TaxProf Blog

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

Saturday, January 13, 2018

NY Times: A Swiss Banker Helped Americans Dodge Taxes. Was It A Crime?

New York Times, A Swiss Banker Helped Americans Dodge Taxes. Was It a Crime?:

Diane Butrus, a business executive from St. Louis, wandered the streets of Zurich, looking for a bank that would help her keep $1.5 million hidden from America tax collectors.

One bank after another turned her down on that afternoon in 2009. They were worried about a United States crackdown on tax evasion and were no longer willing to shelter American money.

Finally, across the street from a city park, up a discreet elevator, seated in a luxurious conference room, Ms. Butrus found a banker ready to help. His name was Stefan Buck.

Mr. Buck said that his employer, Bank Frey, would be happy to take Ms. Butrus’s money, according to court documents and interviews with Mr. Buck and Ms. Butrus. He instructed her to wire the $1.5 million to Bank Frey. He told her that her name wouldn’t be attached to the new account. It would be known internally as Cardinal, an alias she chose in a nod to her favorite baseball team.

After that, Ms. Butrus contacted Mr. Buck via prepaid cellphones she picked up at a Walgreens drugstore. Every six months or so, she flew to Zurich to withdraw money directly from Mr. Buck. She would return to the United States secretly carrying just under $10,000 in cash — the cutoff for having to make a customs declaration.

The setup allowed Ms. Butrus to avoid paying tens of thousands of dollars in income taxes. And it wouldn’t have been possible without Mr. Buck and Bank Frey.

As much as chocolate and watches, Switzerland is known for bank secrecy. That made the country a destination for money that the wealthy wanted to hide. Last decade, it also made Swiss banks targets for an assault by the United States government, which was tired of Americans escaping taxes on money in offshore accounts.

Many banks came clean, divulging their clients to American authorities. Many Americans, including Ms. Butrus, searched for new places to park their money.

Bank Frey was among the very few to defy the legal onslaught. And Mr. Buck, a clean-cut and self-confident 28-year-old at the time he met Ms. Butrus, was the bank’s public face, responsible for landing and then managing American accounts.

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January 13, 2018 in IRS News, Scholarship, Tax | Permalink | Comments (0)

Friday, January 12, 2018

The IRS Scandal, Day 1709: Victims Of IRS's Tea Party Bias — And Taxpayers — Deserve To See Lois Lerner's Testimony

IRS Logo 2Forbes, Victims Of IRS's Tea Party Bias — And Taxpayers — Must See Lois Lerner's Testimony, Lawyer Says:

Lois Lerner, formerly of the Internal Revenue Service when it discriminated against applicants for tax exemptions based on their viewpoints, claims Americans have no right to read statements she made under oath about why she did it.

Lerner, the former director of the IRS’s Exempt Organizations Division, wants U. S. District Judge Michael Barrett to maintain under seal a deposition she gave in June for a civil suit that victims brought in 2013. Unsealing it would place her safety in jeopardy, she says.

Her former IRS colleague, Holly Paz, seeks the same after they targeted groups with “tea party” names and groups that didn’t like how the government was run.

Among those opposed are the very plaintiffs who sued the IRS in Barrett’s Ohio court. Attorney Edward Greim, who represents the Norcal Tea Party Patriots, says a pending settlement in their case shouldn’t create a reason for the depositions to stay secret. “Class members must know the content of their testimony to consider the fairness of the settlement, and the public must have access to help ensure that similar conduct never occurs again,” he wrote in November. ...

He’s not alone. It was the Cincinnati Enquirer that moved to unseal the depositions on Oct. 25, the same day a proposed settlement was announced to the court. The state of Ohio and the Judicial Watch group in Washington have also moved for leave to argue for unsealing as friends of the court. ...

Lerner and Paz have said the release of their depositions “would expose them and their families to harassment and threat of serious bodily injury or even death.”

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January 12, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, January 10, 2018

National Taxpayer Advocate Delivers Annual Report To Congress; Discusses Tax Reform Implementation, Unveils 'Purple Book'

NTAIR-2018-03 (Jan. 10, 2018), National Taxpayer Advocate Delivers Annual Report to Congress; Discusses Tax Reform Implementation and Unveils “Purple Book”:

National Taxpayer Advocate Nina E. Olson today released her 2017 Annual Report to Congress, describing challenges the IRS will face as it implements the recently enacted tax reform legislation and unveiling a new publication, “The Purple Book,” that presents 50 legislative recommendations intended to strengthen taxpayer rights and improve tax administration.  The report also examines a wide range of other tax administration issues, including the IRS’s administration of the private debt collection program, the agency’s increasing emphasis on online taxpayer accounts, and its implementation of a recent law that would deny or revoke the passports of taxpayers with significant tax debts.

Implementation of Tax Reform Legislation
The National Taxpayer Advocate’s report says the reduction in IRS funding since FY 2010, approximately 20 percent in inflation-adjusted terms, has challenged the agency’s ability to perform the basic tasks of administering the tax system.  “As the National Taxpayer Advocate, I see daily the consequences of reduced funding of the IRS and the choices made by the agency in the face of these funding constraints,” Olson wrote in the preface to the report.  “These impacts are real and affect everything the IRS does.  Funding cuts have rendered the IRS unable to provide acceptable levels of taxpayer service, unable to update its technology to improve its efficiency and effectiveness, and unable to maintain compliance programs that both promote compliance and protect taxpayer rights.  ’Shortcuts’ have become the norm, and ‘shortcuts’ are incompatible with high-quality tax administration.” ...

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January 10, 2018 in IRS News, Tax | Permalink | Comments (4)

Tuesday, January 9, 2018

The IRS Scandal, Day 1706: Lois Lerner, Liberty, And Bureaucracy

IRS Logo 2Washington Times, Liberty Dies in Bureaucracy:

As Donald Trump finishes the first year of his presidency, the greatest political scandal story of the last generation is being mostly ignored.

In May 2013, then-IRS official Lois Lerner admitted the Internal Revenue Service had been targeting conservative groups in general, and Tea Party groups in particular. Mrs. Lerner was not trying to clear her conscience. The Treasury Department’s Inspector General was about to release a damning reporting on the politicization of the IRS and how that agency was targeting political opponents of the Obama regime.

Mrs. Lerner’s actions did not happen in a vacuum. Ninety-four percent of political contributions from IRS employees went to Hillary Clinton in the 2016 election. ...

If Republicans are serious about their commitment to liberty and freedom, there is only one option. The swamp must be drained. There must be a wholesale elimination of government departments and agencies. Civil service must be abolished and a lot of government workers need to be told to find other jobs.

If the Republican Party once again, haul up their freshly laundered white flag of surrender on the issue of a weaponized government that can be used against the enemies of the Democrats, America’s days as a free nation are over.

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January 9, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, January 8, 2018

Whitney Houston's Estate Settles Dispute With IRS Over Valuation Of Right Of Publicity

WhitneyFollowing up on my previous post, How Will I Know? IRS Claims Whitney Houston's Estate Undervalued Her Right Of Publicity By $11.5 Million:  Jennifer E. Rothman, Whitney Houston Estate Settles with IRS over Right of Publicity Valuation:

The Whitney Houston estate and the IRS have settled their dispute over the value of the Grammy award-winner’s estate. The more than $11 million dollar disagreement in the amount of taxes owed centered on the valuation of Houston’s intellectual property rights, and particularly the value of her postmortem right of publicity. The estate had claimed that Houston’s right of publicity was worth just under $200,000, while the IRS claimed that it was worth more than $11.7 million. A staggering difference.

