TaxProf Blog

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

Monday, May 22, 2017

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

FAFSAIRSFollowing up on my previous posts:

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

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

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

Monday, May 15, 2017

Grewal:  Congress Handcuffs The IRS

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

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

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

Saturday, May 13, 2017

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

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

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

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

Saturday, May 6, 2017

IRS Seeks Grant Applications For Funding Low Income Taxpayer Clinics

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

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

 

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

Thursday, May 4, 2017

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

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

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

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

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

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

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

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

Tuesday, May 2, 2017

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

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

Foreword

1. Interventions: Influencing Taxpayer Compliance

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

Sunday, April 23, 2017

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

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

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

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

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

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

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

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

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

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

Saturday, April 22, 2017

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

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

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

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

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

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

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

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

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

Friday, April 21, 2017

Weekly Tax Roundup

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

Monday, April 17, 2017

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

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

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

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

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

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

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

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

Thursday, April 20, 2017

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

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

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

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

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

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

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

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

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

Wednesday, April 19, 2017

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

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

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

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

Tuesday, April 18, 2017

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

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

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

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

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

Monday, April 17, 2017

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

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

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

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

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

Sunday, April 16, 2017

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

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

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

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

Sessions hesitated.

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

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

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

Saturday, April 15, 2017

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

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

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

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

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

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

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

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

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

Thursday, April 13, 2017

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

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

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

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

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

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

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

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

Wednesday, April 12, 2017

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

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

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

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

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

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

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

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

Tuesday, April 11, 2017

The IRS Scandal, Day 1433: House Oversight Committee Republicans Call On President Trump To Fire Commissioner Koskinen

IRS Logo 2Townhall, House Oversight Committee: President Trump, Remove IRS Commissioner John Koskinen:

Republicans on the House Oversight Committee, including Chairman Jason Chaffetz, have sent a letter to the White House demanding IRS Commissioner John Koskinen be removed from office.

"By applying additional rigorous scrutiny and unjustifiable, interminable delays to their applications for tax-exempt status, our own government betrayed the fundamental principles of liberty, free speech and democracy for partisan political reasons," the letter states. "So long as the IRS commissioner is a man who has misled the people, destroyed evidence, and failed his legal duties to the people's representatives in Congress, the IRS is not 'controlled by the people.'  For that reason, we request you immediately remove Koskinen." 

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

Saturday, April 8, 2017

The IRS Scandal, Day 1430: At Least 1 Top Republican in Congress Really Likes Commissioner Koskinen

IRS Logo 2Salt Lake City Tribune, At Least 1 Top Republican in Congress Really Likes IRS Head: Orrin Hatch:

At least one powerful Republican in Congress really likes IRS Commissioner John Koskinen. Utah's Orrin Hatch might be the only one.

Hatch gave Koskinen a warm welcome at a Senate hearing Thursday, a day after House Republicans asked President Donald Trump to fire him. "I personally appreciate the work that you have done over the years," Hatch, the Senate's senior Republican and chairman of the powerful Finance Committee, told Koskinen. "I appreciate the service you have given to this wonderful country."

At the other end of the spectrum is another Utah Republican. Rep. Jason Chaffetz has been Koskinen's most fervant detractor, repeatedly seeking his resignation and even calling for his impeachment. Chaffetz not only relentlessly pursued the IRS leader from his perch as House Oversight and Government Reform chairman, but he even testified against him as a witness before the House Judiciary Committee, claiming Koskinen has misused his power, lied and withheld records.

Unprompted, Hatch said he has a good relationship with Koskinen. It's an influential statement of support because Hatch serves as Senate president pro tem — making him third in line to succeed the president. Hatch also led the Senate Finance Committee investigation of allegations the IRS targeted conservative groups for audits, and said Koskinen cooperated.

But Hatch's backing may not be enough to counter the ire against Koskinen from other Republicans, some of whom want him to step down before his five-year-term ends in November.

