TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Saturday, March 25, 2017

Amazon Beats IRS In $1.5 Billion Tax Court Case

Amazon logoSeattle Times, Amazon Wins $1.5 Billion Tax Battle With IRS:

Amazon.com scored a big victory Thursday against the IRS in a case that the company says could have cost it about $1.5 billion [Amazon.com v. Commissioner, 148 T.C. No. 8 (Mar. 23, 2017)].

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March 25, 2017 in IRS News, New Cases, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1416:  The Root Problem Is The Law, Not The IRS

Hackney (2017)Philip Hackney (LSU) delivered the Norman A. Sugarman Memorial Lecture in Nonprofit Law at Case Western yesterday on Improving IRS Charity Oversight: Responsible Congressional Delegation, Responsive IRS Rulemaking:

Whether you think it fair or unfair, there is a large segment of American society who believes the IRS targeted conservative groups trying to obtain tax-exempt status from at least 2011-2013, leading to explosive accusations on the professional integrity and political bias of the agency.

In this lecture, Professor Hackney, James E. & Betty M. Phillips Associate Professor of Law, LSU Law Center, will clarify how this charge is unfair or at the least deeply misguided, explaining that root problem is not the alleged political litmus test by the IRS in considering tax exempt status in the charitable sector, but rather the law — both in its construction and implementation.

Congress has provided vague legal standards for the IRS to implement in the tax exempt arena, resulting in costly enforcement attempts that have undermined the public’s confidence that the laws are being enforced in a fair and impartial manner. To solve this issue, Congress should enact standards in this arena, but that the Treasury Department and the IRS ought to implement rules.

This lecture will consider the political, legal, and technical challenges to adopting such a rule-based regime for charity oversight.

See Philip Hackney, Charitable Organization Oversight: Rules v. Standards, 13 Pitt. Tax Rev. 83 (2015).

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March 25, 2017 in IRS News, IRS Scandal, Scholarship, Tax | Permalink | Comments (2)

Friday, March 24, 2017

The IRS Scandal, Day 1415:  ‘Media Attention’ And IRS Abuse

IRS Logo 2Wall Street Journal op-ed: ‘Media Attention’ and IRS Abuse: A Simple Rule Fix Could End Partisan Targeting Tomorrow, by John J. (President & CEO, Cause of Action Institute):

The Internal Revenue Service’s targeting of Americans for their political views may have ended with the Obama administration — or even with its exposure in 2013. But it could easily recur. Even now, an internal IRS rule singles out applicants for nonprofit status who might be tied to anything newsworthy.

The genesis of the targeting scandal was Section 7.29.3 of the Internal Revenue Manual. As noted in a report my organization is issuing Wednesday, this manual dictates how IRS employees handle everything from customer service to criminal investigations. This particular section tells them to flag for further review any application for tax-exempt status that might “attract media or Congressional attention.”

That’s a broad, vague and subjective command that career IRS employees are nevertheless required to follow. Emails between IRS personnel make clear that low-level employees were guided by this rule throughout the targeting scandal. They repeatedly cited “media attention” on the Tea Party as the reason to single out and delay applications from conservative groups.

This rule means that IRS enforcement reflects the ideological biases of the media. Aside from a small number of groups related to the Occupy Wall Street movement and the defunct advocacy group Acorn, libertarian and free-market groups were almost exclusively targeted.

These provisions of the IRS manual have nothing to do with the merits of a nonprofit application and everything to do with keeping the agency from looking bad. It is inappropriate for a group’s tax-exempt status to be deep-sixed because of negative publicity. In the targeting scandal, this approach allowed partisan concerns to overtake the application process, resulting in the unfair treatment of political viewpoints at odds with the Obama administration.

Equal justice under the law demands that the IRS abandon the “newsworthy” criterion. To date, however, the agency has promised only to stop making lists of targeted groups “until further notice.” Even if the halt were permanent, it wouldn’t be enough. IRS officials are still required to follow the manual and pull high-profile applications for enhanced scrutiny.

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March 24, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, March 20, 2017

Fewer Than 1,000 Taxpayers Come Clean To The IRS On Virtual Currency Transactions

Bitcoin IRSFortune, Only 802 People Told the IRS About Bitcoin—Lawsuit:

The Internal Revenue Service revealed new details about its investigation into tax evasion related to bitcoin, filing court documents that suggest only a tiny percentage of virtual currency owners are reporting profits or losses in their annual returns.

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

The IRS Scandal, Day 1411: Why Did Donald Trump Fire Sally Yates And Preet Bharara, But Not John Koskinen?

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Washington Examiner, Why Is Trump Afraid of Draining the Swamp at the IRS and Firing John Koskinen?:

Political cartography in Washington can be difficult. After three months in office, it's clear President Trump doesn't believe the D.C. bog includes the federal building at the corner of 12th Street and Pennsylvania Avenue. He won't drain the swamp at the Internal Revenue Service.

Famous for firing people, Trump has disrupted the status quo in the nation's capital with his personnel decisions. He quickly terminated Acting Attorney General Sally Yates, then sacked 46 federal prosecutors. But he won't ax IRS Commissioner John Koskinen.

Conservatives have been gunning for the tax chief's scalp for years. To no avail, they've tried shaming, officially censuring, and impeaching Koskinen. But now that Trump's in the White House, they're wondering why the president is sheltering the taxman. ...

The Trump White House keeps dodging the question. On Friday, press secretary Sean Spicer referred curious reporters inquiring about Koskinen's fate to the Treasury Department, even after it came to light that the agency still has 7,000 unreleased documents related to the scandal. ...

Trump has every reason to dismiss the tax agent. With Koskinen at the helm, the IRS was able to cover up its targeting scandal. Brought in by President Obama to clean up the agency's image, he turned a blind eye as the IRS covered up its scandal and continued to violate citizen's First Amendment rights.

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March 20, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Sunday, March 19, 2017

The IRS Scandal, Day 1410: Judicial Watch Forces Disclosure Of New Documents

IRS Logo 2

Breitbart op-ed: Obama IRS Scandal Continues – Judicial Watch Forces IRS to Disclose New Documents, by Tom Fitton (President, Judicial Watch):

We have no intention to allow the extra-legal activities of former President Obama’s administration to fade into the sunset now that he is out of office. Particularly egregious was his use of the might of the Internal Revenue Service (IRS) to target groups that disagreed with his political views.
And heel-dragging at the IRS continues.

Last week, Judicial Watch reported that the agency informed the U.S. District Court that it located “an additional 6,924 documents of potentially responsive records” relating to our 2015 Freedom of Information Act (FOIA) lawsuit regarding the Obama IRS targeting scandal.

The lawsuit at issue sought records about the IRS selection of individuals and organizations for audits based upon applications requesting non-profit tax status filed by Tea Party and other 501(c)(4) tax-exempt organizations (Judicial Watch v. Internal Revenue Service (No. 1:15-cv-00220)). ...

The corruption at the IRS is astounding. Our attorneys knew that there were more records to be searched, but the Obama IRS ignored this issue for years.

Remember that in July 2015, we released Obama IRS documents confirming that the agency used donor lists of tax-exempt organizations to target those donors for audits. The documents also show that IRS officials specifically highlighted how the U.S. Chamber of Commerce may come under “high scrutiny” from the IRS.

In September 2014, another JW FOIA lawsuit forced the release of documents detailing that the IRS sought, obtained, and maintained the names of donors to tea party and other conservative groups. IRS officials acknowledged in these documents that “such information was not needed.” The documents also show that the donor names were being used for a “secret research project.”

The Obama IRS scandal continues, and President Trump needs to clean house at the IRS as quickly as possible.

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March 19, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, March 18, 2017

The IRS Scandal, Day 1409:  'After School Satan Club' Granted Tax-Exempt Status In 10 Days While Conservative Groups Waited Years

IRS Logo 2

Judicial Watch Press Release, IRS Gives “After School Satan Club” Tax-Exempt Status in 10 Days:

While the Internal Revenue Service (IRS) makes conservative groups wait years for tax-exempt status an “After School Satan Club” launched to hinder Christian-based counterparts got its nonprofit ranking in just ten days, records obtained by Judicial Watch show. The classification is offered to charitable, religious and educational organizations that operate as nonprofits. Under the Obama administration IRS political appointees illegally targeted conservative groups, either making them wait up to seven years for tax-exempt status or denying their application altogether. Judicial Watch uncovered that scandal and has obtained piles of government records showing how the IRS illegally colluded with another federal agency to single out groups with conservative-sounding terms such as patriot and Tea Party in their titles when applying for tax-exempt status.