The IRS and the estate ultimately settled with the estate agreeing to pay $2 million. The IRS had initially sought more than $11 million in taxes and penalties from the estate. The stipulation entered on December 26th did not specify what Houston’s right of publicity was ultimately valued at.

The stipulation and settlement yet again avoided a court determination of whether the right of publicity should be part of the estate in the first place. Like the Michael Jackson estate, the Houston estate did not contest the inclusion of the right of publicity in the estate’s property―something I think estates should more actively start doing.

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January 8, 2018 in IRS News, New Cases, Tax | Permalink | Comments (1)

Former IRS Ethics Attorney (And Georgetown Tax Adjunct) Pleads Guilty To Conspiracy To Distribute 500 Grams Of Meth

Jack VitayanonNew York Law Journal, Former IRS Attorney Pleads Guilty to Drug Conspiracy:

A former attorney with the IRS’ Office of Professional Responsibility pleaded guilty in the U.S. District Court for the Eastern District of New York to conspiracy to distribute over 500 grams of methamphetamine, the U.S. Attorney’s Office announced Friday.

Jack Vitayanon was arrested in February in Washington, D.C., on charges he conspired with people in Arizona and Long Island to distribute meth over a number of years.

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January 8, 2018 in IRS News, Tax | Permalink | Comments (1)

Sunday, January 7, 2018

The IRS Scandal, Days 1601-1700

January 7, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, January 2, 2018

The IRS Scandal, Day 1699: Lois Lerner And Civil Service Reform

IRS Logo 2Wall Street Journal op-ed:  A Big, Beautiful Trump 2018 Issue, by Kimberley A. Strassel:

President Trump is on the hunt for a 2018 issue—a strong follow-up to his tax-cut victory that will motivate voters and gain bipartisan support. Democrats are pushing for an infrastructure bill, inviting the president to spend with them. House GOP leaders are mulling entitlement reform—a noble goal, if unlikely in a midterm cycle.

Fortunately for the president, there’s a better idea out there that’s already a Trump theme. It’s also a sure winner with the public, so Republicans ought to be able to pressure Democrats to join.

Let 2018 be the year of civil-service reform—a root-and-branch overhaul of the government itself. Call it Operation Drain the Swamp. ...

We live in an administrative state, run by a left-leaning, self-interested governing class that is actively hostile to any president with a deregulatory or reform agenda.

It’s Lois Lerner, the IRS official who used her powers to silence conservative nonprofits. ...

More broadly, it is a federal workforce whose pay and benefits are completely out of whack with the private sector. ...

Civil-service reform’s bipartisan appeal means it has a shot in the Senate. The Chuck Schumers and Elizabeth Warrens will fight for their federal union buddies. But will Democrats like Jon Tester, Claire McCaskill, Joe Manchin and Joe Donnelly —who represent conservative or right-to-work states—go to bat for the likes of Lois Lerner?

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January 2, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, January 1, 2018

The IRS Scandal, Day 1698: Fallout From Tea Party Targeting Allegations Has Neutered IRS Oversight Of Nonprofits

IRS Logo 2Washington Post editorial, Scandal Has Overwhelmed the IRS:

Conservatives who long sought to restrain the Internal Revenue Service have managed to throw a wrench into an IRS division that is supposed to regulate tax-exempt nonprofits and charities, just at a time when these groups are becoming more partisan and complex.

In a Dec. 18 article in The Post, reporter Robert O’Harrow Jr. offered a disturbing picture of the besieged Exempt Organizations division of the IRS, which regulates charities and nonprofits such as those allowed under sections 501(c)(3) and 501(c)(4) of the tax code. The former may not directly or indirectly support a political candidate, but they are allowed to participate in educational debates about the issues; the latter are social-welfare groups that can be involved in politics only so long as it is not their primary activity. The number of applications from new charities has exploded in recent years, and the law is a bit of a gray zone — vaguely written and hard to enforce.

In recent years, overwhelmed by applications, the division and its then-leader, Lois Lerner, fell into the crosshairs of the conservative tea party movement for the slow pace of approvals of tea party groups, which they claimed was due to a conspiracy by the Obama administration to target them. Subsequent investigations found mismanagement — the IRS was taking shortcuts and using keywords to deal with the mountain of applications — but not deliberate targeting.

Still, the charges took a toll. The division seems to have lost its will to scrutinize charities. According to Mr. O’Harrow, last year the division rejected just 37 of the 79,582 applications on which it made a final determination. He reported that charities have now begun to recognize they face little or no chance of examination or sanction. The division’s budget has declined from a peak of $102 million in 2011 to $82 million last year. The number of division employees has fallen from 889 to 642. ...

There is more than enough blame to go around in this tale. The conservative groups, their allies in Congress and the IRS itself all bear responsibility. It is clear what the result will be. Voters will have less and less knowledge of who is paying for political activity in their democracy, even as many politicians hypocritically claim to favor transparency.

(Hat Tip: Bill Turnier.)

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January 1, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (9)

Sunday, December 31, 2017

The IRS Scandal, Day 1697: Budgetary Evisceration After Tea Party Targeting Allegations Has Left The IRS Incapable Of Implementing The New Tax Law

IRS Logo 2New York Times editorial, Don’t Cheer as the I.R.S. Grows Weaker:

[A]s it prepares to implement the most sweeping tax overhaul in 30 years, the I.R.S. is perhaps weaker than it has ever been. In 1986, the last time Congress passed major changes in the tax code, it included a budget increase for the agency, allowing it to hire 2,100 more employees to carry out the changes. Earlier this year, as the agency struggled to do its job with a decimated staff, a shrinking budget and decrepit computers, its commissioner pleaded with Congress to at least give it time to prepare for the big tax overhaul Republicans wanted.

That didn’t happen. Instead, Republicans rushed hastily written legislation larded with amendments through both chambers. Even before this hash hit their desks, I.R.S. officials were warning about the potential for a catastrophic breakdown that could imperil our tax system. Then, at its busiest time of year, the agency was given a week before the tax law goes into effect to translate hundreds of pages of conflicting provisions, potential loopholes and unintended consequences into coherent guidance for taxpayers. ...

Americans should reserve their rage for Republicans, who have spent years targeting the I.R.S. for political gain. Since 2010, Congress has cut the agency’s budget by nearly $1 billion, or 18 percent, adjusted for inflation, as the I.R.S. processes about 10 million more tax returns. Its work force has been whacked by 21,000, or nearly one-quarter; taxpayers who need help — often individuals preparing their own returns — have a hard time getting anyone to answer the phone. ...

There is no permanent commissioner leading the I.R.S. Its last one, John Koskinen, left in November at the expiration of his term. Mr. Koskinen had spent a big chunk of his time on Capitol Hill, being lambasted by Republicans over allegations that the Obama-era I.R.S. unfairly targeted conservative political groups seeking tax-exempt status. A report released in October by the Treasury Department’s inspector general found that the I.R.S. had also scoured left-leaning groups’ applications for tax-exempt status as part of its effort to identify groups focused on politics, not “social welfare,” as the rules for tax-exempt status require.

The agency apologized for its improper audits, and a Justice Department investigation found mismanagement but no evidence of a crime. Though the audits occurred before Mr. Koskinen came aboard, Republicans clamored for him to be impeached, an action not taken against an administration official besides the president since the 1870s. The dumb and unsuccessful effort was led by legislators like Jason Chaffetz, then a Republican congressman from Utah, who view the I.R.S. as symbolic of “big government” and think that killing it outright might be a good idea. ...

Pounding a perennial punching bag like the I.R.S. scores easy political points among Americans who associate the agency with an unpleasant April deadline. We get it. But if the agency that collects more than 90 percent of the government’s money stumbles, all Americans pay, and they can look to Congress, not just the I.R.S., in assigning the blame.