On Wednesday, 15 GOP members of the House Ways and Means Committee said trust in the IRS has hit rock bottom. They said that under Koskinen, the IRS destroyed evidence when Congress was investigating the tax agency for inappropriately singling out conservative groups for extra scrutiny. ...

Koskinen said he has not heard from anyone in the Trump administration about stepping down.

But in tense exchange at Thursday's hearing, Sen. Pat Roberts, R-Kan., asked Koskinen if he intends to finish his term. "It gives me no pleasure and some degree of sadness," Roberts said. "I have been disappointed in your record at the agency."

Koskinen replied, "I regret that you're disappointed in the performance." Koskinen went on to defend his record. He said the IRS has implemented every recommendation from every investigation into the IRS handling of conservative groups. He said no one at the tax agency hindered any of the investigations.

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

Friday, April 7, 2017

NY Times:  100,000 Taxpayers Compromised In Hack Of FAFSA Tool At IRS

FAFSAIRSFollowing up on my previous post, As Deadlines Approach For College Financial Aid & Income-Based Loan Repayment, IRS Leaves Parents, Students & Graduates In Lurch By Taking Down Online Tax Return Data Retrieval Tool:  New York Times, Up to 100,000 Taxpayers Compromised in Fafsa Tool Breach, I.R.S. Says:

The Internal Revenue Service said on Thursday that the personal data of as many as 100,000 taxpayers could have been compromised through a scheme in which hackers posed as students using an online tool to apply for financial aid.

The breach may be the most extensive since 2015, when thieves gained access to the tax returns of over 300,000 people by using stolen data and filed fraudulent returns to get refunds.

The possibility of an attack became known in early March after the I.R.S. shut down its Data Retrieval Tool, which families used to import tax information to Fafsa, the Free Application for Federal Student Aid, on the Education Department’s website. The shutdown, at the height of financial aid application season, caused outrage among parents and students trying to fill out the complicated Fafsa forms.

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April 7, 2017 in IRS News, Tax | Permalink | Comments (3)

The IRS Scandal, Day 1429:  Commissioner Koskinen Says He Will Finish Term Despite GOP Calls To Step Down Immediately

IRS Logo 2The Hill, IRS Chief Says He's Committed to Finishing His Term:

IRS Commissioner John Koskinen on Thursday said he is committed to finishing his term, one day after Republicans on the House Ways and Means Committee called for his removal.

“I signed up for a term that ends in November,” Koskinen said at a Senate Finance Committee hearing. “Where I come from, if you sign up for a commitment, you complete that commitment.”

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April 7, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, April 6, 2017

FAIR Seeks Revocation Of The Southern Poverty Law Center’s Tax Exemption Due To Its Anti-Trump Electioneering

SPLCPress Release, FAIR Files Formal Exhaustive Complaint with the IRS: SPLC Violated Its Tax Exempt Status Repeatedly in the Last Election Cycle Alleges FAIR:

According to a formal legal complaint filed today with the Internal Revenue Service (IRS), the Southern Poverty Law Center (SPLC) openly and repeatedly violated its non-profit tax status nearly 50 times during the 2016 presidential election cycle, participating in communication activities prohibited by the IRS in a “flagrant, continued and intentional campaign” targeting then-Presidential candidate Donald J. Trump and other Republican candidates. The complaint was filed by the Federation for American Immigration Reform (FAIR) through its legal affiliate the Immigration Reform Law Institute (IRLI). Copies are available here.

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April 6, 2017 in IRS News, Tax | Permalink | Comments (1)

TIGTA:  91% Of Taxpayers Whose Bank Accounts Were Seized By The IRS Had Acquired The Cash Legally

TIGTAThe Treasury Inspector General for Tax Administration yesterday released Criminal Investigation Enforced Structuring Laws Primarily Against Legal Source Funds and Compromised the Rights of Some  Indiviuals and Businesses:

The Currency and Foreign Transactions Reporting Act of 1970, referred to as the Bank Secrecy Act, requires U.S. financial institutions to file reports of currency transactions exceeding $10,000. ... In October 2014, a new policy was instituted by IRS Criminal Investigation (CI) that it would no longer pursue the seizure and forfeiture of funds related to legal source structuring. In the same month the policy changed, the New York Times reported that CI had been seizing funds in structuring investigations without filing a criminal complaint. Property owners were left to prove their innocence, and many gave up trying. This audit was initiated to evaluate the IRS’s use of seizures against property owners suspected of structuring transactions to avoid Bank Secrecy Act reporting requirements.