In the meantime, leftist groups like the Satan club got fast tracked. The principle goal of establishing the Satan clubs in public schools throughout Washington State appears to be to counter existing enterprises operated by a Christian-based group. Documents obtained by Judicial Watch include the process of establishing an after-school Satan club at Point Defiance Elementary in Tacoma. The entity behind the club is a nonprofit called Reason Alliance, which is based in Somerville, Massachusetts, and operates in Washington State as the Satanic Temple of Seattle. Its director, Lilith X. Starr, established the Point Defiance Elementary Satanic club, the records show. In its application the club states that its purpose is “character development” and that adult instructors are vetted by the Satanic Temple’s “Executive Ministry.” Children ages 5-12 will develop basic critical reasoning, character qualities, problem solving and creative expression, according to the Satanic Temple filings included in the documents. The club logo is a pencil with devil’s horns. Records obtained by Judicial Watch from the Treasury Department show that the Satanic cult applied for tax-exempt status on October 21, 2014 and received it on October 31, 2014.

The parent permission forms ask for the name of the child’s church and pastor, the records show. They also reveal that Starr, the Seattle Satanic Temple director, told Tacoma School District Superintendent Carla Santorno that the clubs are led by “caring Satanists” and each child receives a membership card. Starr also tells the superintendent that the effort to establish after-school Satan clubs in Tacoma schools is in direct response to the Christian-based Good News Clubs operating in campuses throughout the district. This ignited concern among some Tacoma district officials, the records show. In one electronic mail exchange, Tacoma Schools official Andrea O-Brien-Henley sends colleague Paul Koch a citation from the Satanic Temple’s website noting that the temple only wants to establish after-school Satan clubs in school districts with Christian Good News Clubs. O’Brien-Henley notes that it’s odd that the Satanic Temple only targets schools that have Good News Clubs, writing to hear colleague: “If they really want to get their message out to kids it seems kind of odd that they would only be targeting schools with a Good News Club; one would think that they would want to start clubs anywhere there is an *interest* in them.”

Here’s the citation that O’Brien-Henley forwarded to fellow school district official Koch from the Satanic Temple’s website: “How do I start an After School Satan Club in my school district? If there isn’t a chapter of The Satanic Temple near you, but you’re interested in starting and After School Satan Club in your school district, please contact The Satanic Temple. Please keep in mind that the Satanic Temple is not interested in operating After School Satan Clubs in school districts that are not already hosting the Good News Club. However, The Satanic Temple ultimately intends to have After School Satan Clubs operating in every school district where the Good News Club is represented.”

In another exchange, the Executive Director of Communications for the Tacoma School District, Dan Voelpel, expresses concern to colleagues that people will confuse the school district’s message of tolerance toward the Satan Club with tolerance toward alleged “hate-related activities around the country in the wake of the presidential election.” In the records the principal of Point Defiance Elementary reveals that, two weeks after the Satan club was launched, no one had signed up for it. The fact remains however, that the IRS fast-tracked a deranged Satanic cult to operate as a nonprofit in taxpayer-funded elementary schools.

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March 18, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Friday, March 17, 2017

The IRS Scandal, Day 1408: Why Won't The Media Cover It?

IRS Logo 2

The Hill op-ed: Why Won't the Media Cover IRS Scandals?, by Jenny Beth Martin (President & Co-Founder, Tea Party Patriots):

Sometimes the most insidious attack on our individual liberty arises not from the government’s wholesale trampling on those rights, but instead from a widespread chilling effect, in which individuals “self-police” or regulate their behavior out of fear of the government’s retaliation.

The years-long IRS scandal surrounding its abuse of power when it engaged in a systematic targeting of conservatives is a powerful example of the government’s ability to initiate a chilling effect on free speech.

It has been nearly four years since the IRS admitted in May of 2013 to singling out and targeting conservative groups, especially tea party groups, for additional scrutiny, onerous paperwork, and even audits. The IRS’s abusive targeting, which lasted for years, was entirely motivated by political animus and caused untold — incalculable, even — devastation to conservatives and to conservative groups. ...

After meeting with, and speaking with, hundreds of local tea party organization members in 2013, I was convinced of three key points: 1) the IRS’s targeting scandal had had a profound impact on organizations’ abilities to attract new members, fundraise, and engage on important policy battles; 2) the chilling effect of the federal government’s actions was real, devastating, and impossible to calculate; and 3) the American public needed to know the full extent of the targeting scandal so we could ensure it would never happen again.

When news of the targeting became public, the media was completely disinterested. And, now, four years later, it seems, not much has changed with the media’s interest levels.

Just this past week, the IRS revealed that it had found nearly 7,000 documents potentially related to the targeting of tea party groups. Yes, the agency that has stone-walled Congress for four years, lost computers and hard drives and tens of thousands of emails, just discovered 6,924 documents in response to an ongoing Freedom of Information Act (FOIA) request from Judicial Watch.

Mainstream media outlets have barely reported on this latest revelation at all. And why should they? It’s only the latest chapter in a tome the media has made clear it has no intention of sharing with the American public. ...

Two hallmarks of a free society are that individuals do not have to live in fear that their political views or activities will cause them to be subjected to abuse by the federal taxing agency, and that the press holds government accountable when it becomes abusive to its citizens. It seems, in both areas, we have a lot more work to do.

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March 17, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Thursday, March 16, 2017

The IRS Scandal, Day 1407: NY Post Editorial, Fire The IRS Chief Already, Mr. President

IRS Logo 2

New York Post Editorial, Fire the IRS Chief Already, Mr. President:

Why is IRS Commissioner John Koskinen still in office? A growing number of Capitol Hill Republicans want to know — and they have good reason to be troubled.

When he took over in 2013, Koskinen was supposed to “fix” the IRS — and in particular get to the bottom of the scandal in which the agency deliberately held up approvals for 75 conservative and Tea Party groups that had applied for legitimate tax exemptions.

Instead, what Congress and the public got from him was obstruction, open defiance and a refusal to discipline anyone at the agency. Indeed, he seemed most concerned with running interference to shield the Obama administration from any embarrassment.

Nor was he alone: The Obama Justice Department refused to bring criminal charges against anyone at the IRS. To date, no one has been held accountable for what even liberal legal icon Laurence Tribe has called “inexcusable abuse.” ...

It’s clear there’ll be no IRS reforms while Koskinen is in office. He’s the No. 1 candidate in Washington for President Trump’s signature line: “You’re fired.”

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March 16, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, March 15, 2017

IRS Strips Tax-Exempt Status From Richard Spencer's White Nationalist Nonprofit

NPI 3Following up on my previous post, Alt-Right Group Has Not Filed Form 990s Due To IRS Error, Allowing Group's Finances To Escape Scrutiny:  Los Angeles Times, IRS Strips Tax-Exempt Status from Richard Spencer's White Nationalist Nonprofit:

The nonprofit run by one of America’s most prominent white nationalists, Richard Spencer, has lost its tax-exempt status for failing to file tax returns with the federal government, according to Internal Revenue Service records.

An inquiry by The Times also raised questions about whether Spencer had properly filed paperwork allowing the National Policy Institute to raise funds in Virginia, its primary place of business, and whether Spencer, a Donald Trump supporter, had flouted federal rules that forbid nonprofits from supporting or opposing political candidates.

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

Monday, March 13, 2017

Second International Conference On Taxpayer Rights Kicks Off Today In Vienna

The IRS Scandal, Day 1404: Attorney General Sessions Weighs Appointing Special Counsel To Investigate Obama's Justice Department Scandals

IRS Logo 2

Hugh Hewitt, Attorney General Jeff Sessions:

Hugh Hewitt:  Now let me switch to the Department itself, Mr. Attorney General. It had a bad eight years. I’m a proud veteran of the Department of Justice, as you are. But the IRS case, the Fast and Furious case, Secretary Clinton’s server, the Department of Justice came under great criticism. How about an outside counsel, not connected to politics, to review the DOJ’s actions in those matters with authority to bring charges if underlying crimes are uncovered in the course of the investigation, and just generally to look at how the Department of Justice operated in the highly-politicized Holder-Lynch years?

Jeff Sessions:  Well, I’m going to do everything I possibly can to restore the independence and professionalism of the Department of Justice. So we would have to consider whether or not some outside special counsel is needed. Generally, a good review of that internally is the first step before any such decision is made.

Hugh Hewitt:  Will you be looking at the IRS investigation specifically, because that left many of us thinking that the Department of Justice had laid down for a terrible abuse of political power?

Jeff Sessions:  It does. That circumstance raised a lot of questions in my mind, and when I was in the Senate. So it is a matter of real concern to me.

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

Sunday, March 12, 2017

The IRS Scandal, Day 1403: Should Koskinen Remain, Resign, Or Be Fired?