(Hat Tip: Bill Turnier.)

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December 31, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (17)

Friday, December 29, 2017

Confusion Reigns As People Race To Prepay (And Deduct) Property Taxes By Year-End

IR-2017-210, Prepaid Real Property Taxes May Be Deductible in 2017 if Assessed and Paid in 2017:

The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.

The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018.  A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.  State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.

The following examples illustrate these points.

Example 1: Assume County A assesses property tax on July 1, 2017 for the period July 1, 2017 – June 30, 2018.  On July 31, 2017, County A sends notices to residents notifying them of the assessment and billing the property tax in two installments with the first installment due Sept. 30, 2017 and the second installment due Jan. 31, 2018.   Assuming taxpayer has paid the first installment in 2017, the taxpayer may choose to pay the second installment on Dec. 31, 2017, and may claim a deduction for this prepayment on the taxpayer’s 2017 return.

Example 2: County B also assesses and bills its residents for property taxes on July 1, 2017, for the period July 1, 2017 – June 30, 2018. County B intends to make the usual assessment in July 2018 for the period July 1, 2018 – June 30, 2019.  However, because county residents wish to prepay their 2018-2019 property taxes in 2017, County B has revised its computer systems to accept prepayment of property taxes for the 2018-2019 property tax year.  Taxpayers who prepay their 2018-2019 property taxes in 2017 will not be allowed to deduct the prepayment on their federal tax returns because the county will not assess the property tax for the 2018-2019 tax year until July 1, 2018.

Victor Thuronyi, Can You Prepay 2018 Property Tax in 2017?:

It turns out this question get[s] more complex by the day. ...

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December 29, 2017 in IRS News, Tax | Permalink | Comments (11)

Friday, December 22, 2017

The Farmer, The Pickup, And The Elephant: A Post-Modern Fable

Once upon a time in West Texas there lived a farmer. In addition to raising crops, he kept a collection of interesting animals as a hobby. Always keen to make some money, however, he used the output of the animals for compost and sold the excess to surrounding farms. More about that below the fold. But first I need to tell you about the farmer’s pickup truck, “Iris.”

The farmer’s dad had bought a fine Ford F250 in the early 2000’s. His dad was very fond of the truck and called it “Iris.” But the farmer did not like Iris and so he used it exclusively to haul the animal product to market. Of course that meant Iris stank. The stink offended people, who thought Iris was to blame for payload the farmer asked Iris to carry.

When the farmer took over farming operations from his dad in 2008 he began neglecting Iris by not putting in the money to make needed upkeep and repairs. For example, he used a really cheap motor oil because he liked its name “Liberty,” and he liked the pennies he saved. But that oil actually did the exact opposite of what oils are supposed to do: it exacerbated the wear on the engine Then the farmer started using an even cheaper lubricant: chicken grease. When the once proud 5.2L Voodoo V8 engine failed, the farmer replaced it with an 4-cylinder engine taken from a Ford Fiesta, ‘cause that was cheap. More pennies saved! As parts failed, Iris became increasingly unreliable.  Still, the farmer kept relying on Iris to carry the load for him.

And now, for the Elephant part, below the fold.

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December 22, 2017 in Bryan Camp, IRS News, Tax, Tax Policy in the Trump Administration, Tax Practice And Procedure | Permalink | Comments (3)

Monday, December 18, 2017

The IRS Scandal, Day 1684: Fallout From Allegations Of Tea Party Targeting Hampers IRS Oversight Of Nonprofits

IRS Logo 2Washington Post, Fallout From Allegations of Tea Party Targeting Hamper IRS Oversight of Nonprofits:

Years of conservative attacks on the Internal Revenue Service have greatly diminished the ability of agency regulators to oversee political activity by charities and other nonprofits, documents and interviews show.

The fall in oversight, a byproduct of repeated cuts to the IRS budget, comes at a time when the number of charities is reaching a historic high and they are becoming more partisan and financially complex.

It represents a success for conservatives who have long sought to scale back the IRS and shrink the federal government. They capitalized on revelations in 2013 that IRS officials focused inappropriately on tea party and other conservative groups based on their names and policy positions, rather than on their political activity, in assessing their applications for tax-exempt status. Among conservatives, the episode has come to be known as the “IRS targeting scandal.”

Under the federal tax code, charities may not directly or indirectly support a political candidate, but they are allowed to participate in educational debates about the issues. Other nonprofits known as social welfare groups may be involved in politics, but only as long as it is not their primary purpose.

The main part of government tasked with policing those lines, the IRS’s Exempt Organizations division, has seen its budget decline from a peak of $102 million in 2011 to $82 million last year. At the same time, division employees have fallen from 889 to 642.

The division now lacks expertise, resources and the will needed to effectively oversee more than 1.2 million charities and tens of thousands of social welfare groups, according to interviews with two dozen nonprofit specialists and current and former IRS officials.

“This completely neutered them,” said Philip Hackney, a tax law professor at Louisiana State University and former Exempt Organizations lawyer at the IRS. “The will is totally gone.” ...

Conservatives have likened the IRS’s extra scrutiny of the tea party groups to Watergate and called it a political witch hunt. Among the leading critics was Cleta Mitchell, a veteran Republican activist and nonprofit lawyer. In 2014, she told a House oversight panel that Congress ought to abolish the IRS, saying the agency “is so corrupt and so rotten to the core that it cannot be salvaged.”

But while investigations by Congress and federal agencies found that IRS officials selected tea party groups for added attention, the investigators concluded there was no proof of political intent, a liberal conspiracy or White House involvement. ...

More charities have now begun to recognize they face little chance of an examination or sanction, which can involve terminating a group’s tax-exempt status and the ability of its donors to deduct their contributions, specialists said. “More and more groups are going to discover that they get away with doing politics,” said Lloyd Hitoshi Mayer, a law professor at Notre Dame and a former nonprofit lawyer. ...

In interviews and an email exchange with The Post, Mitchell said the investigations failed to highlight the essence of IRS wrongdoing. She maintains the scandal was grounded in abusive, politically motivated targeting, as chronicled by the Issa report in 2014. “I have no intention of ‘schooling’ anyone on why the IRS / Obama / Democrats’ narrative is wrong,” she wrote. “I’m not going to get into an argument to try to convince you of why that narrative is wrong. It just is. You either believe it or you don’t and if you don’t think there was a Political targeting scandal, then you don’t need to talk to me.”

Miriam Galston, a law professor at George Washington University, said there’s growing evidence that many charities are “flagrantly violating” the expectation that they contribute to “the public good.” She said IRS regulators are not in a position to do anything about it. “They’ve been burned. They’ve been hammered. They’ve been bludgeoned,” said Galston, a specialist in state and federal nonprofit law. “They’re trying to survive.”

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

Friday, December 15, 2017

The IRS Scandal, Day 1681: Robert Mueller And Lois Lerner

IRS Logo 2Wall Street Journal op-ed:  Let Mueller Keep Digging, by William McGurn:

At a moment when the special counsel’s team is busy calling its own fairness and impartiality into question, why would Donald Trump even think of firing Robert Mueller?

When the special counsel picked his team, almost half the lawyers he selected had donated to Hillary Clinton. Legally that may not be disqualifying. It was, however, highly imprudent for a man presiding over the nation’s most sensitive investigation. Not a single Mueller prosecutor had contributed to Mr. Trump.

Those donations now provide the context for more recent revelations about the partisan preferences of Team Mueller. ...

