, which Congress enacted following revelations of President Nixon’s abuse of private tax information during the Watergate scandal. The second article of impeachment against Nixon in the House Judiciary Committee was based on those abuses.

So the ghost of Richard Nixon may approve of Obama, as suggested by this cartoon.

But this isn’t the only IRS scandal we need to monitor. Remember Lois Lerner, who became infamous for targeting the President’s opponents and then apparently losing her emails? Well, we have an update. The Wall Street Journal opines on the latest development in the IRS targeting scandal. ... One can’t help but wonder whether the delay in finding the emails and now the delay in turning them over to investigators is simply to allow time for smoking guns to be hidden. ...

Let’s close with a good cartoon about the IRS. By the way, if you enjoy anti-IRS cartoons, click here, here, and here for more examples. ...

P.P.S. I don’t want to end on a sour note, so here’s more examples of IRS humor from my archives, including a new Obama 1040 form, a death tax cartoon, a list of tax day tips from David Letterman, a cartoon of how GPS would work if operated by the IRS, an IRS-designed pencil sharpener, two Obamacare/IRS cartoons (here and here), a sale on 1040-form toilet paper (a real product), a song about the tax agency, the IRS’s version of the quadratic formula, and (my favorite) a joke about a Rabbi and an IRS agent.

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December 7, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, December 6, 2014

The IRS Scandal, Day 576

IRS Logo 2Forbes:  Recovered IRS Emails Can't Be Revealed Because Of Privacy...That Was Already Breached, by Robert W. Wood:

For over 18 months, we’ve been wondering about those ‘lost’ IRS emails. Would they surface and if so, what they would show? Targeting? Profanity? Nothing? It was a whole year into the Congressional investigation before the IRS first said they were ‘lost,’ a bizarrely belated “oh by the way….”

Think you could file your tax return a year late next year? Would the IRS show some compassion? Unlikely. Yet it turns out those lost, destroyed, found, and now warehoused emails still can’t be reviewed by the media or anyone else. Why? Because they contain confidential taxpayer information, that’s why.

So says the IRS watchdog known as TIGTA, the Treasury Inspector General for Tax Administration. The Inspector General has done great works this year and often pokes at the IRS behemoth to improve it. But the Inspector General is in a tough spot over this privacy issue.

We thought the news that the lost or destroyed Lois Lerner emails were actually not lost or destroyed meant we would get to the bottom of this once and for all. How else could we see if the President’s supporters are right? They say this is a ‘witch hunt’ that reveals not even a smidgen of corruption, a phrase Mr. Obama himself repeated to Fox News in February. But once again, we’re in the dark. Talk about a Catch-22. ...

A judge finally ruled that the IRS must turn over any relevant documents to Cause of Action. But that puts in Inspector General back in the hot seat. TIGTA admits it has thousands of pages of responsive documents. However, TIGTA says it can’t release them because they contain confidential taxpayer information. That sure sounds telling already, even if we can’t see them!

After all, why would communications between the IRS and the White House contain taxpayer information? A key question is whether any officials at the White House ever asked anyone at the IRS to transmit private taxpayer information to the White House in violation of law. Moreover, regardless of whether the White House asked for any taxpayer information, did the IRS ever transmit any?

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December 6, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Friday, December 5, 2014

The IRS Scandal, Day 575

The Hill, Watchdog: IRS Withholding Documents on Taxpayer Data Requests:

A watchdog group says the IRS is withholding documents between the agency and the White House that show inappropriate requests for taxpayer data, according to multiple reports.

The Treasury inspector general for tax administration has told the group that there are more than 2,000 documents potentially related to the request.

A court has said the agency must hand over the documents. But IRS officials have said that they will not release the documents, citing a part of the tax code that protects the confidentiality of individual tax returns.

It is not clear what is contained in the documents, but Cause of Action said they might be evidence of White House misdeeds.

“That indicates scandal,” said Daniel Epstein, a spokesman for the group. "Now, potentially, there's confidential tax information going from the IRS to the White House. Potentially — we don't know, we'd like to see," said Rep. Jim Jordan (R-Ohio), who has been a critic of the IRS under the Obama administration, said late Wednesday on Fox News.

The White House denied any wrongdoing to Fox News. “I can tell you that, as a rule, that the Obama administration has been very rigorous in following all of the rules and regulations that govern proper communication between Treasury officials and White House officials and the Internal Revenue Service,” press secretary Josh Earnest told the outlet.

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December 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, December 4, 2014

The Wheels Are Falling Off the Wagon at the IRS

WheelsMichael Gregory, The Wheels Are Falling Off the Wagon at the IRS: An Open Letter to Patriotic Americans Concerned with the Federal Tax System (2014) (free download):

The IRS is falling apart. If the IRS falls apart the funding arm of the U.S. Government falls apart. If the U.S. Government falls apart what is next for the U.S.?

As a former IRS insider Mike Gregory shares insights from more than 30 years working with IRS employees as well as with taxpayers and practitioners.

This book describes how honest law-abiding taxpayers are now being seriously harmed while cyber-thieves steal from taxpayers and criminals promote illegal schemes that are not being prosecuted.

Mike argues that unless this situation is reversed immediately, the trust of the American people could be permanently broken. Once trust is broken our country could go the way of Greece with harsh economic consequences. This book is a candid tell-all and a call to action for the Congress to fully fund the IRS.

(Hat Tip: Mike Talbert.)