Saturday, March 11, 2017

The IRS Scandal, Day 1402: IRS Locates 7,000 Documents Related To Tea Party Targeting

IRS Logo 2Washington Free Beacon, Two Years Later, IRS Locates 6,924 Documents Related to Tea Party Targeting; Agency Will Not Commit to a Timeframe to Make the Documents Public:

The Internal Revenue Service has located 6,924 documents potentially related to the targeting of Tea Party conservatives, two years after the group Judicial Watch filed a Freedom of Information Act lawsuit for them.

The watchdog group intended to find records regarding how the IRS selected individuals and organizations for audits that were requesting nonprofit tax status.

The agency will not say when it will make the documents available to the public.

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March 11, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, March 10, 2017

Low Income Taxpayer Clinic Annual Report

The IRS yesterday released (IR-2017-56) Program Report and 2017 Publication 4134, Low Income Taxpayer Clinic List:

LITC

LITC Program Report
The Internal Revenue Service’s Low Income Taxpayer Clinic (LITC) Program Office has issued its annual program report, which details how LITCs have provided representation, education, and advocacy for taxpayers who are low income or speak English as a second language (ESL).

During 2015, LITCs represented 18,751 taxpayers in disputes with the IRS and provided consultation or advice to an additional 18,810 taxpayers. LITCs helped taxpayers secure more than $4.3 million in tax refunds and eliminate more than $64 million in tax liabilities, penalties, and interest.

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March 10, 2017 in IRS News, Tax | Permalink | Comments (0)

Friday, March 3, 2017

NY Times:  Trump's Budget Proposes Deep Cuts In Already Depleted IRS

IRS Logo 2New York Times, Under Trump, an Already Depleted I.R.S. Could Face Deep Cuts:

President Trump has a rocky history with the Internal Revenue Service, which he has complained audits him with unfair ferocity. Now he wants to significantly cut the tax agency’s funding at a time when it has already been bleeding staff and struggling to keep up with a flood of returns ahead of Tax Day.

The plans, revealed this week in documents associated with the White House budget outline, put Mr. Trump at odds with his Treasury secretary, Steven Mnuchin, who has argued that the I.R.S. needs more money and a larger staff.

Another round of cuts, tax experts say, could put one of the few federal departments that pays for itself on life support. “This is an agency that has had every last drop squeezed out of it,” said Dennis J. Ventry Jr., a member of the I.R.S. advisory council and a law professor at the University of California, Davis. “I don’t know how it’s going to sustain itself.”

The White House budget office has proposed a 14.1 percent cut to the I.R.S. for the fiscal year that begins in October, reducing the agency’s budget to $9.65 billion; six years ago, it stood at $12.1 billion ($13.6 billion when adjusted for inflation).

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March 3, 2017 in IRS News, Tax | Permalink | Comments (4)

Thursday, February 23, 2017

IRS Audit Rate Of Individuals (0.7%), Businesses (0.5%) Falls To 10+ Year Lows Due To Budget Cuts

Audit (2016)Wall Street Journal, IRS Audits of Individuals Drop for Fifth Straight Year:

U.S. tax audits of individuals declined for the fifth straight year in 2016 to reach the lowest level since 2003, showing the effects of budget cuts at the Internal Revenue Service.

The IRS, which has lost 30% of its enforcement staffing since the 2010 peak, audited 0.7% of tax returns in the fiscal year that ended Sept. 30, according to preliminary data released Wednesday. That means the IRS audited roughly 1 in every 143 individual tax returns, down from 1 in 90 back in 2010.

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February 23, 2017 in IRS News, Tax | Permalink | Comments (5)

Camp & Thuronyi:  An IRS Whistleblower Could Release Trump's Tax Return To Congress Under § 6103(f)

Trump Tax ReturnsFollowing up on my previous posts (links below):  Forbes, Disclosing President Trump's Tax Returns — An Unconventional Idea, by Bryan Camp (Texas Tech) & Victor Thuronyi (former Lead Counsel, (Taxation), IMF):

Lots of folks want to see Donald Trump’s tax returns. Conventional wisdom is that the returns cannot be disclosed unless he consents. That conventional wisdom is based on the general rule contained in 26 U.S.C. § 6103(a). The general rule forbids IRS employees (and some folks who receive information from IRS employees) from disclosing “return information.” That is a term of art that means not just tax returns but also just about anything in the IRS files.

Section 6103 is a really complex statute, mostly because of the exceptions to the general rule. The exceptions are found in subsections (c) through (o). These exceptions balance a taxpayer’s privacy with the needs of government officers and employees to do their jobs. So the exceptions to the general rule can get quite gnarly.

Several commentators have begun to explore some of the lesser-known exceptions to the general rule of nondisclosure. George Yin has a nice op-ed piece that explains one exception to the general rule in § 6103: Congress can ask for Trump’s returns. Andy Grewal also explores this idea in a well-done post over at the Yale regulation blog. Both posts are worth reading.

Both George and Andy focus on the power of certain congressional committees and staff to ask for tax returns as part of their oversight function. That power is found in § 6103(f)(1) through (f)(4). Democrats have acted on the ideas in George and Andy’s blogs. Stephen Ohlemacher from the AP reports that Democrats on the House Ways and Means Committee tried to get the committee to ask for Trump’s returns, but were outvoted by committee Republicans.

But what if the returns were dumped on the committee’s lap by an IRS employee without the Committee having made a request? That could happen under the very last paragraph in subsection (f).

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February 23, 2017 in Congressional News, IRS News, Tax | Permalink | Comments (1)

Wednesday, February 22, 2017

Should New York State Give President Trump’s Federal Tax Returns To Congress?

Trump Tax ReturnsBalkinization:  Does New York State Have a Copy of President Trump’s Federal Returns?, by Gregory Klass (Georgetown):

There has been a lot of talk about the new role state attorneys general have been taking on as a check on federal overreach. ... There is something else state attorneys general might do. It is now absolutely clear that the President will not release his federal tax returns.

Any state with a copy of those returns could choose to share them with Congress.

Section 6103(f)(1) of the Tax Code gives House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation the power to request individual returns from the IRS. Representative Bill Pascrell is a member of the House Ways and Means Committee. On February 1, he sent a letter to the Chairman, Republican Kevin Brady, requesting that that the Committee obtain from the IRS President Trump’s returns. Last week Brady rebuffed Pascrell.

But there is another option. Since 1998, another subsection of section 6103 has given whistleblowers permission to share federal returns with Congress. Section 6103(f)(5) provides:

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February 22, 2017 in IRS News, Tax | Permalink | Comments (5)

Monday, February 20, 2017

Sixth Circuit Reverses IRS, Tax Court:  'Citizens Can't Comply With Tax Laws They Can’t See'

CaligulaSumma Holdings v. Commissioner, No. 16-1712 (Feb. 16, 2017):

Caligula posted the tax laws in such fine print and so high that his subjects could not read them. Suetonius, The Twelve Caesars, bk. 4, para. 41 (Robert Graves, trans., 1957). That’s not a good idea, we can all agree. How can citizens comply with what they can’t see? And how can anyone assess the tax collector’s exercise of power in that setting? The Internal Revenue Code improves matters in one sense, as it is accessible to everyone with the time and patience to pore over its provisions.

In today’s case, however, the Commissioner of the Internal Revenue Service denied relief to a set of taxpayers who complied in full with the printed and accessible words of the tax laws. The Benenson family, to its good fortune, had the time and patience (and money) to understand how a complex set of tax provisions could lower its taxes.

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February 20, 2017 in IRS News, New Cases, Tax | Permalink | Comments (11)

Saturday, February 18, 2017

IRS Suspends Guidance Due To Trump Executive Order

Sam Brunson (Loyola-Chicago), The (Near) Future of Treasury Regulations:

Today’s Tax Notes reports [No Substantive IRS Guidance Coming for a While, Official Says] that the IRS has announced that it will not release pretty much any new formal guidance (including revenue rulings and revenue procedures) for the foreseeable future. [Fn: It will continue to release routine guidance, like updated interest rates and updated mileage allowances.]

Why not? A confluence of an Executive Order and a January 20 memorandum. The EO, Reducing Regulation and Controlling Regulatory Cost, requires that, for every new regulation issued, two existing regulations be eliminated.

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February 18, 2017 in IRS News, Tax | Permalink | Comments (4)

Thursday, February 16, 2017

IRS Stealth Attack On Obamacare Should Worry Both Conservatives And Liberals

Los Angeles Times:  Trump's IRS Stages a Stealth Attack on Obamacare, by Michael Hiltzik:

The Internal Revenue Service has become the first agency to follow President Trump’s directive to start undermining the Affordable Care Act.