These developments, alas, have encouraged two horrible responses from Republicans. The first is the call for Mr. Trump to sack Mr. Mueller, an idea news reports say is gaining traction inside the White House. The other is for a new special counsel to investigate the existing special counsel.

Either would make a bad situation worse. ...

Then there’s Congress, which has been rightly frustrated to find the Trump Justice Department as obstructionist as the Obama Justice Department. In testimony last week, FBI Director Christopher Wray advanced the extraordinary claim he can hold back information from the elected representatives of the American people on the grounds that it is classified or that he’s waiting for an inspector general’s report and so, presumably, should they.

The message for Congress is this: Why should an FBI director take you seriously when you don’t take yourselves seriously? During the IRS scandal, Lois Lerner rode off into the sunset without testifying because Congress allowed the Obama Justice Department to determine her fate. Ditto for John Koskinen, the IRS commissioner who happily served out his time when Congress should have impeached him for his falsehoods and obstructionism.

n its 1821 decision affirming the right of the House to hold people in contempt and jail them, the Supreme Court noted that depriving Congress of this authority would mean “the total annihilation of the power of the House of Representatives” to prevent people from just flipping it the bird. Isn’t that just what government officials from Ms. Lerner to Mr. Wray have been doing?

If executive branch officials continue to play games with subpoenas, Congress needs to give them a taste of the legislature’s powers, whether by cutting agency budgets, impeaching directors or holding uncooperative officials in contempt. In this regard it’s good to know Devin Nunes, chairman of the House Intelligence Committee, is still pursuing contempt citations for Mr. Wray and Deputy Attorney General Rod Rosenstein. A contempt vote by the full House would of course depend on Speaker Paul Ryan, who complained in October about FBI “stonewalling.”

So forget firings and new special prosecutors. Let the president use his executive authority to make public the evidence that would tell the American people what really happened. And let Congress start acting like the coequal branch of government the Founders intended—and get to the bottom of a story that involves the legitimacy of the presidency, the 2016 election and our federal institutions.

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December 15, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, December 14, 2017

WaPo: How The IRS Values Art

I try to tell my students that where the rubber hits the road for many tax issues is in valuation.  Here's a great story about one aspect of valuation disputes from the Washington Post Magazine:  "The Secretive Panel of Art Experts That Tell the IRS How Much Art is Worth"

Each year, bequests and donations of art generate tens of millions of dollars in potential tax revenue. But to be accurately taxed, an artwork needs to be accurately valued, and the owner who has to pay the tax can’t be expected to provide the last word. When an artwork is sold outright, the Internal Revenue Service needs no help in determining how much to tax; it has the purchase price and the sale price and it knows how to subtract. (The maximum federal tax rate on profits from the sale of art and collectibles is 28 percent, higher than the 15 to 20 percent for stocks.) Things get trickier, however, when an artwork passes to an heir or is given to a museum. The agency still needs to know, as of the date of death or donation, how much the art is worth, but without a current sale price that figure can be debatable.

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December 14, 2017 in Bryan Camp, IRS News, Tax | Permalink | Comments (1)

Wednesday, December 6, 2017

The IRS Scandal, Day 1672: Ohio Attorney General Asks Federal Court To Release Lois Lerner's Deposition In Tea Party Targeting Case

IRS Logo 2Cincinnati Enquirer, Ohio AG DeWine Wants Lois Lerner's IRS Testimony Unsealed in Tea Party Case:

Ohio Attorney General Mike DeWine has thrown his support behind efforts to unseal testimony by two former IRS officials at the center of the tea party scandal of 2013.

A federal judge previously sealed the depositions of former IRS divisional director Lois Lerner and her immediate subordinate after their personal lawyers said the two were receiving threats.

The Enquirer has since requested the documents be unsealed by U.S. District Court as the case has been tentatively settled. That request has been backed by the U.S. Justice Department and the lawyers suing the government. The two women's lawyers still oppose it.

DeWine joined in on The Enquirer's side last week by filing an amicus brief. The case "involves matters of profound public concern and ... the public’s right of access to documents filed in the litigation,” lawyers with DeWine's office wrote.

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December 6, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Tuesday, December 5, 2017

The IRS Scandal, Day 1671: Lois Lerner’s Secrets

IRS Logo 2Wall Street Journal editorial, Lois Lerner’s Secrets: The Former IRS Official Wants a Court to Seal Her Testimony:

If only the National Security Agency were as good at keeping secrets as Lois Lerner. When news that the IRS had targeted conservative groups led to congressional hearings, the former director of the Exempt Organizations division declared her innocence and then clammed up. Now she and her former IRS associate, Holly Paz, are asking a federal judge to seal forever their depositions in a lawsuit that the IRS settled last month for $3.5 million.

Ms. Lerner and Ms. Paz say they or their families have endured harassment or death threats. But Edward Greim, the attorney for the roughly 400 tea-party clients who sued, notes in reply that the last threat Ms. Lerner and Ms. Paz cited was from early 2014.

Leave aside that the usual way of dealing with threats or harassment is to notify police or the FBI—not to keep information about an abuse of power by public officials from the public. Every other party is united for disclosure: the defense (i.e., the government, which has admitted wrongdoing and apologized); the plaintiffs; and the Cincinnati Enquirer, which has filed a motion to lift the seal. ...

American taxpayers who will fork out $3.5 million for Ms. Lerner’s actions have a right to hear how she justified what she did at the IRS.

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

Tuesday, November 21, 2017

The IRS Scandal, Day 1657: Lois Lerner Fears Retaliation If Her Tea Party Targeting Deposition Is Made Public 

IRS Logo 2Wall Street Journal, Lois Lerner Doesn’t Trust You: “You Can’t Handle the Truth,” the Former IRS Official Tells the American People:

In his courtroom apologia in the film “A Few Good Men,” Jack Nicholson’s Col. Nathan Jessup made the words famous. Now, in her bid to keep her testimony in a recently settled tea-party lawsuit against the IRS secret, Lois Lerner has picked up the Jessup argument: “You can’t handle the truth!”

They used different words but the meaning is the same. Here’s how lawyers for Ms. Lerner and her former IRS deputy, Holly Paz, put it in a filing aimed at persuading a judge to keep their testimony from becoming public: “Public dissemination of their deposition testimony would expose them and their families to harassment and a credible risk of violence and physical harm.” They’re not just thinking of themselves, they add. Young children, family members, might be hurt too.

That’s quite an argument. So enraged would the American public become upon learning what Ms. Lerner and Ms. Paz said that they and those around them would be in physical peril. Which probably makes most people wonder what the heck must the two have said that would get everyone so agitated? ...

[W]hat a crippling precedent it would be if government officials from powerful agencies such as the IRS were permitted to keep their abuses secret on grounds they fear that the people whom they are supposed to serve might be upset if they found out.

There can be good reasons to keep a deposition sealed, from ensuring the privacy of the innocent to protecting the life of a mafia informant. But Ms. Lerner is no innocent. Indeed, given all the falsehoods that have been spread in an effort to whitewash what the IRS had done, the case for transparency becomes even more compelling here. ...

[I]n this case the plaintiffs, the government and a newspaper all say they are for disclosure. Is a judge really going to buy Ms. Lerner’s argument that the American people can’t handle the truth?

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November 21, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Friday, November 17, 2017

National Taxpayer Advocate Blog: Caring About “Sharing” — The IRS Should Do More For Participants In The Gig Economy

Taxpayer Advocate (2016)NTA Blog, Caring about “Sharing” – The IRS Should Do More for Participants in the Gig Economy:

In this blog post, I will discuss how the IRS has been dealing with a growing sector of our economy called the “sharing” economy (also known as the gig economy). Proponents of the sharing economy believe it promotes marketplace efficiency by enabling individuals to generate revenue from assets while the assets are not being used personally. For example, a vacation home owner may rent out her home while she is not using it. Airbnb (short-term home rentals) and Uber (shared car services) are two of the more prominent companies that facilitate a sharing economy.