December 4, 2014 in Book Club, IRS News, Tax | Permalink | Comments (0)

IRS Issues Call for Tax Statistics Research Proposals

IRS Logo 2The IRS Statistics of Income Division has issued a call for proposals for research projects with potential to make significant contributions to tax administration.

The call for proposals describes the details of the program and the application process. Although all submissions will be considered, topics identified as especially relevant to researchers include:

  • Tax administration in a global economy
  • Taxpayer needs and behavior, particularly the roles of information, complexity, salience, engagement, and compliance costs
  • Filing, payment, and reporting compliance measures, behaviors, and drivers
  • Benefit participation measures, behaviors, and drivers, particularly related to the Affordable Care Act
  • Taxpayer response to policy changes, particularly taxpayer responses to changes in incentives
  • The role of complex business structures in tax planning

The due date for research proposal application is December 15, 2014.

December 4, 2014 in IRS News, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 574

IRS Logo 2Washington Free Beacon:  Treasury IG Blocking Release of Records on Leaks of Taxpayer Info to White House:

An IRS watchdog is refusing to release thousands of documents related to unauthorized leaks of confidential taxpayer information to the White House, citing privacy concerns.

In a letter to watchdog group Cause of Action on Tuesday, an attorney with the Treasury Inspector General for Tax Administration (TIGTA) said the office had located “2,509 pages of documents potentially responsive to your request.” However, TIGTA said it barred by law from releasing them.

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December 4, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Wednesday, December 3, 2014

The IRS Scandal, Day 573

Tuesday, December 2, 2014

The IRS Scandal, Day 572

IRS Logo 2Forbes:  Are Criminals Outsmarting The IRS?, by Robert W. Wood:

With the IRS scandals of the last 18 months, it might seem that we have lost control of our tax system. The IRS is an essential part of our government, which can’t run without taxes. So having it fairly and efficiently run is pretty important. More than 18 months ago, an angry President Obama sacked the IRS Chief, Steven Miller. That was inevitable after the story broke that Tea Party and other conservative groups were targeted for extra scrutiny. The cover-up was worse than the crime, especially for an agency that must rely on taxpayers self-assessing their taxes.

More than 18 months ago, Mr. Obama said (in this transcript) that the IRS needed new leadership while it faced a broad probe of its conduct. The President promised full cooperation with congressional investigations. For new leadership “that can help restore confidence,” President Obama picked John Koskinen as next Commissioner. He came to office having no tax knowledge and no tax experience, but was an avowed turnaround specialist.

Whatever Mr. Koskinen’s skills, the agency hasn’t yet come back to smooth sailing. With alleged targeting, bonus controversies, systemic lien and collection errors and more, the agency looks incompetent to many outsiders. Whatever one’s political views, it doesn’t exactly inspire confidence. The different stories surrounding the lost or destroyed Lois Lerner emails alone do not leave everyone as certain as the President that there is not a smidgen of corruption.Perhaps the President will be proven right–I hope so.

But it still is no way to run a railroad. Taxpayers deserve better, and so do the thousands of IRS honest and hard working IRS employees. The 18 months of dissembling started when a comparatively unknown Lois Lerner was speaking at a bar association meeting May 10, 2013. She planted a question in the audience so she could get out ahead of the TIGTA report documenting IRS targeting. It may have been well-intentioned but came off as duplicitous. 18 months later, we’re still waiting for the final word, though now we are told that 2,500 previously undisclosed documents may link to the White House.

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December 2, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, December 1, 2014

The IRS Scandal, Day 571

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December 1, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, November 30, 2014

The IRS Scandal, Day 570

IRS Logo 2Breitbart:  Obama: Not Legitimate for Future Presidents to Lower Taxes via Executive Action:

After unilaterally granting temporary amnesty and work permits to millions of illegal immigrants last week, President Barack Obama said it would not be legitimate for a future president to unilaterally lower tax rates. 

When asked on ABC's This Week if his successor could unilaterally act to lower taxes if Congress does not, Obama replied, "absolutely not."

Obama, despite the IRS's targeting of conservative and Tea Party organizations, also said that his administration only audits "folks who are most likely to be cheating" and said that even though the IRS does not "audit every single person... we still expect that people are going to go ahead and follow the law."

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November 30, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Saturday, November 29, 2014

The IRS Scandal, Day 569

IRS Logo 2Forbes:  In 'Lost' Trove Of IRS Emails, 2,500 May Link White House To Confidential Taxpayer Data, by Robert W. Wood:

The recent news that the lost or destroyed Lois Lerner emails were actually not lost or destroyed surprised some people. That they will now be sorted, cataloged and released provokes mixed reactions. It has some Republicans upset that more wasn’t done and more transparently. It has some Democrats upset that more money is being spent on what some see as a witch hunt that reveals not even a smidgen of corruption. Despite the 18 months of dissembling about who did what and when, the latter reaction may be premature.

The Treasury Inspector General for Tax Administration has confirmed that, on top of the backed-up email horde, there are also nearly 2,500 documents relating to investigations of the improper disclosure of confidential taxpayer information by the IRS to the White House. Yes, the White House.

Why should the White House be getting confidential taxpayer information? That is a good question. If the facts show such data was transmitted, even under the most charitable interpretation, you would think every American would want to know what happened.

The Inspector General for Tax Administration has seemed to be a white knight in the sometimes tawdry (and often inflammatory) email and targeting scandal that has roiled the IRS over 18 months. Yet on this particular issue, the Inspector General is being questioned too. An advocacy group called Cause of Action sued the Inspector General under the Freedom of Information Act for information about communications between the White House and the IRS.