In a quiet rule change, but an important one, the IRS has told tax preparers and software firms that it won’t automatically reject tax returns that fail to state whether the tax filer had health insurance during the year. That effectively loosens enforcement of the ACA’s individual mandate. It appears to be a direct response to Trump’s Jan. 20 executive order requiring federal agencies “minimize...the economic and regulatory burdens of the Act.”

National Review, Refusing to Enforce the Law Is the Wrong Way to Defeat Obamacare, by Charlie Cooke:

The IRS’s willingness to ignore violations of the individual mandate should worry conservatives and liberals alike.

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February 16, 2017 in IRS News | Permalink | Comments (3)

Woman Sues Howard Stern For Airing Her Phone Call With IRS Agent Discussing Her Taxes

HIRSRadio Ink, “Hello Howard, This Is the IRS …”:

In a fact pattern worthy of a law school exam question, an IRS employee calls the Howard Stern Show and is put on hold. The IRS employee on a different line, apparently either using fat fingers on a conference call feature, or on a speakerphone, takes a call from a taxpayer while on hold with Stern. The Howard Stern Show then picks up, hears the IRS employee talking with the taxpayer and puts the nearly hour-long conversation on the air live. The law school question is … in how many ways might the Howard Stern Show be civilly and criminally liable?

The question will likely be answered by the courts. The taxpayer has sued both the IRS for violations of the Federal Tort Claims Act and unlawful disclosure of tax returns and personal information, the Howard Stern Production Company, and Stern individually, for negligence, invasion of privacy, and the intentional infliction of emotional distress.

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February 16, 2017 in IRS News, Tax Analysts | Permalink | Comments (11)

Tuesday, February 14, 2017

The IRS Scandal, Day 1377:  Republicans Still Want IRS Chief's Head

IRS Logo 2Washington Examiner, Republicans Still Want IRS Chief's Head:

Ways and Means Committee Chairman Kevin Brady, R-Texas, became the latest GOP lawmaker to call for IRS Commissioner John Koskinen's head.

"Frankly, in my view, he's the most corrupt IRS commissioner that I've ever dealt with," Brady said on Monday. He "continues … to mislead Congress, and until he's removed, I don't think the IRS will ever regain its credibility.

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February 14, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, February 12, 2017

Debate: Should Congress Heed Trump's Call To Repeal The Johnson Amendment's Prohibition On Politicking By Churches?

IRS ChurchFollowing up on my previous post, Trump Vows To ‘Destroy’ Law Banning Political Endorsements By Tax-Exempt Churches: One of His 'Least Objectionable Policies'?:  U.S. News & World Report Debate Club, Is Repealing the Johnson Amendment a Good Idea?:

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February 12, 2017 in IRS News | Permalink | Comments (1)

Friday, February 10, 2017

Brunson & Herzig:  Treasury Department Should Create Blacklist Of What Constitutes Prohibited Discrimination By Religious Organizations

Samuel D. Brunson (Loyola-Chicago) & David Herzig (Valparaiso), A Diachronic Approach to Bob Jones: Religious Tax Exemptions after Obergefell, 92 Ind. L.J. ___ (2016):

In Bob Jones v. U.S., the Supreme Court held that an entity may lose its tax exemption if it violates a fundamental public policy, even where religious beliefs demand that violation. In that case, the Court held that racial discrimination violated fundamental public policy. Could the determination to exclude same-sex individuals from marriage or attending a college also be considered a violation of fundamental public policy? There is uncertainty in the answer. In the recent Obergefell v. Hodges case that legalized same-sex marriage, the Court asserted that LGBT individuals are entitled to “equal dignity in the eyes of the law.” Constitutional law scholars, such as Lawrence Tribe, are advocating that faith groups might lose their status, citing that this decision is the dawning of a new era of constitutional doctrine in which fundamental public policy will have a more broad application.

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February 10, 2017 in IRS News, Scholarship, Tax | Permalink | Comments (3)

Saturday, February 4, 2017

The IRS Scandal, Day 1367:  White House Mum On Fate Of IRS Boss Koskinen

IRS Logo 2Newsmax, White House Mum on Fate of IRS Boss Koskinen:

The fate of controversial Internal Revenue Commissioner John Koskinen at the hands of President Donald Trump remained uncertain as of Thursday.

At the regular briefing for reporters at the White House, Newsmax reminded Press Secretary Sean Spicer numerous House Republicans recently met with Vice President Mike Pence and urged him to tell the President to sack the controversial IRS boss.

"Had Pence brought their intentions to the president and, if so, what was the fate of Koskinen?" we asked.

"I have nothing to update you on," replied the president's top spokesman.

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

Thursday, February 2, 2017

The IRS Scandal, Day 1365:  55 GOP Members Of Congress Ask Trump To Fire Koskinen

IRS Logo 2Letter to President Trump (Jan. 30, 2017):

Dear President Trump,

The consideration of the impeachment of IRS Commissioner John Koskinen in the House in late 2016 was a clear indication that Congress and the American people have no confidence in Commissioner Koskinen or his ability to discharge his duties.

The IRS, through its targeting of citizens for their political beliefs, has forfeited the trust of a free people. The IRS has admitted to improperly targeting conservative groups, delaying applications for tax-exempt status from 2010-2012, with at least 75 groups selected for extra scrutiny. Moreover, in August 2016, the D.C. Circuit Court of Appeals ruled that the IRS had yet to demonstrate that officials have definitively ceased targeting conservative groups. The ruling came at the heels of evidence that two targeted conservative groups continued to have delayed applications for tax-exempt status pending at the IRS.

Congressional investigations, hearings, and actions have shown that Commissioner Koskinen misled Congress, obstructed investigations into the IRS, and failed to comply with Congressional subpoenas. Commissioner Koskinen's willful deception and obstructionism has only further eroded any remaining confidence.

Pursuant to 26 U.S.C. § 7803, you have the authority to remove Commissioner Koskinen. We encourage you to dismiss him in the most expedient manner practicable. Such an action would restore the credibility of our Federal tax authority and the faith the American people have in their Constitutional rights to free speech and association.

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

Tuesday, January 31, 2017

The IRS Scandal, Day 1363:  The Final Chapter On The End Of My Daily Coverage

IRS Logo 2Peter J. Reilly (Forbes), IRS Scandal Daily Coverage The Final Chapter:

Last week, Paul Caron, the TaxProf, dean of the tax blogosphere, called an end to daily coverage of "The IRS Scandal" on Day 1352.  This was 552 days beyond the point that I had opined that the series had "jumped the shark". To be clear, I was not suggesting that the Prof stop covering the scandal, just that there be an occasional day here and there on which there was nothing to report.  So it just took another 552 posts for that to happen.  It is worth noting that there were more Happy Days episodes after Fonzie jumped the shark than before, so maybe it was not such a bad call on my part.

Regardless, in order to make case for shark jumping I went through the series in two posts which are here and here.  For the sake of completeness I thought it would be nice to go through the rest of the series to see how it is that the Prof managed to keep it going for over a year after my shark jumping call.  Over a year ago, on Day 943, Professor Caron indicated that he was running out of material and it might be ending soon.  Things changed on Day 984.  He had thought that it might end at 1,000, but the certification of a class action lawsuit - NorCal Tea Party Patriots v IRS  promised significant material for some time to come.

Just as a reminder.  Day 1, May 10, 2013, is where the TaxProf count starts with the headline - IRS Admits to Targeting Conservative Groups in 2012 Election. ...

Day 1024 is in a class all by itself as we learn that Donald Trump has been audited so many times perhaps because he is such a strong Christian. ...

Scattered among the days are full scale commentary pieces about the scandal.  I'm not going to give you a lot of links, but instead am putting out the three pieces that lay out the two extreme positions and a more intermediate one.  On Day 1008 in recognition of the scandal millennium (by TaxProf day count) Jennifer Kabbany wrote in the National Review one of the best summaries of the scandal true believer creed. ...

The series also contains reference to the counter narrative.  On Day 1144, we hear from Ralph Nader. ...

A more nuanced view, one that I find interesting although not persuasive, is put out by Joe Kristan. He believes what happens was a form of self-weaponization on the part of the IRS.

The self-weaponization of the bureaucracy against its political opponents is hugely depressing. The government workforce is overwhelmingly on the side of the political party that favors an ever-larger state. There are plenty of Lois Lerners in the IRS and throughout the Leviathan. The Tea Party scandal, and the complete lack of accountability for its perpetrators, gives no reason to hope those who don’t share that worldview can expect a fair shake. That’s especially true when the sitting president (referring to President Obama) shows no interest in discouraging such behavior

This view is buttressed by an entry on Day 965 with reports about federal employees giving more political donations to Democrats than Republicans.  ...