Nearly a quarter of the U.S. population earns money from the sharing economy. Although it may be growing at a healthy rate, I want to make clear that not all sharing economy participants are finding it to be a very lucrative endeavor. On the contrary, data show that the vast majority – 85 percent – earn less than $500 per month from their gigs.

Furthermore, many of the service providers are simply unfamiliar with the tax filing and recordkeeping requirements. Service providers in the sharing economy may not fit the mold of the traditional employee who works “9 to 5” and receives a Form W-2 from one employer. Rather, a service provider in the sharing economy may have to take on multiple gigs to help make ends meet, making it difficult to track and allocate expenses among the various gigs. The majority of them do not receive any tax information from the sharing economy platform they use to earn their income. This demonstrates both the need for guidance from the IRS and the opportunity to create a culture of tax compliance among participants in the sharing economy from the outset. Establishing the tax compliance norms for this emerging industry in its infancy will assist the IRS as this segment of taxpayers grows. 

This leads us to the question, “What can the IRS do to help sharing economy participants comply with their tax obligations?” First, when looking at noncompliance, it is important to distinguish between the various types of noncompliance the IRS encounters. Not all noncompliant taxpayers are willfully noncompliant; many of them are tripped up by “unknowing” or “lazy” noncompliance. That is, some taxpayers are simply unaware of their tax compliance obligations. Many sharing-economy entrepreneurs and merchants have never operated a small business and need to understand certain basic tax obligations (i.e., making required quarterly estimated payments throughout the year to avoid penalties).

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November 17, 2017 in Gov't Reports, IRS News, News, Shuyi Oei, Tax | Permalink | Comments (0)

Monday, November 13, 2017

Frances Regan Receives Award For Her Work In Leadership Training In IRS Office Of Chief Counsel

ReganFederal News Radio, Would-be Pharmacist Turned IRS Lawyer Honored For Her Leadership Skills:

Growing up in a family of pharmacists, there was no question Frances Regan would end up working in healthcare, but as fate would have it, law school was the right prescription for Regan.

Three decades after graduating from St. John’s University School of Law, Regan works as the area counsel for the IRS’ Small Business Self Employed Division for Office of Chief Counsel, and her work hasn’t gone unnoticed.

Regan was one of two federal employees honored with the Roger W. Jones Award from the American University School of Public Affairs, for her leadership and “commitment to effective continuity of government.”

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

Sunday, November 12, 2017

Facebook Sues IRS Seeking Access To Internal Agency Appeal

Facebook (2016)Law.com, Facebook Sues IRS Seeking Access to Internal Agency Appeal:

Facebook Inc. has sued the Internal Revenue Service seeking access to an internal IRS appeal process regarding a decision related to the social media giant’s tax bill.

In a 12-page complaint filed in U.S. District Court for the Northern District of California on Wednesday, Facebook claims that IRS counsel have stymied the company’s request to pursue an internal IRS appeal by citing a new and so far seldom-used rule that allows IRS exam teams to deny access to internal appeals when they determine such an appeal would not be in the interest of “sound tax administration.”

Facebook wants a finding that the IRS violated the Administrative Procedure Act by issuing the new rule — Revenue Procedure 2016-22, 2016-15 I.R.B. 1 — and by denying Facebook’s request for an internal appeal.

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November 12, 2017 in IRS News, Tax | Permalink | Comments (4)

Friday, November 3, 2017

$6.8 Billion Hedge Fund Tax Dispute Moves to IRS Appeals Office

RenaissanceFollowing up on my previous post, Senate Report Criticizes Hedge Funds' Use of Basket Options Tax Strategy:  Bloomberg, Mercer Hedge Fund Tax Dispute Moves to IRS Appeals Office:

A tax dispute involving Renaissance Technologies, the hedge fund firm whose co-chief executive officer is a prominent backer of President Donald Trump, is advancing to a new phase.

Members of the Internal Revenue Service’s Office of Appeals are scheduled to meet with lawyers for Renaissance in New York on Nov. 7, according to a person with knowledge of the matter. The meeting kicks off a review by an independent branch of the tax agency and suggests a resolution may be years away.

Although the dollar amount at issue has never been made public, Senate investigators estimated that Renaissance employees may have pocketed about $6.8 billion through what a bipartisan panel in 2014 called an “abusive” tax shelter. Renaissance executives maintain the transactions at issue were within the law and weren’t driven by tax savings.

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November 3, 2017 in IRS News, New Cases, Tax | Permalink | Comments (0)

Tuesday, October 31, 2017

Davis: Morrissey And The IRS's Hostility To Reproductive Choice

Following up on my previous posts:

Tessa Davis (South Carolina), Morrissey v. U.S. and the IRS's Hostility to Reproductive Choice:

I’ll begin with what the court of appeals got right. First, the court did not read a “disease” requirement into the “structure or function” route to a medical expense deduction. Second, the court did not summarily reason that ARTs are unrelated to a “function of the body.” The court of appeals thus avoided two errors that plagued the earlier Magdalin v. Comm’r  case (a Tax Court memorandum opinion summarily affirmed by the First Circuit, and which I’ve written about here).

Unfortunately, the court of appeals got just about everything else wrong.

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October 31, 2017 in IRS News, New Cases, Tax | Permalink | Comments (2)

Some Positive News About The IRS

IRS Logo 2The IRS does not have an easy job.  Remember, it's NOT the "IRS Code" because the IRS is just the agency stuck with the task of carrying out the will of Congress.   And the IRS must do this job all while being a political soccer ball — and since the mid-1990's the Republican team has hogged that ball, kicking with more enthusiasm than enlightenment.  So it was nice to see a positive story about tax administration picked up by USA Today, especially because USA stories also appear in little town newspapers, like the one I read here in Lubbock, Texas (the Lubbock Avalanche-Journal:  IRS: Public-private Crackdown Slashes Identity Theft, Tax Refund Fraud, the story comes from a press release by the IRS that explained:

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October 31, 2017 in Bryan Camp, IRS News, Tax, Tax Practice And Procedure | Permalink | Comments (1)

Friday, October 27, 2017

Trump Names Assistant Secretary Of The Treasury For Tax Policy David Kautter Acting IRS Commissioner, Effective Nov. 12

KautterFollowing up on previous posts (links below): President Trump has named David Kautter, Assistant Secretary of the Treasury for Tax Policy. to be the Acting Commissioner of the IRS when John Koskinen's term ends November 12.

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October 27, 2017 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1632: Department Of Justice Settles Tea Party Targeting Cases For Millions And An Apology

IRS Logo 2Wall Street Journal, Administration Agrees to Settle Tea-Party Suits Against IRS:

The Trump administration on Thursday said it has agreed to pay between $1 million and $10 million to settle lawsuits against the Internal Revenue Service for targeting tea-party groups in the Obama era, saying in court documents that the IRS “admits that its treatment...was wrong.”

The Justice Department entered into proposed settlements with groups that alleged in 2013 they had been subject to discriminatory treatment in applying for tax-exempt status. The move largely puts an end to a saga that had engulfed the IRS for years.

In a settlement filed in federal court in Washington, which still must be approved by a judge, the Justice Department said the IRS “expresses its sincere apology” and was “fully committed” to not subjecting groups for additional review “solely on the name or policy positions of such entity.”