Eventually, the court ordered that office to reveal whether the documents existed. Finally, the Obama administration has agreed to release the documents. A key question is whether any officials at the White House have ever asked anyone over at the IRS to transmit private taxpayer information to the White House in violation of law. Another question, regardless of whether the White House asked for any taxpayer information, is whether the IRS ever transmitted any.

With talk of targeting for more than 18 months, those of fair questions. The Obama administration consistently resisted responding, but has finally had to relent. In an email to Cause of Action, the Department of Justice has proposed deadlines for turning over documents next month. The DOJ states that it anticipates delivering some of the documents December 1st, and the remainder by December 15th.

The data may seem unimportant, and hopefully it will turn out to be. Still, the privacy protections for taxpayer data held by the IRS are among the most sensitive parts of the tax law. That makes any alleged transgressions of these rules serious. It makes this topic arguably the worst part of the IRS scandal so far.

According to the U.S. Supreme Court in a decision reaching back to 1819, the power to tax includes the power to destroy. The current administration’s pooh-poohing, including its ‘no smidgen of corruption’ remark to Fox News in February, does little to help. We have been feted to multiple mixed explanations of what happened, to multiple participants who may or may not have said or done something, to multiple refusals by one of the key players to testify. Such shifting sands leave us wondering.

The defiance and hubris from at least some at the IRS itself has been as disturbing. It has hardly seemed to be the kind of “we’re here to serve” attitude one might reasonably have expected. Some are even wondering about that whole separation of powers thing we learned about in civics or history class. American taxpayers should want to know what happened.

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November 29, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, November 28, 2014

The IRS Scandal, Day 568

IRS Logo 2Wall Street Journal:  ‘Lost’ IRS Emails Found: An Investigator Locates What the Tax Agency Claimed Had Vanished:

The Democrats’ midterm shellacking was in part a referendum on competence, which leads, naturally, to the all but unreported news that the IRS never “lost” emails after all. IRS Commissioner John Koskinen is pulling off the impossible task of destroying what little credibility that bureaucracy has left.

Treasury Department Inspector General Russell George recently informed Congress that his forensic investigation has turned up as many as 30,000 emails from the account of former IRS Exempt Organizations Director Lois Lerner—emails the IRS has insisted were destroyed. The emails cover the crucial period from January 2009 through June 2011 when the IRS was ramping up its targeting of conservative nonprofits.

Mr. Koskinen—hired nearly a year ago to clean up the IRS—has been at the center of that delay. In June the IRS buried in a letter to the Senate Finance Committee the bombshell news that nearly two years of Lerner emails were missing because her hard drive had crashed. This malfunction conveniently happened about 10 days after Congress alerted the IRS that it was looking into claims the agency was harassing conservative groups.

It later emerged that Mr. Koskinen had known about these missing emails in April—but hadn’t told Congress. He informed Congress only after a court case revealed the Lerner email record was incomplete.

Mr. Koskinen claimed in June that his agency had done everything humanly possible to recover the pesky documents. ... We can only imagine Mr. Koskinen’s shock in September when the Treasury IG said it had found 760 tapes that might hold Lerner emails. Or his further surprise when it took only a few weeks to identify and extract the specific Lerner documents—out of 250 million backup emails.

And we can only imagine Mr. Koskinen’s apology for his agency’s email failure—since he hasn’t given one. In response to the emails’ miraculous reappearance, the IRS explained: “The IRS welcomes TIGTA’s independent review and expert forensic analysis. Commissioner Koskinen has said for some time he would be pleased if additional Lois Lerner emails from this time frame could be found.”

This is an extraordinary statement, in that it suggests the only way an agency can be held accountable for producing subpoenaed documents is if an outsider tosses the joint. Either the IRS didn’t bother to investigate these tapes or, more alarming, it did and chose not to produce the results.

The IG is turning over the emails to the IRS, which is supposed to redact sensitive tax information before sending them to Congress. Mr. Koskinen needs to end the IRS stonewalling and turn the records over with dispatch without covering up incriminating evidence.

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November 28, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, November 27, 2014

The IRS Scandal, Day 567

IRS Logo 2CP Politics:  IRS Scandal a Priority for New House Oversight Committee Chair:

Rep. Jason Chaffetz, R-Utah, will focus on the IRS scandal as the House's new head executive watchdog. He was appointed as the next chairman of the House Oversight and Government Reform Committee on Tuesday.

Replacing the term-limited Rep. Darrell Issa, R-Calif., the 47-year-old Chaffetz will now chair the committee that has been a leading force behind the House investigation into the scandal involving the Internal Revenue Service's targeting of conservative and Christian groups. ...

Chaffetz' appointment could spell continued trouble for the IRS. Fox News reported that Chaffetz "vowed" to make the probe into the IRS's practice of stalling 501(c) tax-exempt applications of conservative and religious political action groups the "centerpiece of his chairmanship."

Along with Issa's leadership, Chaffetz has been an influential part of the Committee's IRS investigation. In the Spring, Chaffetz called for an independent special prosecutor when the IRS announced that emails from IRS Director of Exempt Organizations Unit, Lois Lerner, had been lost in a 2011 hard drive and no backup copies were made to turn over for review.

Chaffetz said he sees a pattern in the coincidental loss of evidence when it comes to federal agencies turning over documents when pressed in investigations.