Most of the seizures for structuring violations involved legal source funds from businesses. While current law does not require that the funds have an illegal source (e.g., money laundering or criminal activity other than alleged.

Washington Post, The IRS Took Millions From Innocent People Because of How They Managed Their Bank Accounts, Inspector General Finds:

The IRS pursued hundreds of cases from 2012 to 2015 on suspicion of structuring, but with no indications of connections to any criminal activity. Simply depositing cash in sums of less than $10,000 was all that it took to arouse agents' suspicions, leading to the eventual seizure and forfeiture of millions of dollars in cash from people not otherwise suspected of criminal activity.

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April 6, 2017 in Gov't Reports, IRS News, Tax | Permalink | Comments (11)

The IRS Scandal, Day 1428:  Fifteen Ways & Means Committee Republicans Urge Trump To Fire Commissioner Koskinen

IRS Logo 2Letter From 15 House Ways & Means Committee Republicans to President Trump (Apr. 5, 2017) (press release):

As members of the House Ways and Means Committee, we believe it is imperative that the Internal Revenue Service (IRS) work for the best interest of all taxpayers, and that the taxpayers in tum have confidence in the IRS's ability to fairly administer the tax code. This trust is at the core of our system of voluntary tax compliance . Trust in the IRS is hitting rock-bottom under IRS Commissioner John Koskinen . Not only was key evidence relevant to this Committee's investigation destroyed under his watch, but he also misled Congress in the process, intentionally degraded customer service at the agency, and has since lost the trust of the American people. We believe that trust cannot be fully restored under Commissioner Koskinen's leadership. For this reason, we are writing to request the removal of John Koskinen as Commissioner of the IRS and to request that a new leader be put in place as soon as possible.

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April 6, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, April 5, 2017

The IRS Scandal, Day 1427:  54 Applications For Tax-Exempt Status Were Rejected In 2016; One Conservative Group Has Been Waiting For An Answer Since 2009

IRS Logo 2Washington Free Beacon, IRS Denied Tax-Exempt Status to 37 Religious, Charitable Groups in 2016: One Group Has Been Waiting For Tax-Exempt Status For More Than Seven Years:

The Internal Revenue Service denied tax-exempt status to 37 religious, charitable, and educational organizations in 2016, according to recent data from the agency.

The IRS rejected a total of 54 applications for tax-exempt status in 2016. Groups applying for 501(c)3 status, which applies to non-profits whose mission is religious or charitable in nature, comprised 69 percent of denials.

Nearly 85,000 groups applied for 501(c)3 status in 2016. Of those applications, 79,545 were approved, 37 were denied, and 5,006 were not adjudicated. According to the IRS, the 5,006 applications that were not adjudicated in 2016 were either withdrawn by the organization, did not include required information, were incomplete, or were IRS correction disposals. ...

As early as 2010, the IRS began targeting applicants for tax-exempt status based on their political ideology, delaying the applications of some Tea Party and conservative groups before the 2012 presidential election. To this day, some groups are still waiting for their tax-exempt status to be approved.

Attorney Jordan Sekulow, executive director of the American Center for Law and Justice, represents 37 conservative and pro-life nonprofit organizations encountered opposition from the IRS in getting their tax-exempt status approved. One of these groups is still waiting for determination after filing for tax-exempt status in December 2009, which means it has been waiting for more than seven years. ...