Most of the commenters on the coverage tended to support the anti-IRS narrative.  When I showed up, there would often be a brickbat thrown.  My favorite was from somebody who goes by Porkypine:

Peter J. Reilly's writings on this matter in Forbes have tended to be IRS/Administration apologias, under a thin cloak of reasonableness. Too thin to cover the way he hovers between disingenuousness and mendacity in these efforts, however.

There was one though who joined me in scandal skepticism. That is Publius Novus whose last supportive comment was:

I am a Reilly Agnostic. I too would like to see what's under the rocks. Specifically, I would like to hear testimony from LLerner after an immunity grant. And if the Republicons were honest about pursuing this mess, they would grant immunity. Why not Mr. Chaffetz?

It is interesting to note that Paul Caron himself called for Lerner immunity in a piece on USA Today which was featured way back on Day 369.  I have not had any luck in figuring out who Publius Novus actually is,  Paul Caron has told me that he doesn't know.  Joe Kristan suggested Judge Crater, a joke that was too obscure for me to get.  Well, he or she should not have any trouble finding me.

And those comments are probably an indication of one of the best things about the TaxProf's chronicle.  It took the people who follow it out of their bubbles.  It will be interesting to see whether the crusade picks up again.  I can see in the coming weeks as the practicality of the Obamacare replacement or the wall building becomes challenging, that representatives of the Trump administration and the Republican congressional majority will start pining for the days when the buck did not stop with them. Then they will recall that Lois Lerner was probably the best enemy that they ever had and the scandal will get another lease on life.

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January 31, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, January 28, 2017

The IRS Scandal, Day 1360: VP Pence, GOP House And Senate Push Trump To Fire Koskinen

IRS Logo 2Newsmax, Pence Will Urge Trump to Sack IRS Boss:

Responding to the urging of House Republicans, Vice President Mike Pence will soon call on President Trump to fire or force the resignation of controversial Internal Revenue Service Commissioner John Koskinen. Newsmax learned this Thursday afternoon from several lawmakers at the House Republican Retreat in Philadelphia. ...

Emerging from a closed-door meeting with the vice president Thursday morning at the House Republican Retreat in Philadelphia, Rep,. Chris Collins (R.-N.Y.) confirmed that the subject of sacking Koskinen was raised. "[Pence] said 'I can hear you,'" said Collins, who said the vice president "promised us" he would share with President Trump the strong belief of Republicans in Congress that "Koskinen must go."

Washington Examiner, Led by Republican Study Committee, 50 House GOPers Tell Trump to Fire IRS Chief:

A faction of conservatives is circumventing leadership brass and calling directly on President Trump to tell IRS Chief John Koskinen, "You're fired."

Rep. Mark Walker, R-N.C., will make the ask. The chairman of the Republican Study Committee has quietly but urgently been circulating a letter inside the GOP conference to build support. He's now got 50 congressmen signed onto the letter. 

The Hill, McConnell: Trump Should Replace IRS Commissioner:

Senate Majority Leader Mitch McConnell (R-Ky.) says President Trump should replace John Koskinen, the IRS commissioner who faced an impeachment vote in the House last year. “I think he’s been a disaster and I’d be shocked if we don’t have a new one,” McConnell told The Hill on Friday. ...

The Trump transition team said in December that the then-president-elect had not yet made a decision on whether to replace Koskinen immediately or allow him to serve out the remaining year of his term.

Politico, GOP Airs Old Grievances in Private Pence Meeting:

Congressional Republicans used a private audience with Vice President Mike Pence on Thursday to rehash years-old political controversies — even suggesting Pence fire the IRS commissioner, according to sources in the room.

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January 28, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (12)

Thursday, January 26, 2017

The IRS Scandal, Day 1358: More Reflections On The End Of My Daily Coverage

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William Jacobson (Cornell), TaxProf Ends Daily Coverage of IRS Scandals:

After 1352 days, thank you for your service, Sir.

Pepperdine Law Professor Paul Caron, also known as TaxProf at the TaxProf blog, started daily coverage of the IRS scandal(s) several years ago. The College Fix has some good background on the endeavor.

TaxProf probably didn’t think it would last this long. But once you start to cover something daily, it’s hard to stop.

After 1352 days, Tax Prof stopped daily coverage. ...

Thank you for your service, Sir.

Mark Meckler, the man behind the Convention of States movement, writes that monitoring the IRS can’t stop, TaxProfBlog stops daily blog about IRS harassment of conservative groups, so now we need to do this:

Just because Donald Trump is now in office doesn’t mean conservatives can take their eyes off the federal government.

On this blog, I’ve written extensively about the IRS’s targeting of Tea Party groups and have often linked to Paul Caron who has kept a daily update on the scandal at the TaxProfBlog. Unfortunately, his coverage has come to an end ….

…. thank you for the amazing service you provided. But in the meantime, we can’t let up and allow this corruption to go unpunished and allow the tax agency to walk away free from its responsibility. Trump vowed to remove corruption from Washington, and we look forward to watching him make good on his promise.

I agree with Glenn Reynolds at Instapundit who wrote, “There hasn’t been sufficient accountability for the IRS’s gross misbehavior here, but I think that Caron has done a tremendous service by keeping the issue alive for so long. I remain deeply disappointed at how many of his fellow tax professors criticized him for doing so, because they didn’t want Obama and the Democrats to look bad.”

We must stay the fight.

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January 26, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, January 24, 2017

The IRS Scandal, Day 1356: Reflections On The End Of My Daily Coverage

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Peter J. Reilly (Forbes), TaxProf Calls An End To Day By Day IRS Scandal Coverage:

Paul Caron, the TaxProf, dean of the tax blogosphere has called the end of an era.  We were all distracted with the inauguration, an admittedly important even, but given the number of peaceful transitions of power we have had since 1800, well 1860 anyway, not really that remarkable.  Professor Caron declared that he was ending daily coverage of the IRS scandal with Day 1352.

His announcement is particularly meaningful to me. Check out the lead paragraph:

In response to inquiries from Peter J. Reilly (Forbes) and Brian Leiter (University of Chicago Law School), I previously discussed when I would stop my daily coverage of the IRS Scandal.

Professor Caron explained

My answer is the same as it has been throughout the scandal: I will stop when the daily commentary in the press and blogosphere on the scandal (from both the right and the left) ends. At several points in the scandal, as I was running out of content, a new chapter would unfold and my daily coverage would continue.

At any rate, his mention of me in this context gives me a sense of having really arrived in the tax blogosphere after over seven years since my very first post. ...

I remain the last IRS scandal agnostic. Frankly, I don't think you needed a big conspiracy to account for the IRS getting its works gummed with exempt applications from groups calling themselves a party but claiming they were mostly not political.  On the other hand, both Joe Kristan and George Will think there is a scandal and that is a tough pair to be dismissive of. ...

In October 2015 I wrote two posts in which I indicated that the quality of the TaxProf's series was being diluted, by the addition of extraneous matter. ... The core scandal had been about difficulties processing applications for exempt status. Conservative groups were not getting their exempt status revoked for single statements.

There were quite a few strands of stories that were legitimately connected to the core scandal. Lois Lerner's emails, the congressional investigations, emails lost on servers, how quickly Koskinen moved the investigation on are examples. But extraneous material started creeping in. ...

It seems that the IRS Scandal even more than usual is something that is viewed through ideological glasses. ...

I reached out for some comments on the closing of the day by day scandal coverage.  Joe Kristan refereed me to his post, which ironically became Day 1353.

Thanks to TaxProf Paul Caron for staying on this undercovered story. The IRS and Lois Lerner admitted the targeting on Day 1. People have been trying to walk that back ever since, either by moving the goal posts (“the President was never implicated”) or by pretending the targeting never happened. The tax agency taking on itself the task of targeting political organizations is scarier than it doing so at the bidding of the White House.

Now we wait to see whether the new President will disarm the IRS, or wield it.

Robert Flach, the Wandering Tax Pro wrote me:

I did not follow the professor's coverage. I agreed with you that he "jumped the shark" way back. I felt he was truly beating a dead horse.

I personally strongly oppose the Tea Party and the religious right - but I am also no fan of the Commissioner and felt he mismanaged the IRS. ...

Paul Streckfus of the EO Tax Journal wrote me:

It's probably time, even if Lois Lerner is the gift that keeps on giving. What's interesting is whether Trump wants to keep the scandal alive. The wild card is the House Freedom Caucus. They probably expect Sessions to open another investigation of Lois Lerner. If so, Caron may have stopped his countdown too soon!