"This is a recurring theme, from Fast and Furious, right down to Benghazi and now this IRS. It's the same basic drumbeat," Chaffetz told Sean Hannity earlier this year. "I think they are trying to play out the clock."

Numerous conservative political groups have accused the IRS of stalling their tax-exempt applications for political reasons. When a political action group does not receive tax-exempt status, potential donors can not be guaranteed that their donations will be eligible for tax write-offs. The IRS' stalling of the applications has cost groups thousands in donations and grants, while other groups have have not been able to survive. A communications director for a Texas-based conservative group told the Christian Post in October that the IRS's stalling cost his group $80,000 in donations and grants.

"The IRS, more than anybody else, cannot be a political organization. But is what it looks like it is has been like lately," Chaffetz told Fox News' Sunday Morning Futures with Maria Bartiromo in June. ...

The House Ways and Means Committee, which is also involved in the IRS investigation, will also have a new chair as Rep. Paul Ryan, R-Wis., was appointed as the committee's chairman on Tuesday. In a statement, Ryan said his committee will work to "hold the IRS accountable."

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November 27, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, November 26, 2014

The IRS Scandal, Day 566

IRS Logo 2Washington Examiner:  2,500 New Documents ID'd in White House-IRS Taxpayer Harassment Cases:

In a shocking revelation, the Treasury Inspector General has identified some 2,500 documents that “potentially” show taxpayer information held by the Internal Revenue Service being shared with President Obama’s White House.

The discovery was revealed to the group Cause of Action, which has sued for access to any of the documents. It charges that the IRS and White House have harassed taxpayers.

In an email from the Justice Department’s tax office, an official revealed the high number of documents, suggesting that the White House was hip deep in probes of taxpayers, likely including conservatives and Tea Party groups associated with the IRS scandal.

Power Line:  The IRS Scandal Rears Its Head:

The Obama Administration’s IRS scandal is multi-faceted. In addition to the persecution of conservative non-profits by Lois Lerner et al., the question has been percolating for some years whether Obama’s IRS has transferred confidential taxpayer information to Obama’s White House in violation of federal criminal laws. The issue first arose when Austin Goolsbee of the president’s Council of Economic Advisers told reporters that he had information about Koch Industries that could only have come, illegally, from confidential IRS files. When questions were asked, the administration immediately clammed up.

Years later, the judicial system may be poised to expose another layer of Obama corruption. A group called Cause of Action began a Freedom of Information Act lawsuit against the Department of the Treasury, and for several years, your taxpayer dollars have funded the administration’s cover-up.

But nothing lasts forever, and a federal court in Washington, D.C. has finally overruled the Treasury Department’s frivolous objections, and ordered Treasury to respond to Cause of Action’s request for documents. That request relates to the Department’s Inspector General’s investigation–which began a long time ago, and probably has long been concluded–and asks for “[a]ll documents pertaining to any investigation by [TIGTA] into the unauthorized disclosure of [26 U.S.C.] §6103 ‘return information’ to anyone in the Executive Office of the President.”

That is an extraordinarily narrow request for documents which, one would think, could have been responded to in a few hours. But the administration’s evasion has gone on for years. Now that the court has ordered the administration to respond, its lawyers have asked for more time

Cause of Action:  Press Release:

Monday the Treasury Inspector General for Tax Administration (TIGTA) informed Cause of Action that there exist nearly 2,500 potentially responsive documents relating to investigations of improper disclosures of confidential taxpayer information by the IRS to the White House. This disclosure, coming only after Cause of Action sued TIGTA over its refusal to acknowledge whether such investigations took place, and after the Court ordered TIGTA to reveal whether or not documents existed, signals that the White House may have made significant efforts to obtain taxpayers’ personal information. This disclosure, following on the heels of TIGTA’s admission that it recovered 30,000 “lost” Lois Lerner emails, renews Cause of Action’s concerns about the decaying professionalism of, and apparent slip into partisanship by, IRS’s senior leadership.

Cause of Action will continue to pursue the truth and to work for IRS accountability.

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November 26, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, November 25, 2014

TIGTA: IRS Still Has Not Taken Necessary Steps to Prevent Billion Dollar Prisoner Tax Fraud

TIGTA The Treasury Inspector General for Tax Administration today released Prisoner Tax Refund Fraud: Delays Continue in Completing Agreements to Share Information With Prisons, and Reports to Congress Are Not Timely or Complete (2014-40-091):

Refund fraud associated with prisoner Social Security Numbers remains a significant problem for tax administration. The number of fraudulent tax returns filed using a prisoner’s Social Security Number that were identified by the IRS increased from more than 37,000 tax returns in Calendar Year 2007 to more than 137,000 tax returns in Calendar Year 2012. The refunds claimed on these tax returns increased from $166 million to $1 billion. ...

TIGTA found that the IRS has not yet shared fraudulent prisoner tax return information with Federal or State prison officials. TIGTA also found that the required annual prisoner fraud reports to Congress are not timely and that the reports do not address the extent to which prisoners may be filing fraudulent tax returns using a different individual’s SSN. TIGTA also followed up on a condition identified in a past review and found that IRS processes still do not ensure that all tax returns filed using a prisoner Social Security Number are assigned a prisoner indicator.

Figure 1

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November 25, 2014 in IRS News, Tax | Permalink | Comments (0)

IRS Hires Outside Law Firm to Audit Microsoft

MicrosoftBloomberg, Microsoft Sues IRS Over Law Firm Contract Tied to Audits:

Microsoft sued the IRS seeking information about its contract with a law firm tied to audits of the software maker’s transactions with subsidiaries.