Sekulow said IRS Commissioner John Koskinen, who has led the agency since 2013, needs to be replaced by someone who Congress and the American people can trust. "We've had a very firm position at the ACLJ, we believe that there needs to be total reform at the IRS, and the institution is incapable of self-correcting," Sekulow said. "That means people like Koskinen and a lot of the bureaucrats like Lois Lerner that run the [exempt organizations division] and the different departments within the IRS need to be changed."

Sekulow said Koskinen missed an opportunity to clean up the IRS and was too protective of the agency and its officials. Koskinen's term ends at the end of November 2017, though he said late last year he would resign at the request of President Donald Trump. Sekulow said added pressure from Congress to impeach the commissioner could encourage Trump to take him up on his offer. ...

"You shouldn't have to be afraid that the IRS will target you because of your political beliefs or your religious beliefs," he said. "So that's why we believe continued pressure from Congress, I think, President Trump would appreciate that because it would give him the momentum to make that decision and it would work in tandem. You would have Congress calling for it and the president taking action on it."

The IRS did not respond to requests for comment.

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April 5, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, April 4, 2017

The IRS Scandal, Day 1426: Obama’s IRS Chief Who Dodged Impeachment Continues Under Trump

IRS Logo 2Daily Signal, Obama’s IRS Chief Who Dodged Impeachment Continues Under Trump:

In the heart of tax season, Internal Revenue Service Commissioner John Koskinen will address the National Press Club next Wednesday even as many members of Congress question why someone who dodged impeachment during the Obama administration continues to be the face of the tax collecting agency under President Donald Trump.

“It could be partly that for the checklist of the Trump administration, they don’t yet have a full Cabinet and this isn’t a priority. External pressure, from what I picked up, should continue,” Jordan Sekulow, executive director for the American Center for Law and Justice, a conservative legal group, told The Daily Signal. “If we saw more pressure from Congress, I think Koskinen would be gone.”

Koskinen’s five-year term ends in November, unless he is removed. Though Koskinen wasn’t in office when the IRS targeted tea party and conservative groups, House Republicans said he was repeatedly uncooperative and misled congressional investigators. Koskinen has said he acted in good faith to cooperate with the investigation. ...

In January, shortly after Trump took office, 53 House Republicans—led by Republican Study Committee Chairman Mark Walker of North Carolina—asked Trump to remove Koskinen.

Walker spokesman Jack Minor told The Daily Signal Thursday the congressman stands by the letter, which House Oversight and Government Reform Committee Chairman Jason Chaffetz, R-Utah; Judiciary Committee Chairman Bob Goodlatte, R-Va.; and House Freedom Caucus Chairman Mark Meadows, R-N.C.; also signed. ... Chaffetz’s opinion hasn’t changed that Koskinen should not only be removed from office, but should forfeit his government pension, M.J. Henshaw, spokeswoman for the House Oversight and Government Reform Committee, told The Daily Signal Thursday.

Last week, Cause of Action Institute, a conservative government watchdog group, issued a report asserting the IRS can engage in politicized targeting again under a section of the internal revenue manual. The report called for the Trump administration to roll back the rule.

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April 4, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, April 3, 2017

David Kautter To Be Named Assistant Secretary For Tax Policy

KautterPolitico reports that David Kautter is slated to be named President Trump's Assistant Secretary for Tax Policy, succeeding Mark Mazur (who left the position in February to become Director of the Tax Policy Center) and Acting Assistant Secretary for Tax Policy Thomas West.  From his webpage at American University's Kogod Tax Center:

David Kautter is Managing Director of the Kogod Tax Center and Executive in Residence in the Department of Accounting and Taxation. He joins Kogod following a distinguished career as a partner at Ernst & Young LLP, where he held a number of key technical and leadership roles spanning over three decades.

Most recently, Kautter served as Ernst & Young's Director of National Tax, the chief operating executive for the firm's national tax practices.