The scandal has really devastated the IRS exempt function.  The groundwork for the next scandal has been laid in this one. The next scandal will be about how nobody is watching exempt organizations creating a playground for scoundrels.

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

Saturday, January 21, 2017

The IRS Scandal, Day 1353: Will The Trump IRS End, Or Embrace, Targeting Of Disfavored Groups?

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Joe Kristan (Tax Update Blog), Obama’s Tax Policy: How Much Will Survive?:

Obama tax policy was a sharp break from the Bush years. The Trump years, in turn, will likely veer off the Obama path in many areas. Here’s my list of the big developments in tax policy during the Obama years, and my guesses as to how they will fare under Trump. ...

IRS Scandal.  IRS exempt organizations official Lois Lerner blew open the Tea Party scandal by planting a staged question at a May 2013 conference. The modified limited hangout failed to contain the scandal, which still is working through courtrooms 1351 days later. Commissioner Koskinen’s apathetic and clumsy response to the admission that right-leaning organizations were targeted for special scrutiny on their exemption applications (and remember, this was admitted at the start, only to be walked back later) sowed distrust, and appropriations reductions, that cripple the agency still.

I would be surprised if Koskinen stays in office much past tomorrow. The real question is whether the new administration reverses the weaponization of the IRS, or just adopts it.

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January 21, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, January 20, 2017

The IRS Scandal, Day 1352: The End Of My Daily Coverage

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In response to inquiries from Peter J. Reilly (Forbes) and Brian Leiter (University of Chicago Law School), I previously discussed when I would stop my daily coverage of the IRS Scandal:

My answer is the same as it has been throughout the scandal: I will stop when the daily commentary in the press and blogosphere on the scandal (from both the right and the left) ends. At several points in the scandal, as I was running out of content, a new chapter would unfold and my daily coverage would continue. Currently, the scandal has gone mostly quiet and I have only a few posts left in the queue. So it may be that my daily coverage will end soon, and will be resumed if and when the scandal heats up again.

With Donald Trump's inauguration, I am ending my daily coverage as the scandal again has gone mostly quiet.  I will continue to sporadically blog the scandal when there is news about it (indeed, I have a post in the queue for tomorrow).  But I will no longer provide coverage each day.  I hope readers have found my coverage useful, and will continue to come here for updates on the scandal.

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

Thursday, January 19, 2017

The IRS Scandal, Day 1351:  Two Federal Judges Order Five Officials To Preserve Emails Sought In FOIA Lawsuits; Judicial Watch Fears Another Lois Lerner Situation As Obama Administration Leaves Power

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Politico, Judge Orders 4 Homeland Security Officials to Preserve Private-Account Emails:

A federal judge has ordered four current or former top officials at the Department of Homeland Security, including Secretary Jeh Johnson, to preserve emails in their private accounts that may be responsive to a Freedom of Information Act lawsuit.

U.S. District Court Judge Randolph Moss issued the order Wednesday morning to Johnson, former Deputy Secretary Alejandro Mayorkas, former chief of staff Christian Marrone, and former General Counsel Stevan Bunnell, telling them to copy relevant messages to thumb drives.

Moss said the Justice Department indicated that all four men agreed to preserve any responsive messages that might be in their private accounts, but he still granted the preservation order sought by the conservative group Judicial Watch, which said it feared the government might lose easy access to the records as Obama appointees ship out.

“Given the Department’s representation, the Court has no reason to doubt that the four individuals have agreed to comply fully with their obligations to preserve any potentially responsive emails and that they have every intention of doing so,” wrote Moss, an appointee of President Barack Obama.

“Nonetheless, out of the abundance of caution, the Court will order an additional preservation step to minimize the risk of any inadvertent loss of potentially responsive emails. Specifically, the Court will order the individuals to copy any emails from the relevant time period in any private email accounts that might contain responsive materials onto portable thumb drives, to be kept in the individuals’ personal possessions,” the judge added. “Copying the emails to a physical drive will minimize the risk that any responsive email might be inadvertently deleted.” ...

In a separate Judicial Watch case before another judge, the Justice Department indicated Wednesday that one of its top officials has no record of an email he apparently sent to a top Clinton campaign official in May 2015 previewing an upcoming congressional hearing and an expected DOJ filing in a court case related to Clinton’s emails.

Assistant Attorney General for Legislative Affairs Peter Kadzik sent the message with the subject line “Heads Up” to Clinton campaign chairman John Podesta. Clinton campaign aides said the communication was routine, but Donald Trump’s campaign has alleged it showed improper collusion between Justice and the Clinton camp. The contact is one focus of a Justice inspector general investigation announced last week.

The message from Kadzik to Podesta was one of tens of thousands of messages that were hacked from Podesta’s account and posted online by WikiLeaks during the campaign in an effort U.S. intelligence agencies have concluded was part of a Russian government-led drive to influence the U.S. presidential election and bolster Trump’s chances. ...

U.S. District Court Judge Emmet Sullivan issued a preservation order Wednesday at Judicial Watch’s request and instructed the government to report by this morning on its efforts to comply.

Before It's News, Federal Judge Orders DHS Officials to Not Destroy Email:

Even though the judge says the doesn’t doubt their intent, of course he does. He’d have to have been utterly brain dead to not see what is going on from Lois Lerner to Hillary Clinton and beyond. Even as this was happening, another federal judge was discovering that the word of an Obama official that they’d complied with the law wasn’t worth a whole lot.

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January 19, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, January 18, 2017

The IRS Scandal, Day 1350:  Even Trump Adviser Buys Myth Of 'Scandal-Free Administration,' Despite IRS, Five Other Scandals

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Wall Street Journal: Obama’s ‘Scandal-Free Administration’ Is a Myth, by John Fund (National Review) & Hans Von Spakovsky (Heritage Foundation):

You often hear that the Obama administration, whatever its other failings, has been “scandal-free.” Valerie Jarrett, the president’s closest adviser, has said he “prides himself on the fact that his administration hasn’t had a scandal and he hasn’t done something to embarrass himself.”

Even Trump adviser Peter Thiel seems to agree. When the New York Times’s Maureen Dowd observed during an interview that Mr. Obama’s administration was “without any ethical shadiness,” Mr. Thiel accepted the premise, saying: “But there’s a point where no corruption can be a bad thing. It can mean that things are too boring.”

In reality, Mr. Obama has presided over some of the worst scandals of any president in recent decades. Here’s a partial list: ...

IRS abuses. Mr. Obama’s Internal Revenue Service did something Richard Nixon only dreamed of doing: It successfully targeted political opponents. The Justice Department then refused to enforce Congress’s contempt citation against the IRS’s Lois Lerner, who refused to answer questions about her agency’s misconduct. ...

All of these scandals were accompanied by a lack of transparency so severe that 47 of Mr. Obama’s 73 inspectors general signed an open letter in 2014 decrying the administration’s stonewalling of their investigations. ...

The president’s journalistic allies are happily echoing the “scandal-free” myth. Time’s Joe Klein claims Mr. Obama has had “absolutely no hint of scandal” in his presidency. The media’s failure to cover the Obama administration critically has been a scandal in itself—but at least the president can’t be blamed for that one.

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January 18, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, January 17, 2017

The IRS Scandal, Day 1349:  Peggy Noonan On The Obama Presidency And The IRS Scandal

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Wall Street Journal op-ed: The Trump Cabinet’s Good Opening Week, by Peggy Noonan:

Mr. Obama’s has not been a successful presidency. In foreign affairs his two terms, added to George W. Bush’s two terms, produced 16 years of unsuccess—an entire generation. Richard Haass, head of the Council on Foreign Relations, put it gently in conversation this week: Mr. Bush tried to do too much, which was unrealistic; Mr. Obama attempted too little, its own, perhaps more consequential unrealism.

In domestic matters he put all his chips on health care and bullied it through without a single Republican vote, leaving his party fully owning it and the other with no investment in saving it. His relationship with Congress started out at impasse, proceeded to fraught and ended in estrangement. He saw this all as the other side’s fault. In his dealings with the Hill he was often imperious, sometimes a snot. He allowed executive agencies such as the IRS to ruin their public reputations and stonewall scandal after scandal. His most famous words as president came not in formal addresses but extemporaneous misjudgments—“red line,” ISIS as the “jayvee team”—plus an attempt to mislead: “If you like your plan, you can keep your plan.”

He left his party weaker, in terms of public offices held, than at any point since the 1920s.