Microsoft wants the complete government contract between the IRS and Quinn Emanuel Urquhart & Sullivan LLP, the firm assisting the agency in examining federal income tax returns for 2004 through 2009, according to the complaint filed today under the Freedom of Information Act in federal court in Washington. The IRS “unlawfully withheld” the information, Microsoft said.

Microsoft submitted a public records request on Sept. 22 seeking information on the contract entered in May for $2.2 million, according to the filing. To date, the IRS hasn’t disclosed the records, Microsoft said. ...

The agency is examining Microsoft’s “transfer pricing,” transactions between the company and its offshore subsidiaries, according to the complaint.

November 25, 2014 in IRS News | Permalink | Comments (0)

The IRS Scandal, Day 565

IRS Logo 2Glenn Reynolds (Tennessee), More on Those 'Found' Emails From Lois Lerner:

I’m cynical enough to suspect that they’ve been found for a long time, and the delay was to (1) get past the midterms; and (2) allow someone to vacuum the archives of any truly incriminating material.

American Thinker:  The Zelig Presidency:

For those familiar with Woody Allen movies, one of his more unusual ones was Zelig, a movie done in a black & white, semi-documentary form about a man played by Woody Allen who has a rare chameleon-like disorder where he takes on the physical and personality traits of those who he is in close proximity. The movie stands out for its uniqueness but is also a commentary on personality, how a person gets one and how it is defined, and is it even possible to be original anymore, especially when it comes to political, artistic and intellectual greatness.

In the case of Obama, he seems to be the Zelig president. He's been taking on the characteristics and actions of past presidents while displaying no originality. He is Nixon using the IRS to target his political enemies. Here he succeeded where Nixon did not. Nixon's IRS director refused to carry out his orders when instructed to do his bidding but Lois Lerner perfected political targeting to an art. (Her problem was that she got caught.)

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November 25, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, November 24, 2014

TIGTA: 50% of IRS Employees With Outside Jobs Do Not Obtain Required Approval; 93% of Employee Computer Records Are Out of Date

TIGTA The Treasury Inspector General for Tax Administration has released Controls Over Outside Employment Are Not Sufficient to Prevent or Detect Conflicts of Interest (2014-10-073):

Generally, IRS employees are allowed to engage in outside employment or business activities after obtaining written approval. Effective controls over outside employment can reduce the risk of conflicts of interest that could result in decisions that are not in the best interest of American taxpayers. ...

IRS records indicate that, in Calendar Year 2011, nearly 3,000 of the more than 6,000 active, full-time IRS employees who held jobs or participated in business activities outside the IRS did not obtain documented approval, as required by Department of the Treasury regulations and IRS policies. IRS Human Capital Office management was generally not aware of the number of employees with unapproved outside employment because responsibility has not been assigned for overseeing the overall outside employment process. In addition, the IRS stated that it does not have authorization to use taxpayer information (e.g., Form W-2, Wage and Tax Statement) to identify employees with unapproved outside income because Internal Revenue Code Section 6103 does not clearly provide that tax data can be used for this purpose.

It will be difficult for the IRS to monitor outside employment because 93 percent of the existing records in the database used to compile outside employment requests are out of date. Moreover, approval of outside employment requests is not always documented on the database or in Official Personnel Folders, in part because of confusing and incomplete guidance.

Improving controls will be important because TIGTA identified current and former IRS employees with both actual and potential conflicts of interest. One employee pled guilty to engaging in a criminal conflict of interest for accessing taxpayer information for the purpose of conducting a private tax and accounting business, 44 IRS employees prepared tax returns for compensation (a prohibited practice), and TIGTA’s analysis identified 20 employees with a high risk of potential conflicts of interest who received outside income without documented approval. For example, four employees operated businesses with annual gross receipts ranging from more than $500,000 to more than $7 million, and six employees had wages of more than $50,000 from outside of the IRS. Significant outside income could impact the employee’s effectiveness on the job.

November 24, 2014 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 564

IRS Logo 2Daily Caller:  How to Ensure The IRS Never Abuses Its Powers Again:

It is not so much whether or when or why the IRS abused its authority by targeting Tea Party and conservative groups. We know by now the answers are: of course, over a period of year, and to aid the re-election of President Obama.

Going forward, the most important question is: How can we prevent it from happening again? The answer may be more complicated than we think. ...

The evidence proves the IRS was used as an abusive political tool to hobble or destroy as many organizations as possible that opposed President Obama’s agenda. The partisan media may continue to suppress this fact, but the denial that it happened at all is growing more absurd by the day. Journalists raised to never trust anyone over the age of 30 now seem to accept any excuse – no matter how implausible – to explain away the scandal.

Once the problem came to light, the director of the IRS Exempt Organizations Division claimed to have “lost” her emails. At the same time, the IRS was known to sanction individuals for not maintaining seven years of receipts. Would the New York Times have accepted this excuse from the Koch Brothers? ...

[W]hat the IRS did to Tea Party organizations is tyranny personified and it cannot be ignored or forgiven, because it can happen to anyone who opposes the policies of the powerful. ...

This controversy presents us with an opportunity to remove the Internal Revenue Service from political influence altogether. Anyone who respects the separation of powers, regardless of whether they are conservative, liberal, moderate, libertarian or anything else, ought to see the wisdom in separating IRS enforcement and presidential appointments.

Appointments by the president are, by and large, intended to mirror his political decisions. The IRS, however, is different. Because of its massive power and essentially unlimited authority, it must be more than fair – it must be 100 percent non-political. Even if this is unattainable, every attempt must be made.