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October 27, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (12)

Wednesday, October 25, 2017

The IRS Scandal, Day 1630: The Real Scandal Is The IRS's Budget

IRS Logo 2Philip Hackney (LSU), The IRS Targeting Scandal Was Fake, but IRS Budget Woes Are a Real Problem:

Conservatives have been seething since 2013 over what they say was an unfair and imbalanced effort by the IRS to scrutinize right-leaning organizations more closely than other groups seeking nonprofit status.

As a new report from the Treasury Department’s inspector general for tax administration shows, the IRS did flag some conservative groups out of concern that they might be problematic. But it also paid the same kind of extra attention to liberal organizations with words like “occupy” and “progressive” in their names between 2004 and 2013.

So it’s now official. There was extra scrutiny but there was no liberal bias among the federal employees who determine whether new organizations that want to operate as nonprofits are legitimate – and therefore eligible for the tax-exempt status that goes with that designation.

As a former IRS lawyer who now researches nonprofit regulation, I am relieved to see the claim that the government exclusively targeted conservative organizations officially debunked. I believe this new report ought to usher in a serious discussion about a very real problem: The IRS is too cash-strapped to conduct its oversight of nonprofits of all kinds. ...

The Government Accountability Office, a nonpartisan congressional agency, recognized in 2014 that the tax agency’s budget and staff were too small to handle its nonprofit oversight responsibilities. The situation has only deteriorated since then.

The overall IRS budget fell by about 18 percent in inflation-adjusted terms from 2010 to 2017, from US$14 billion to roughly $11.5 billion. Today, the agency employs fewer people than it did in 2010. The number of its employees dedicated to auditing and vetting the nonprofit sector fell about 5 percent from 2010 to 2013, the GAO found.

This long-term trend, which began two decades ago, has eroded oversight. The number of aspiring nonprofits gaining tax-exempt status rose over the past decade as rejections fell. The number of denials plummeted from 1,607 in 2007 to merely 37 in 2016.

Hackney

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October 25, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (10)

Monday, October 16, 2017

Head Of Tax Practice At BigLaw Firm Sentenced To 24 Months In Federal Prison For Tax Evasion: 'Everyone — Including Tax Lawyers — Must Be Truthful In Reporting Their Income'

LevineNew York Law Journal, Judge Hands Two-Year Sentence to Ex-Herrick Tax Head:

Four months after pleading guilty to tax charges, former Herrick Feinstein partner Harold Levine in New York was sentenced Wednesday to 24 months in federal prison for his role in a scheme to defraud the IRS.

U.S. District Judge Jed Rakoff of the Southern District of New York in Manhattan handed down the sentence against Levine, who was indicted a year ago this month on wire fraud and tax evasion charges.

U.S. Attorney’s Office for the Southern District of New York Press Release, Manhattan Tax Attorney Sentenced To Two Years In Prison For Participation In Multimillion-Dollar Tax Evasion Scheme And Lying To The IRS:

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

Tuesday, October 10, 2017

Treasury Rolls Back Eight Tax Regulations

TreasuryTreasury Department, Second Report to the President on Identifying and Reducing Tax Regulatory Burdens (Executive Order 13789) (Oct. 2, 2017) (press release):

This Second Report recommends actions to eliminate, and in other cases mitigate, consistent with law, the burdens imposed on taxpayers by eight regulations that the Department of the Treasury (Treasury) has identified for review under Executive Order 13789. As stated in the order, it is the policy of the President that tax regulations provide clarity and useful guidance. Recent regulations, however, have increased tax burdens and impeded economic growth. The order therefore calls for immediate action to reduce tax regulatory burdens and provide useful and simplified tax guidance.

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October 10, 2017 in Gov't Reports, IRS News, Tax | Permalink | Comments (3)

Saturday, October 7, 2017

The IRS Scandal, Day 1612: Inspector General Debunks Ideological Targeting Of Conservative Groups By The IRS

IRS Logo 2New York Times, In Targeting Political Groups, I.R.S. Crossed Party Lines:

A federal watchdog investigating whether the Internal Revenue Service unfairly targeted conservative political groups seeking tax-exempt status said that the agency also scrutinized organizations associated with liberal causes from 2004 to 2013.

The findings by the Treasury Department’s inspector general mark the end of a political firestorm that embroiled the I.R.S. in controversy, led to the ouster of its commissioner and prompted accusations the tax collection agency was being used as a political weapon by the Obama administration.

The exhaustive report, which examined nine years worth of applications for tax-exempt status, comes after a similar audit in 2013 found that groups with conservative names like “Tea Party,” “patriot” or “9/12” were unfairly targeted for further review.

The new report found that the I.R.S. was also inappropriately targeting progressive-leaning groups. While the investigation does not specify the political affiliations of the groups, names that were flagged included the words “Progressive,” “Occupy,” “Green Energy,” and Acorn — the acronym for the now defunct Association of Community Organizations for Reform Now. ...

Ahead of the 2014 midterm elections, Republicans regularly used the scandal to bludgeon Democrats and paint the Obama administration as corrupt. But now it appears that the I.R.S. was an equal offender. “This report shows the I.R.S. deep scrutiny of political groups is in fact bipartisan, it is liberal and conservative groups that the I.R.S. has been targeting,” said Craig Holman, a government affairs lobbyist for the consumer advocacy group Public Citizen.

Rather than condemn the I.R.S. actions, Democrats on Thursday celebrated the findings as evidence that Republicans were wrong to claim bias at the I.R.S. Democrats had previously been critical of the 2013 Treasury report since it only looked at two years of applications. “After years of baseless claims and false accusations it is my hope Republicans will finally put an end to this witch hunt and admit that their attacks on the I.R.S. were nothing but political grandstanding on behalf of special interests at the expense of American taxpayers,” said Senator Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee.

Republicans, however, are not prepared to let the I.R.S. off the hook and seized on the report as evidence that the agency must be reformed. “This report reinforces what government watchdogs and congressional investigators have confirmed time and time again: Bureaucrats at the I.R.S., such as Lois Lerner, arbitrarily and haphazardly administered the tax code and targeted taxpayers based on political ideology,” said Representative Kevin Brady of Texas, the Republican chairman of the Ways and Means Committee. “It’s no wonder the American people have lost faith in the I.R.S.”

The controversy over political targeting at the I.R.S. was the genesis of many congressional hearings and probes, and it has continued to haunt its current commissioner, John Koskinen, whom Mr. Obama tapped to stabilize the agency. As recently as April, House members called for the firing of Mr. Koskinen for the “gross mishandling” of its investigation into the targeting of political groups. Despite the uproar from Republicans, President Trump has not taken any steps to fire Mr. Koskinen, whose term ends next month.

Washington Post, Four Years Later, the IRS Tea Party Scandal Looks Very Different. It May Not Even Be a Scandal:

It all seemed to add up. At least it did then.

The Internal Revenue Service, according to outraged Republicans and many media accounts at the time, targeted tea party organizations and other conservative nonprofit groups that were seeking tax-exempt status between 2010 and 2012. Critics said the tax agency had subjected the targeted groups to extra scrutiny, questioning and long delays, largely because their names suggested they would be political opponents of the Obama administration and the Democratic Party.

The allegations formed one of the best-known scandals of former president Barack Obama’s administration and led to months of congressional hearings, official investigations and damning news coverage.

Now, it seems, it wasn’t so simple. ...

The new finding suggests Republicans and the media provided an incomplete or even misleading account of what the IRS was up to when it was reviewing political organizations that sought tax-exempt status. While not of the order of the news media’s credulous (and flawed) reporting about supposed weapons of mass destruction in Iraq before the U.S. invasion in 2003, the report offers a check on the prevailing narrative of the time.