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April 3, 2017 in IRS News, Tax | Permalink | Comments (0)

Sunday, April 2, 2017

The IRS Scandal, Day 1424:  Conservatives Demand IRS Commissioner’s Head In White House Meeting

IRS Logo 2Daily Caller, Conservatives Demand IRS Commissioner’s Head In White House Meeting:

An off-the-record White House meeting with roughly two dozen conservative leaders Wednesday included explicit calls for President Trump to fire IRS Commissioner John Koskinen, according to a source in the room.

White House conservative liaison Paul Teller organized the meeting Wednesday between Trump staffers and leaders of conservative groups such as the Heritage Foundation and Judicial Watch.

Talk of Koskinen’s firing was part of a larger discussion on clearing out Obama-era personnel from the executive branch where possible, the source said. The broad consensus among attendees was that Trump needs to clean out Obama-era bureaucrats if he is going to be successful in pushing through his agenda.

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April 2, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, March 31, 2017

IRS Releases FY 2016 Data Book

IRS Data BookIR-2017-69 (Mar. 30, 2017), IRS Releases FY 2016 Data Book:

The Internal Revenue Service today released the 2016 IRS Data Book, a snapshot of agency activities for the fiscal year.

The 2016 IRS Data Book describes activities conducted by the IRS from Oct. 1, 2015, to Sept. 30, 2016, and includes information about returns filed, taxes collected, enforcement, taxpayer assistance, the IRS budget and workforce as well as other data.

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

Thursday, March 30, 2017

Trade Group: IRS Wastes 22% Of Its Budget ($2.76 Billion) On Information Technology

IRS Logo 2International Association of IT Asset Managers,  IT Waste at the Internal Revenue Service:

IRS IT Spending/Waste By The Numbers:

  • $11.2 billion - Total IRS budget in 2016. 
  • 79,890 - Total IRS employees as of FY2015.
  • $4,600-$4,900 - Average amount spent per employee on IT in the private sector.
  • $37,051 - Average amount spent per employee on IT at the Department of Treasury.
  • $31,000 - According to IAITAM, private sector-style IT Asset Management protocol implementation would save roughly $31,000 per employee at the IRS. 
  • More than three times – How much the potential ITAM-related savings per employee stack up in comparison to the average $9,118 federal income tax bill for Americans.
  • 22 percent - Total potential ITAM-related savings would add up to $2.76 billion
    or nearly one quarter of the total 2016 IRS budget.

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March 30, 2017 in IRS News, Tax | Permalink | Comments (12)

The IRS Scandal, Day 1421: More On A Hidden Cause Of The IRS Scandal

Cause of ActionFox News, IRS Still Allowed to Target Political Groups, According to Watchdog Org:

The IRS is still able to target certain political groups despite being publicly exposed for the unfair practice more than five years ago, according to a new report by a watchdog group.

A rule in place at the IRS allows the federal agency to delay the applications of non-profit groups looking for tax-exempt status, claims the Washington-based Cause of Action in its report, A Hidden Cause of the IRS Targeting Scandal. The IRS admitted in 2013 that leading up to the 2012 election the agency unfairly targeted right-leaning groups as well as those with “Tea Party” or “patriot” in their name. More than five years after the practice was exposed, Cause of Action says the IRS has not made changes to end the practice. “The regulation that allows them to do this is still there,” John Vecchione, executive director of Cause of Action told Fox News. “It’s bureaucratic inertia until someone makes a change.”

The findings claims the IRS is able to target these groups while still complying with its own rules. Cause of Action claims changing this practice would be a simple and quick fix. “The IRS has the authority to change its internal policy at any moment, which means it can remove the problematic rules at its discretion,” the authors of the report said in their findings. “Doing so would eliminate the agency procedure than enabled the targeting scandal. To date, the agency has not made the required changes to its rules.”

Officials for the IRS refute the report’s claims. “The IRS strongly disputes the report and any suggestion or allegation that Exempt Organizations is targeting taxpayers,” reads a statement provided to Fox News. “The IRS emphasizes that this point has been confirmed by independent third parties, including the Treasury Inspector General for Tax Administration.”