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November 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, November 23, 2014

The IRS Scandal, Day 563

IRS Logo 2New York Post editorial:  Silence of the Schumer:

It wasn’t so long ago Chuck Schumer was obsessing over the idea that the tax code was being abused for partisan purposes.

Back in March 2012, he and six fellow Democratic senators wrote the IRS demanding more scrutiny for 501(c)4 groups who claimed they were involved in “social welfare” but were “devoted chiefly to political election activities who operate behind a facade of charity work.”

Later, the IRS started singling out conservative organizations for special treatment and delay.

But times have changed. Now we have a story in The New York Times about an individual deeply involved in politics who has a 501(c)4 that, as the Times puts it, appears to rank “among the most delinquent nonprofit organizations in the nation.”

The individual: the Rev. Al Sharpton. His organization: the National Action Network, which has failed to pay payroll taxes over the years. Sharpton says this wasn’t intentional but stemmed from a dispute on how to classify some independent contractors.

Nonetheless, Sharpton still flies first class and collects a nice salary from NAN as he zips between New York, Ferguson, Mo., and Washington, DC.

As the Times also reports, it’s the “kind of practice by nonprofit groups that the United States Treasury’s inspector general recently characterized as ‘abusive’ or ‘potentially criminal’ if the failure to turn over or collect taxes is willful.”

Considering how eager Sen. Schumer was to ensure 501(c)4’s weren’t gaming the tax system, we felt sure we would hear the senator thumping loudly for the IRS to take a hard look at the National Action Network.

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November 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, November 22, 2014

The IRS Scandal, Day 562

Wall Street Journal:  IRS Finds Missing Emails of Former Top Official Lerner in Targeting Probe:

The watchdog agency for the Internal Revenue Service said it has found as many as 30,000 missing emails that could be relevant to a long-running congressional inquiry into alleged IRS targeting of conservative groups.

Investigators for the Treasury Inspector General for Tax Administration recently recovered the emails from IRS backup tapes, according to a spokeswoman for the watchdog agency. The emails belong to a former top IRS official, Lois Lerner, who has been a focus of congressional inquiries. ...

Top IRS officials had told lawmakers that backup tapes were routinely recycled and therefore weren't useful in the effort to find the missing email records. The agency said it had used other employees’ hard drives to recover thousands of the missing emails.

But TIGTA investigators succeeded in locating thousands of Ms. Lerner’s emails on the backup tapes. ...

The IRS said in a statement: “As Commissioner Koskinen has stated, the IRS welcomes TIGTA’s independent review and expert forensic analysis. Commissioner Koskinen has said for some time he would be pleased if additional Lois Lerner emails from this time frame could be found.”

The revelations promise to draw new attention to the targeting controversy, just before lawmakers return to Washington for the new Congress next year. TIGTA officials told lawmakers on Friday about the discovery of the missing emails, but congressional aides said it could take some weeks before the emails are sorted and in shape to examine. The emails must be decrypted and in some cases must be redacted to remove taxpayer-identifying information, aides said.

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November 22, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Friday, November 21, 2014

The IRS Scandal, Day 561

IRS Logo 2Legal Insurrection:  IRS Fears Employees Being “Seized With Spontaneous Diarrhea”, by WIlliam Jacobson (Cornell):

Hey, remember the Reader Poll we did about whether it was okay to follow and try to interview Lois Lerner in her neighborhood? ... 

Someone noticed the comments to the blog post.  The IRS.  And it’s not happy.

In a federal FOIA lawsuit by Judicial Watch seeking records of Lerner emails and IRS efforts to retrieve the emails, the IRS used two of the comments to the Legal Insurrection Reader Poll post to justify the IRS no longer disclosing the identities of IRS personnel.

Think about that. The IRS is reading our comments. Don’t they have anything better to do, like hassle conservative groups seeking tax-exempt status? On second thought, keep reading our comments and leave conservative groups alone.It’s all set forth in the IRS’s opposition to Judicial Watch’s Motion to Compel Discovery. You can read the whole thing here.

The Legal Insurrection post is Exhibit D to the IRS affidavit. ...

Does the IRS really fear “public whipping with a buggy whip” and being in such fear its employees are “seized with spontaneous diarrhea”?

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November 21, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, November 20, 2014

GAO Report on 'Supersize' IRAs

Super Size MeFollowing up on my previous posts:

GAO, IRS Could Bolster Enforcement on Multimillion Dollar Accounts, but More Direction from Congress Is Needed (GAO-15-16):

For tax year 2011 (the most recent year available), an estimated 43 million taxpayers had individual retirement accounts (IRA) with a total reported fair market value (FMV) of $5.2 trillion. As shown in the table below, few taxpayers had aggregated balances exceeding $5 million as of 2011. Generally, taxpayers with IRA balances greater than $5 million tend to have adjusted gross incomes greater than $200,000, be joint filers, and are age 65 or older. Large individual and employer contributions sustained over decades and rolled over from an employer plan would be necessary to accumulate an IRA balance of more than $5 million. There is no total statutory limit on IRA accumulations or rollovers from employer defined contribution plans.