It may also offer a measure of vindication to Obama, at least according to one of his senior advisers. “The Obama administration was often accused of Nixonian wrongdoing,” Eric Schultz, the former president’s spokesman and a deputy White House press secretary under him, said Thursday. “At some point, I lost track of how many Watergates we had. But we live in an environment where the more hyperbolic your allegation is, the more likely it will get headlines, no matter its veracity. This report substantiates our argument that our White House did not politicize the IRS, but those allegations, A1 material at the time, have lived online for four years and now that the public has moved on, they’re proven false.” ...

The issue might have become part of what Dartmouth political scientist Brendan Nyhan has called the “scandal attention cycle” — the rapid surge of attention as reporters race to cover an issue followed by a similar decline as the news media loses interest. “The problem is that it often takes time for the full set of facts to come out,” Nyhan has written. “By that time, the story is old news and the more complex or ambiguous details that often emerge are buried or ignored.”

Philip Hackney (LSU), IRS ‘Targeted’ Liberal Organizations and After All These Years TIGTA is Still Wrong:

The Treasury Inspector General for Tax Administration (TIGTA) just issued a new report four years and five months after rebuking the IRS for using “inappropriate” criteria to select applications for tax exempt status for scrutiny. In the first report, TIGTA rebuked the IRS for pulling the applications of conservative leaning organizations for greater scrutiny.

This time it considers the fact that the IRS over a period of 10 years used liberal leaning names such as ACORN, Emerge, and Progressive as criteria for pulling applications for greater scrutiny. This resulted in the IRS applying greater scrutiny to these organizations. Some might say the IRS targeted these organizations. Those organizations appear to have faced long wait times as well, and sometimes some questions of limited merit.

I write this piece to make two points: (1) had this information been in the initial report, I don’t think we would have had the “scandal” that shook the IRS and the political world of the time; and (2) the TIGTA report built its primary claim on a garbled faux legal postulate. The original report did terrible damage to the IRS and individuals by failing on both of these fronts.

Leandra Lederman (Indiana), The Real IRS Scandal:

[T]he new TIGTA report “identified 146 cases in which the IRS examined groups for suspicion of engaging in disallowed political activity using those criteria.” This finding is not a surprise. The fact that IRS employees were using keywords to identify progressive as well as conservative organizations doing too much political activity to qualify under 501(c)(4) should have been clear to anyone who dug into the public documents. But it wasn’t the message that the House Oversight Committee — and thus many media stories — disseminated. The real scandal was the d amage the resulting witch hunt did to the IRS. I wrote about that in [IRS Reform: Politics As Usual?, 7 Colum. J. Tax L. 36 (2016)] and in a related, short article I published in Tax Notes, The IRS, Politics, and Income Inequality, [150 Tax Notes 1329 (Mar. 14, 2016),] focused in part on IRS underfunding. I hope that TIGTA’s new report helps set the record straight.

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

Friday, October 6, 2017

The IRS Scandal, Day 1611: TIGTA Report, Review Of Selected Criteria Used To Identify Tax-Exempt Applications For Review

IRS Logo 2Treasury Inspector General for Tax Administration, Agency Statement On Audit Report: “Review of Selected Criteria Used to Identify Tax-Exempt Applications for Review”:

In May 2013, the Treasury Inspector General for Tax Administration (TIGTA) published an audit report in which we reported that between May 2010 and May 2012, the Internal Revenue Service (IRS) used inappropriate criteria to identify for review organizations’ applications for tax-exempt status. TIGTA’s 2013 audit found that the IRS inappropriately selected organizations for scrutiny based on their names or policy positions, instead of indications of significant potential political campaign intervention. Further, TIGTA found that the IRS made requests for unnecessary information and delayed, in some cases for years, making decisions on the organizations’ applications.

This audit was initiated based on bipartisan interest expressed by Members of Congress regarding the IRS’s use of other criteria to select tax-exempt applications for further review. Today, we are releasing a 115-page audit report that provides a historical account of the IRS’s use of 17 additional selection criteria going back as far as 2004. These 17 selection criteria were chosen based on bipartisan input from congressional committees of jurisdiction over the IRS, input from the IRS, and training materials that were not provided to TIGTA during the 2013 audit.

TIGTA found that, between 2004 and 2013, the IRS potentially used more than 250 criteria to identify for further review the applications of organizations seeking tax-exempt status. In our 2013 audit, we found that the process for review of applications for potential political advocacy from May 2010 to May 2012 involved the IRS’s use of a tracking sheet identifying the potential political cases selected for further review; however, the IRS was unable to identify what specific cases, if any, were selected for further review under 16 of the 17 criteria in our current report. Without case selection tracking sheets for the 16 criteria, TIGTA used various other sources to identify 146 cases related to the 17 criteria with indications of political activity, and confirmed that 83 of them were selected for review based on the 17 criteria.

This report is divided into 17 sections, one for each of the 17 criteria. Due to the unique nature of the 17 criteria, it is difficult to compare the criteria to each other, or to compare in aggregate to the criteria reviewed in the 2013 audit. However, TIGTA did find that, while the number of organizations impacted is significantly less than the number detailed in the 2013 report, some organizations in the current report also experienced significant delays and received requests for unnecessary information. In addition, in the 2013 report the majority of cases we reviewed were from organizations applying for I.R.C. § 501 (c)(4) status. In contrast, the majority of the 146 cases in the current report were organizations applying for I.R.C. § 501 (c)(3) status.

Our 2013 report made several recommendations for process improvements and all of them were implemented by the IRS, which we verified in a follow-up audit in 2015. As a result of our 2013 report, the IRS completely revamped the process for reviewing tax-exempt applications, including the elimination of criteria listings, known as “Be On the Lookout” listings, in June 2013. According to the IRS, the revamped process has totally eliminated the backlog of applications and reduced processing cycle times for cases. Since the review process in place when the 17 criteria were potentially used by the IRS is no longer in effect, TIGTA did not make any recommendations for improvement in this audit report.

Treasury Inspector General for Tax Administration, Review of Selected Criteria Used to Identify Tax-Exempt Applications for Review (2017-10-054) (Sept. 28, 2017):

IMPACT ON TAXPAYERS
In a prior audit, TIGTA determined that the IRS used inappropriate criteria to select tax‑exempt applications for further review. Moreover, ineffective management resulted in substantial delays in processing certain applications and allowed unnecessary information requests to be issued. It is critical that tax laws are administered in a fair and impartial manner.

WHY TIGTA DID THE AUDIT
In the prior review, TIGTA audited criteria that the IRS stated it used to select potential political cases for additional review from May 2010 through May 2012. The overall objective of this audit was to provide a historical account of the IRS’s development and use of 17 select criteria from 259 criteria used to identify tax‑exempt applications for review. The 17 criteria discussed in this report were selected based on input from staff of various congressional committees of jurisdiction and the IRS as well as from training documents that were not provided to TIGTA in the prior audit.

WHAT TIGTA FOUND
TIGTA found that, from August 2004 through June 2013, the IRS potentially used 259 criteria to identify tax-exempt applications for further review. Most of these criteria involved issues besides political campaign intervention, such as potential fraud, abuse, and links to terrorism.

In the prior audit, TIGTA found that the IRS used a tracking sheet to show which potential political cases were selected for further review; however, IRS management stated that case listings such as the one provided in the prior audit were not required. Due to the lack of case listings for all but one of the 17 criteria, TIGTA used various sources to identify more than 900 cases that could potentially have been selected for review based on the 17 criteria. However, TIGTA could not verify whether all relevant cases were identified.