He spent an unprecedented amount of time campaigning against, and assailing in the bitterest terms, his successor. Donald Trump was “uniquely unqualified,” “temperamentally unfit.” America chose him anyway. They were choosing Mr. Obama’s exact opposite, just as in choosing Sen. Obama in 2008 they went with the opposite of Mr. Bush. When they want the opposite of what you are, they are not registering approval.

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

Monday, January 16, 2017

IRS Whistleblower Awards Jump 322%

The IRS Scandal, Day 1348: How The Trump Administration Can Stop IRS Abuse Of Political Groups

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Weekly Standard, How the Trump Administration Can Stop IRS Abuse of Political Groups:

For more than six years, the Internal Revenue Service has been trying to fend off accusations that its process for granting tax-exempt status discriminated against applicants expressing political views at odds with those of the Obama administration. This discrimination against political viewpoints the Democrats disapprove of is a clear, even astonishing, violation of the First Amendment. For that reason, the IRS has lost many more of these battles than it has won. It’s lost battles not only in court against the victimized non-profits; it’s even lost against the Treasury Department’s own inspector general, which conducted a detailed study and concluded that many of the most serious accusations of discrimination were true.

In its court battles the IRS has been represented by the Justice Department, whose job it is to represent federal agencies when they are sued. No one will be shocked to learn that under the Obama administration, and Attorneys General Eric Holder and Loretta Lynch, DOJ lawyers have used every tool at their disposal to defeat the IRS’s accusers even when those accusers are agreeing with Treasury’s inspector general. That means that, according to the Obama administration’s own inspector general report, those victimized non-profits are right in claiming that they were discriminated against because of their political views.

That litigation strategy needs to change.

Upon President Trump’s inauguration, the Justice Department will get a new boss: Jeff Sessions, President Trump’s nominee for Attorney General. The moment he takes office, General Sessions should direct the Justice Department lawyers—all of whom report to him—to change their litigation stance to reflect an important adage about how government lawyers should do business: “the government wins when justice is done.”

It’s time to see that justice is done in these cases.

Up until now, the government’s strategy has been to make the IRS cases take as long as possible and to resist every demand for discovery—the process by which litigants can request that their adversaries produce documents, or provide testimony, revealing what was really going on inside the IRS.

I represent the plaintiff in one of these cases—Z STREET v. Koskinen—which challenges the IRS’s six year delay in processing the application for tax-exempt status by an organization whose views on the Middle East were at odds with President Obama’s. In discovery, we’ve asked for information about how the IRS went about deciding what to do with (and to) our organization. But the IRS has produced virtually nothing that sheds light on its decision-making process. Other organizations in court against the IRS have been given the same treatment by the Justice Department’s litigation teams.

All of the members of those government lawyer teams report to the U.S. Attorney General. That means that when the new sheriff arrives in town he can give new orders on how these cases ought to be handled.

Attorney General Sessions should direct these lawyers to stop resisting discovery, and to stop trying to prevent the litigants—and the public—from finding out what the IRS was really doing to all of these organizations for all these years. This is not a matter of political payback, like the question whether Hillary Clinton ought to be prosecuted for what many think are her misdeeds, at the State Department and with the Clinton Foundation. It’s just a matter of letting the truth be told. Z STREET, like many of the plaintiffs in the other cases against the IRS, is not seeking money damages. We just want to know the truth about what the IRS was doing to us, and why, and at whose direction.

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January 16, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Sunday, January 15, 2017

The IRS Scandal, Day 1347:  IRS Chief Counsel William Wilkins Resigns, Effective Jan. 20; GOP Questioned His Role In Tea Party Targeting

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Accounting Today, IRS Names Acting Chief Counsel Following William Wilkins’ Departure:

The Internal Revenue Service has chosen William M. Paul to step into the role of acting chief counsel after William Wilkins stepped down this week. ...

Wilkins has been the IRS’s chief counsel since 2009. Like many Obama administration officials, he is leaving just ahead of the incoming Trump administration. He is one of only two political appointees at the IRS.

Wilkins drew some controversy in the midst of the Tea Party targeting scandal in 2013 when it was revealed that he had met with President Obama only two days before the IRS provided new guidance to its Exempt Organizations unit on how to handle applications for tax-exempt status from political groups. Wilkins testified before Congress that he didn’t recall many of the details of his interactions with Treasury Department officials during the period when the new guidance was being drawn up, provoking outraged reactions from Republican leaders of the House Oversight Committee blasting him for his cautious testimony. ...

IRS Commissioner John Koskinen [said] ... "I also want to thank Bill Wilkins for nearly eight years of dedicated service here as Chief Counsel at the IRS. As many in the wider tax community recognize, Bill has done an exceptional job leading the legal division of the IRS during a challenging period.”

Prior TaxProf Blog coverage:

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

Saturday, January 14, 2017

IRS Chief Counsel William Wilkins Resigns, William Paul Named Acting Chief Counsel, Effective Jan. 20

WPNational Law Review, IRS Chief Counsel William J. Wilkins Resigns Effective January 20, 2017:

William J. Wilkins has tendered his resignation as Chief Counsel effective as of noon on January 20, 2017. Mr. Wilkins was nominated by President Obama to replace Donald L. Korb, who resigned from the position in late 2008. Mr. Wilkins was confirmed by the Senate to serve as Chief Counsel in July 2009.

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January 14, 2017 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1346:  The Trump Dossier, The Left, And Tea Party Targeting

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Wall Street Journal: Dumpster Diving for Dossiers, by Kimberley A. Strassel:

Washington and the press corps are feuding over the Trump “dossier,” screaming about what counts as “fake news.” The pity is that this has turned into a story about media ethics. The far better subject is the origin of the dossier itself.

“Fake news” doesn’t come from nowhere. It’s created by people with an agenda. This dossier—which alleges that Donald Trump has deep backing from Russia—is a turbocharged example of the smear strategy that the left has been ramping up for a decade. Team Trump needs to put the scandal in that context so that it can get to governing and better defuse the next such attack.

The more that progressives have failed to win political arguments, the more they have turned to underhanded tactics to shut down their political opponents. (For a complete account of these abuses, see my book, “The Intimidation Game.”) Liberals co-opted the IRS to crack down on Tea Party groups. They used state prosecutors to launch phony investigations. They coordinated liberal shock troops to threaten corporations. And they—important for today’s hysteria—routinely employed outside dirt diggers to engage in character assassination.

This editorial page ran a series in 2012 about one such attack, on Frank VanderSloot. In 2011 the Idaho businessman gave $1 million to a super PAC supporting Mitt Romney. The following spring, the Obama re-election campaign publicly smeared Mr. VanderSloot (and seven other Romney donors) as “wealthy individuals with less-than-reputable records.”

This national shaming, by the president no less, painted a giant target on Mr. VanderSloot’s back. The liberal media slandered him daily on TV and in print. The federal bureaucracy went after him: He was ultimately audited by the IRS and the Labor Department.

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January 14, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, January 13, 2017

The IRS Scandal, Day 1345:  Donald Trump, The Intelligence Community, And Lois Lerner

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Communities Digital News, Chuck Schumer and the CIA Like Their Targets Shaken, Not Stirred:

Between 2010 and 2012, roughly 426 conservative organizations were targeted for extra scrutiny by the IRS. A 298-page report by the Office of Inspector General says the IRS targeted organizations for harassment with names that included the words “tea,” “liberty,” “patriot” or “constitution” in their titles.

Subsequent congressional hearings revealed the IRS colluded with the Justice Department, the Federal Election Commission and leading Democratic members of Congress on which tea party groups to target. One of those congressional members is today’s Democratic Senate Minority Leader, Chuck Schumer.

In 2012, Schumer joined several of his Democratic colleagues in drafting a letter urging the IRS to investigate tea party organizations “focused on federal election activities” and applying for 501(c)(4) tax-exempt status.

When Democrats lost control of the U.S. Senate in 2014, Schumer expressed his fear to members of the Center for American Progress that tea party groups could out fundraise Democratic-friendly organizations, thus purchasing more commercial time for political ads.

“It is clear that we will not pass anything legislatively [to curtail tea party influence] as long as the House of Representatives is in Republican control, but there are many things that can be done administratively by the IRS and other government agencies—we must redouble those efforts immediately,” Schumer said.

When Lois Lerner, who headed the tax-exempt division of the IRS, was subpoenaed to appear before congress to explain her agency’s targeting, she exercised her Fifth Amendment right against self-incrimination. She eventually resigned, with the Obama Justice Department exonerating her of any criminal wrongdoing.

Lerner is retired and drawing a comfortable federal pension.

History, they say, is prelude. ...

MSNBC host Rachel Maddow described Trump’s skepticism of America’s spy agencies as “taking shots,” “antagonism” and “taunting of the intelligence community.”