Estimated Taxpayers with Individual Retirement Accounts (IRA) by Size of IRA Balance, Tax Year 2011

Estimated Taxpayers with Individual Retirement Accounts (IRA) by Size of IRA Balance, Tax Year 2011

A small number of taxpayers has accumulated larger IRA balances, likely by investing in assets unavailable to most investors—initially valued very low and offering disproportionately high potential investment returns if successful. Individuals who invest in these assets using certain types of IRAs can escape taxation on investment gains. For example, founders of companies who use IRAs to invest in nonpublicly traded shares of their newly formed companies can realize many millions of dollars in tax-favored gains on their investment if the company is successful. With no total limit on IRA accumulations, the government forgoes millions in tax revenue. The accumulation of these large IRA balances by a small number of investors stands in contrast to Congress's aim to prevent the tax-favored accumulation of balances exceeding what is needed for retirement.

(Hat Tip: Greg McNeal.)

November 20, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 560

IRS Logo 2American Spectator:  The Lois Lerner Curve: How Anti-corruption Laws Cause Even More Corruption:

Corrupt countries, where the rule of law is weak and political pilfering is common, are poor countries. Entrepreneurs and investors cannot safely start or finance businesses in states that don’t respect property rights and honor contracts, or that use the levers of the government to go after political opponents. And it’s not as though America doesn’t have a corruption problem. On Transparency International’s Corruption Perceptions Index, the U.S. comes in at number 19, behind most of the rest of the First World.

For anyone following the Lois Lerner scandal, that’s not surprising. What should be surprising, perhaps, are her defenders. Lerner tampered with IRS nonprofit applications, and revealed them only when an Inspector General was about to report on them. Then the cover-up began. The IRS put out a story that blamed the shenanigans on low-level Cincinnati employees. We were told that the IRS hadn’t picked on conservative any more than liberal groups. All lies. Then Lerner pled the Fifth, and her emails mysteriously disappeared. ...

[T]here’s another reason why the Lois Lerner scandal was to be expected: we have an excess, not an insufficiency, of laws. Now, we do need laws to police corruption of the obvious sort, such as bribery and extortion. But anti-corruption laws can cause more corruption than they prevent when they rely on complicated five-point standards of the kind loved by Anthony Kennedy and law school professors, with balanced and nuanced rules that seek to apply a scalpel to tasks better suited to an earthmover. We end up giving politicized bureaucrats a weapon to use against their opponents. It’s like handing a match to a giddy pyromaniac.

I call this the Lois Lerner Curve. With few laws policing corruption, there’s a lot of it. Then, as law enforcement increases, corruption declines, down to point zero on the curve. Thereafter, however, additional laws result in more corruption, because citizens and bureaucrats alike become lost in the complexity and enforcement is unevenly applied. ...

Lerner

I think of this when I read about proposals for campaign finance reform. Sure, there’s room for cleaning up the pay-for-play politics of crony capitalism and the gerrymandering that makes most Congressional seats into fiefdoms for life. And there are well-meaning people, like Harvard’s Larry Lessig, who for honest motives want to limit campaign spending. Whatever their intentions, however, what they would do is take our election laws up the right-hand side of the Lois Lerner Curve, resulting in more corruption. Lurking behind them are Lois Lerner’s duplicitous partisans, the bare-knuckled street fighters who seek to end the scandal of Republican money in politics, and who would give us a country as free of corruption as Russia. They are scoundrels in the cause of honor, whores who clamor for morality, thieves in defense of property rights. 

Was that a little rough, just now? Then let me remind you about True the Vote, the conservative vote-monitoring organization led by Catherine Englebrecht. True the Vote trains volunteers to record and report on suspicious voter registrations. We’re not talking about the New Black Panthers with their baseball bats, but nevertheless Rep. Elijah Cummings opened up a congressional investigation into the group. His staffers wrote to Lois Lerner about it, and subsequently the IRS questioned its tax-exempt status. In in short order Engelbrecht’s business was visited by the FBI, ATF, and OSHA. She testified about this in February, and what’s interesting is how Democrats treated her. Cummings questioned her about her possible racist motives, and Gerry Connolly complained of McCarthyism and mocked her “paranoia” for thinking the audits might have been politically motivated.

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November 20, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Wednesday, November 19, 2014

The IRS Scandal, Day 559

Tuesday, November 18, 2014

The IRS Scandal, Day 558

IRS Logo 2Town Hall, The IRS Hatchetmen:

[W]hen the Joint Committee on Taxation was started, it was a temporary committee and that was founded because the IRS (then called the BIR) was engaged in the same type of political bullying and illegality that conservatives have used against the Tea Party since 2010.

Senator James Couzens of Michigan, who helped found the JTC, was the Larry Ellison of his day. Like Ellison, who co-founded Oracle, Couzens made his money as the number two guy and management genius behind Henry Ford and Ford Motors. ... As a Republican from Michigan he was considered a progressive and opposed tax cuts, supported the graduated income tax and–like another rich guy, Warren Buffet—acted as the self appointed popular voice against rich corporations, railing against favorable tax treatment for companies.

At the time Secretary of the Treasury, Andrew Mellon, himself one of the richest men in America was advocating a scientific basis for taxation, “the use of economic theory to identify the tax rates that would maximize revenue yet burden productive capital as little as possible,” according to George K. Yin at the University of Virginia Law School. In short he was proposing an infant Laffer curve.

Mellon noted that tax policy was distorting the distribution of capital with companies less willing to pay dividends to shareholders because of the hostile tax treatment dividends received. He also noted that wealthy people were more inclined to invest in tax-free municipal securities because of the different tax treatment that cities and states had versus corporations.