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March 30, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, March 29, 2017

The IRS Scandal, Day 1420: A Hidden Cause

Cause of ActionCause of Action, Sensitive Case Reports: A Hidden Cause of the IRS Targeting Scandal:

Executive Summary:
Beginning in February 2010, the Internal Revenue Service (“IRS’) singled out certain non-profit organizations for extra scrutiny when they applied for tax-exempt status. Numerous subsequent congressional investigations and media reports demonstrated that the targeting involved invasive questioning and years-long delays, and focused disproportionately on right-leaning groups, especially those with “Tea Party” in their name. These reports, however, have almost entirely overlooked a hidden cause of the targeting scandal,which remains in effect today. As a result, American taxpayers are at risk for similar treatment in the future.

Contrary to the conventional storyline, there exists an institutional policy that was the first impetus in prompting IRS employees to target groups based on their political viewpoints. That policy is embodied in an internal IRS rule—which is still on the books—that singles out applications from any group interested in issues that might garner attention from either the media or Congress. In such cases, the merits of the application are ignored as IRS employees develop “Senstive Case Reports” for consideration by those above them in the IRS hierarchy. The result is a process that interferes with the unbiased review of applications for tax-exempt status designed to apply to all eligible organziations, regardless of their political viewpoints or affiliations.

Seven years after the targeting scandal began, the rule that enabled this inexcusable behavior still exists. Until that rule is removed from the internal manual used by all IRS employees, targeting of politcal opponents will remain a very real threat. Fortunately, removing the offending provisions is a simple process that can be started at any time and completed without the need for new legislation or formal notice-and-comment rule-making.

Findings:

  • Targeting was—and is—IRS policy, not a violation of it.
  • The employees who initiated the targeting cited an internal “Sensitive Case Report” process that singled out applications that might attract media or congressional attention.
  • Sensitive Case procedures remain in effect today.
  • The IRS has the authority to change its internal policy at any moment, which means it can remove the problematic rules at its discretion. Doing so would eliminate the agency procedure that enabled the targeting scandal. To date, the agency has not made the required changes to its rules.

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March 29, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, March 26, 2017

The IRS Scandal, Day 1417:  Satan, Tea Parties, and the IRS

IRS Logo 2Sam Brunson (Loyola-Chicago), Satan, Tea Parties, and the IRS:

Did you hear that the IRS granted a Satanic cult tax-exempt status in ten days?!? Meanwhile, Tea Party groups’ exemption applications languished for months or even years?!?

I know, it sounds pure conspiracy theory: the IRS loves Satan and hates conservatives. But it’s true! Or, at least, kind of! But it needs to be contextualized, because comparing the exemption application of Reason Alliance, Ltd. (the putative Satanic cult) and Tea Party groups is inapposite.

First things first, though: the framing of this “controversy” is purely a product of the Outrage Industrial Complex, as represented by Fox News and Judicial Watch. And I’m sure the invocation of “Satanic cult” is going to get them clicks and shares. But Satanic cult? The Reason Alliance is the tax-exempt offshoot of The Satanic Temple, which strikes me as basically a relatively-clever piece of performance art meant to object to religions enjoying tax-exempt status, and which otherwise functions as a much funnier, and more self-aware, version of the Freedom From Religion Foundation and Americans United for the Separation of Church and State. Because The Satanic Temple objects to religions’ exemption from taxation, it has chosen not to pursue tax-exempt status itself. Apparently, though, in the interest of facilitating donations from individuals whose charitable giving is more elastic, it created the Reason Alliance to permit deductible charitable giving.

But the substance of the outrage here isn’t Satan; rather, it’s that Satan could essentially bypass the line (of Tea Party groups, probably) in getting his exemption from tax. ...

But did Satan bypass the line? In a word, no. ...  The Reason Alliance filed a Form 1023-EZ. ... [T]he Reason Alliance merely chose a faster route to exemption.

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March 26, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

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 (1)

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 (5)

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 (1)

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

IRS Logo 2

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)

The IRS Scandal, Days 1301-1400

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