Schumer, her guest, peered over his bifocal readers and spoke in hushed tones, “[If] you take on the intelligence community, they have six ways from Sunday to come back at you. So, even for a practical, supposedly hard-nosed businessman, he’s being really dumb to do this.”

Tuesday, Buzzfeed released a leaked, 35-page dossier supposedly compiled by British intelligence officer Christopher Steele—and in the possession of U.S. intelligence agencies—containing unsubstantiated claims Russian intelligence possess compromising information on Trump for purposes of blackmail and, incredibly, claiming Trump is in essence a Russian spy. ...

Move over IRS. The shadowy U.S. intelligence community, with its state-of-the-art domestic and global spying operations, missile-bearing drones and license to kill, is morphing into a political targeting apparatus beyond Lois Lerner’s wildest dreams.

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January 13, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, January 12, 2017

The IRS Scandal, Day 1344:  Democrats Remind Jeff Sessions AG Enforces 'Every Law,' Yet Were Silent When DOJ Declined To Prosecute Lois Lerner

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Western Journalism Review, Democrats Remind Jeff Sessions AG Enforces 'Every Law,' They Were Silent These 7 Times Under Obama:

Sen. Dianne Feinstein (D-CA) reminded Sessions and America that the Attorney General must enforce every law, regardless of the nation's top law enforcement official's views on those laws. ...

While it's absolutely imperative that Sessions uphold the rule of law if he's confirmed, that charge is a little hypocritical as President Obama's Attorney Generals ignored laws that went against the Obama Administration's agenda.

Here are seven times Obama's Attorney Generals side-stepped the law. ...

3. DOJ Concluded IRS Scrutiny Of Tea Party Groups Wasn't Politically Motivated, Despite Evidence To The Contrary

On October 23, 2015, the Department of Justice announced that it would not bring charges against Lois Lerner, the former Internal Revenue Service (IRS) official who was at the center of the conservative targeting controversy.

The IRS admitted to inappropriately targeting groups with the words “patriot” or “tea party” in their names for increased scrutiny of their tax-exempt applications.

Lerner, who oversaw the tax-exempt section of the IRS, denied that the targeting was politically motivated and DOJ announced that it concluded the IRS's actions were not politically motivated. In a letter to Congress, Assistant Attorney General Peter Kadzik said:

We found no evidence that any IRS official acted based on political, discriminatory, corrupt, or other inappropriate motives that would support a criminal prosecution.”

Republicans blasted the IRS when it was discovered that 24,000 of Lerner's emails were lost and could not be recovered.

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January 12, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (10)

Wednesday, January 11, 2017

National Taxpayer Advocate Delivers Annual Report To Congress

NTAIR-2017-02 (Jan. 10, 2017), National Taxpayer Advocate Delivers Annual Report to Congress; Urges IRS Reform and Tax Reform:

National Taxpayer Advocate Nina E. Olson today released her 2016 annual report to Congress, recommending that the IRS revamp its “Future State” plan to adopt a taxpayer-centric focus and urging Congress to emphasize simplification when it considers tax reform later this year.

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January 11, 2017 in IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1343:  IRS Let Lois Lerner Off The Hook By Paying $12 Million For Email Backup System It Did Not Use

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Daily Caller, ‘Wastebook’ Reveals IRS Wrong-Doing, IT Errors During Lerner Scandal:

Even as the Internal Revenue Service (IRS) was struggling to explain to Congress why it could not produce copies of former IRS official Lois Lerner’s emails, the agency was paying $12 million for an email backup system that it could not and did not use.

The agency’s inability helped Lerner get off the hook for using the IRS to target conservative and Tea Party nonprofit applicants during the 2010 and 2012 campaigns.

Soon after the Lerner scandal, IRS officials bought the system designed to prevent the loss of emails, but then didn’t bother to turn it on. They also broke federal procurement rules in how they bought the system.

The fiasco was highlighted by Sen. Jeff Flake, an Arizona Republican, in the latest edition of his Wastebook, released Tuesday.

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January 11, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, January 10, 2017

The IRS Scandal, Day 1342:  New Chair of House Oversight Committee Pledges To Increase IRS Accountability

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The Hill, Oversight Panel Will Focus on IRS, Medicare, New Chairman Says:

Rep. Vern Buchanan (R-Fla.), the new chairman of the House Ways and Means Committee's oversight panel, said the subcommittee's priorities in the 115th Congress will include combating fraud in Medicare and Social Security, increasing IRS accountability, and protecting people from identity theft.

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January 10, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, January 9, 2017

The IRS Scandal, Day 1341:  Another View Of The Republicans' Reactivation Of The Holman Rule And Lois Lerner

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The Moderate Voice: Preventing the Upcoming Barbarian Apocalypse, by Hart Williams:

House Republicans this week reinstated an arcane procedural rule that enables lawmakers to reach deep into the budget and slash the pay of an individual federal worker — down to a $1 — a move that threatens to upend the 130-year-old civil service. The Holman Rule, named after an Indiana congressman who devised it in 1876, empowers any member of Congress to offer an amendment to an appropriations bill that targets a specific government employee or program. ...

[W]hat does this mean? Well it means that any congressman or senator (almost exclusively GOP) can, in essence, terminate/eliminate almost any civil service employee who incites their wrath. ...

This is a de facto prescription to overturn ALL regulatory enforcement that the “Free Market” pirates of the House GOP deem “bad for business.” And, for a year, the Republicans in Congress can PURGE the Civil Service of all those “obstructionist” employees who insist on doing their jobs as prescribed by law. Think of what they did to Lois Lerner of the IRS, for example, who only attempted to enforce the charitable regulations of the IRS code. In a little-noted move thereafter, the GOP congress essentially gutted all 501(c)4 provisions, making it perfectly legal to launder dark money with zero accountability for political purposes — a complete overturning of the original intent of Congress in CREATING the section 501 provisions prohibiting charitable activities from being partisan POLITICAL activities, or, in essence, allowing the rich to engage in politics on your dime, Mr. and Mrs. US Taxpayer.

The implications of this “rule” are staggering when you apply the “if this goes on” test to it. And recall that you don’t really need to go after ALL civil service employees to create a chilling effect. Just make a few examples of “uppity” civil servants.

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January 9, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (13)

Sunday, January 8, 2017

The IRS Scandal, Day 1340:  Tax Professors Discuss The Future Of Tax Administration And Enforcement After 'What The Media Often Refer To As The 'IRS Targeting Scandal''

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Association of American Law Schools Annual Meeting Discussion Group, The Future of Tax Administration and Enforcement (Jan. 7, 2016):

AALS Discussion Groups provide an in-depth discussion of a topic by a small group of invited discussants selected in advance by the Annual Meeting Program Committee. In addition to the invited discussants, additional discussants were selected through a Call for Participation. There will be limited seating for audience members to observe the discussion groups on a first-come, firstserved basis.

Enforcement and effective administration of tax laws pose challenges for every country, developed and developing. Moreover, how the tax law is administered determines the substantive effects of the laws on the books.

In the United States, the agency responsible for helping taxpayers voluntarily comply with federal tax laws and for coercing the recalcitrant into complying—the Internal Revenue Service (IRS)—is not only underfunded, its image was badly damaged by what the media often refer to as the “IRS targeting scandal.” The IRS is thus in crisis. Over the last couple of years, it has reduced service to taxpayers, reduced enforcement efforts, experienced hacks of its confidential taxpayer information, and sent out billions of dollars in fraudulent refunds claimed by identity thieves. Other tax collection agencies, both in U.S. and abroad, also struggle with resource and cybersecurity issues.

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January 8, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, January 7, 2017

Today's AALS Annual Meeting Highlight

AALS (2018)Today's highlight at the 2017 AALS Annual Meeting in San Francisco:

AALS Discussion Group, The Future of Tax Administration and Enforcement:

Enforcement and effective administration of tax laws pose challenges for every country, developed and developing. Moreover, how the tax law is administered determines the substantive effects of the laws on the books.

In the United States, the agency responsible for helping taxpayers voluntarily comply with federal tax laws and for coercing the recalcitrant into complying—the Internal Revenue Service (IRS)—is not only underfunded, its image was badly damaged by what the media often refer to as the “IRS targeting scandal.” The IRS is thus in crisis. Over the last couple of years, it has reduced service to taxpayers, reduced enforcement efforts, experienced hacks of its confidential taxpayer information, and sent out billions of dollars in fraudulent refunds claimed by identity thieves. Other tax collection agencies, both in U.S. and abroad, also struggle with resource and cybersecurity issues.

Discussion Group Participants:

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January 7, 2017 in Conferences, IRS News, Tax | Permalink | Comments (0)