As a progressive Republican Couzens argued against Mellon, using his own status as a rich man to make his point. His argument—in a preview of Warren Buffet’s own stupidity—was that tax treatment made little difference in what types of investments rich people made. ...

By inviting scrutiny of his tax situation, however, Couzen challenged Mellon publicly and also admitted that the tax treatment of investments changed his behavior. The result eventually was an examination in 1925 of Couzen’s tax liability for the sale of his Ford Motor stock in 1913, according to Yin, which was supposed to amount to 73 percent of the gains from the stock, a tax that Couzen said he supported.

The affair became unseemly with both sides using private tax records as weapons against the other. And when Couzens made the affair public in the Senate, the Senate was outraged that a sitting Senator would be subject to retaliation by an adinistration.

Thus was born the Joint Committee on Taxation whose expressed aim was to "investigate and report upon the operation, effects, and administration of the Federal system of income and other internal revenue taxes and upon any proposals or measures which in the judgment of the Commission may be employed to simplify or improve the operation or administration of such systems of taxes,” according to the JTC’s website.

In reality however it was there to stop internal revenue from being used as a political weapon.

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November 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, November 17, 2014

The IRS Scandal, Day 557

Sunday, November 16, 2014

The IRS Scandal, Day 556

Saturday, November 15, 2014

The IRS Scandal, Day 555

IRS Logo 2Yahoo! Finance:  Politicization of the IRS: Full Disclosure Network Special Video Report:

Watch this 8 minute FDN Video where it is revealed that Obama Administration officials were directing the IRS campaign against political groups critical of the President's policies according to the documents obtained by Paul Orfanedes, Director of Litigation for the public interest law firm Judicial Watch. Orfanedes reveals the tactics used by IRS Director Lois Lerner that deceived the media by where public documents had been withheld from Freedom of Information Act Requests (FOIA) filed by Judicial Watch. He also explains why Judicial Watch is determined to find all the missing Lois Lerner emails and how the IRS was able to shut down Patriot and Tea Party organizations by denying them Tax Exempt Status. 

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November 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Friday, November 14, 2014

The IRS Scandal, Day 554

IRS Logo 2Breitbart, The IRS-Benghazi Congress:

Benghazi and the IRS dominated the news this year thanks to Judicial Watch’s work in exposing smoking gun documents in both scandals – work that left Congress and much of the other media looking feeble. JW’s work can change history. Our intent is to get the truth, and we spared neither party from criticism. But voters were outraged at our findings and the scandals were a major factor in the election. 

Almost half, 49 percent, said the results of the 2012 presidential election would have been different if the public knew the facts then that it knows now about the Obama administration’s initial, misleading story about what happened in Benghazi and the targeting of conservative groups through the IRS. 

In no small way, this new Congress is the Benghazi-IRS Congress. The expanded House majority, which has a historic number of Republican members, and the massive wave that led to the Republican takeover of the Senate were the result of voter concerns about Obama’s IRS abuse and the Benghazi deaths and cover-up. 48 percent of voters said the IRS scandal influenced their vote, and of those concerned Americans, 71 percent voted for Republicans to take over the Senate. The numbers are similar for Benghazi; 39 percent said the scandal influenced their vote and 64 percent who were concerned about the terrorist attack this president lied about to get reelected say they voted for Republicans in the Senate. ...

The new Congress has a strong mandate to pursue Obama’s abuse of power in the IRS scandal, hold him accountable for the Benghazi lies, protect our borders, close the door on amnesty, end Obamacare, confront government secrecy, and ensure the integrity of our elections. Judicial Watch has been happy to do the job of Congress, the establishment media, and the Justice Department for six years. Again, this election shows that Americans want Congress to follow our lead and get Washington back under the rule of law.

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November 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, November 13, 2014

GAO: IRS Lacks Adequate Internal Controls

GAOGovernment Accountability Office, IRS's Fiscal Years 2014 and 2013 Financial Statements (GAO-15-173):

In GAO's opinion, the Internal Revenue Service's (IRS) fiscal years 2014 and 2013 financial statements are fairly presented in all material respects. However, in GAO's opinion, IRS did not maintain effective internal control over financial reporting as of September 30, 2014, because of a continuing material weakness in internal control over unpaid tax assessments. ...

During fiscal year 2014, IRS continued to make important progress in addressing deficiencies in internal control over its financial reporting systems. However, GAO identified new and continuing deficiencies in internal control over information security, including missing security updates, insufficient monitoring of financial reporting systems and mainframe security, and ineffective maintenance of key application security, that constituted a significant deficiency in IRS's internal control over financial reporting systems. Until IRS fully addresses existing control deficiencies over its financial reporting systems, there is an increased risk that its financial and taxpayer data will remain vulnerable to inappropriate and undetected use, modification, or disclosure.

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November 13, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 553

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

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November 13, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, November 12, 2014

Death of Ginny Chung

Chung 2Ginny Chung, Acting Deputy International Tax Counsel at the Treasury Department, died of colon cancer last Saturday at the age of 43.  From her Washington Post obituary:

She earned her undergraduate degree from Wellesley College, her JD from Emory University, and a Master of Laws in Taxation from Georgetown University. Ginny spent all of her professional life working for the United States Government, first for the IRS and most recently serving as the Acting Deputy International Tax Counsel for the Department of the Treasury. ...

Ginny is survived by her husband Aaron King; two children [ages 5 and 10]; her parents George and Grace Chung of New Jersey; and sister Christine Chung of London.

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November 12, 2014 in IRS News, Obituaries, Tax | Permalink | Comments (1)