Based on TIGTA’s review of case documentation, 181 of the more than 900 cases had evidence of political activities or indications of significant potential political campaign intervention (the subject of the prior audit). Thirty-five of these cases were not processed while the applicable criteria were in use and did not appear to be processed based on the criteria. For the remaining 146 cases, TIGTA determined that 83 were processed based upon the criteria and 63 were processed while the criteria were in use, but TIGTA could not confirm these 63 cases were selected based upon the criteria. Analysis of the 146 cases is shown in each of the 17 sections of the report with information for each of these unique criteria.

Figure 4

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October 6, 2017 in Gov't Reports, IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, October 5, 2017

Hickman: Chamber of Commerce v. IRS — The Post-Mayo Shake Out Continues

Hickman (2017)Following up on Monday's post, U.S. District Court Strikes Down Obama-Era Anti-Inversion Regulation, Limiting IRS's Power To Make Rules That Skirt The APA:

TaxProf Blog op-ed:  Chamber of Commerce v. IRS:  The Post-Mayo Shake Out Continues, by Kristin Hickman (Minnesota):

Here we go again.  In 2011, the Supreme Court in the Mayo Foundation case declared that it was “not inclined to carve out an approach to administrative review good for tax law only.”  Since then, courts and scholars have been engaged in an ongoing enterprise of debating just how far to take that suggestion.  Last week, in Chamber of Commerce v. IRS, a federal district court in Texas offered up the latest installment in the ongoing post-Mayo shake out when it invalidated a set of Treasury regulations —this time, Temp. Treas. Reg. 1.7874-8T regarding inversion transactions — on Administrative Procedure Act (APA) grounds.  The court’s opinion addressed several issues concerning the relationship between the IRC and general administrative law principles.  And, as with Cohen, Home Concrete, Altera, and other cases in this line, the Chamber of Commerce decision has inspired cheers from some, hand wringing by others, and a great deal of curiosity as tax specialists and administrative law generalists again try to understand one another.

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October 5, 2017 in IRS News, New Cases, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1610: Inspector General Says IRS Gave Extra Scrutiny To Liberal Groups, Undermining GOP Claims Of Ideological Targeting Of Conservative Groups By IRS

IRS Logo 2Washington Post, Liberal Groups Got IRS Scrutiny, Too, Inspector General Suggests:

A federal watchdog has identified scores of cases in which the Internal Revenue Service may have targeted liberal-leaning groups for extra scrutiny based on their names or political leanings, a finding that could undermine claims that conservatives were unfairly targeted under President Barack Obama.

The Treasury Inspector General for Tax Administration (TIGTA) reviewed cases between 2004 and 2013, which includes the period TIGTA previously examined in a 2013 report that faulted the IRS for using inappropriate political criteria to select groups for heightened scrutiny.

That earlier report found that 96 groups with names referencing “Tea Party,” “Patriot” or “9/12” were selected for intensive review between May 2010 and May 2012, and the House Ways and Means Committee later identified another 152 right-leaning groups that were subjected to scrutiny. Those findings fueled accusations by Republican lawmakers that the Obama administration engaged in politically motivated targeting of conservatives.

But Democrats have long challenged those claims, arguing that liberal-leaning groups were given close scrutiny alongside the conservative groups. The 2013 TIGTA report, they argued, was based on selective criteria that omitted numerous nonconservative groups that were also subjected to close IRS review.

The new report examines a broader range of criteria used by the IRS. It does not characterize the politics of the groups that were selected for scrutiny, a TIGTA spokeswoman emphasized Wednesday. But many of the 17 criteria the report examined had obvious political overtones — including affiliation with the now-defunct Association of Community Organizations for Reform Now (ACORN), as well as names referencing “Progressive,” “Green Energy,” “Medical Marijuana,” and “Occupy.”

Together, the watchdog identified 146 cases in which the IRS examined groups for suspicion of engaging in disallowed political activity using those criteria. Eighty-three of those were definitively chosen for scrutiny because of the selection criteria, the inspector general found; the report could not definitively determine how the other cases were chosen.

The Washington Post reviewed a version of the TIGTA report dated Sept. 28 that has been circulated to various lawmakers and committees on Capitol Hill. The full report is set to be released to the public Thursday.

The new report reiterates the inspector general’s earlier criticism of the IRS review process at the time, calling it “inappropriate” to target groups for scrutiny based on their names rather than on actual evidence of illicit political activity that would leave them ineligible for tax exemptions.

Groups that were selected for review waited months — years, in some cases — for their applications to be reviewed and were subjected to onerous and, in some cases, improper requests for information on their donors and activities. ...

Brady said in a statement Wednesday that the new TIGTA report “reinforces what government watchdogs and congressional investigators have confirmed time and time again: bureaucrats at the IRS, such as Lois Lerner, arbitrarily and haphazardly administered the tax code and targeted taxpayers based on political ideology.” He pledged to “continue holding the IRS accountable for their actions.”

Rep. Sander M. Levin (D-Mich.), who served as the top Democrat on the Ways and Means Committee during the height of the IRS scandal, said Wednesday that the report confirmed “political manipulation by the Republicans.” “They were trying to squeeze whatever political juice they could out of this,” he said. “Incompetence is different than a political witch hunt. There never was one, at least one that anybody could identify.”

DeBonis

Brunson

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

The IRS Scandal, Days 1501-1600

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

Wednesday, October 4, 2017

Democrats And Republicans Blast IRS's Decision To Award Equifax $7.25m No-Bid Contract To Prevent Taxpayer Identity Theft: 'I Thought I Was Reading The Onion'

EIRSPolitico, IRS Awards Multimillion-Dollar Fraud-Prevention Contract to Equifax:

The IRS will pay Equifax $7.25 million to verify taxpayer identities and help prevent fraud under a no-bid contract issued last week, even as lawmakers lash the embattled company about a massive security breach that exposed personal information of as many as 145.5 million Americans.

contract award for Equifax's data services was posted to the Federal Business Opportunities database Sept. 30 — the final day of the fiscal year. The credit agency will "verify taxpayer identity" and "assist in ongoing identity verification and validations" at the IRS, according to the award. ...

Lawmakers on both sides of the aisle blasted the IRS decision.

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October 4, 2017 in IRS News, Tax | Permalink | Comments (0)

Tuesday, October 3, 2017

TIGTA: IRS Must Ensure That Volunteer Income Tax Assistance Is Given Only To Eligible Taxpayers (200,000 Returns Were Prepared For Ineligible Taxpayers, Including Four With AGIs > $1 Million)

TIGTAThe Treasury Inspector General for Tax Administration has released Improvements Are Needed to Ensure That the Volunteer Income Tax Assistance Grant Program Extends Tax Return Preparation to Underserved Populations (2017-40-088):

TIGTA’s review of the almost 4.5 million tax returns prepared by grantees during Grant Years 2014 through 2016 identified that: 1) volunteers prepared 201,572 (4 percent) returns with an Adjusted Gross Income amount that exceeded the income threshold set for free tax return preparation, including 34,371 returns with an Adjusted Gross Income greater than $100,000 and 11 returns with an Adjusted Gross Income exceeding $1 million; 2) the IRS could not verify if 456,220 (10 percent) tax returns with complex tax schedules were prepared by volunteers with advanced certifications; and 3) 15,402 returns were out of scope. Finally, some guidelines and procedures were not current or consistent.

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October 3, 2017 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

Monday, October 2, 2017

U.S. District Court Strikes Down Obama-Era Anti-Inversion Regulation, Limiting IRS's Power To Make Rules That Skirt The APA

Chamber of Commerce v. IRS, No. 1:1 6-CV-944 (W.D. TX Sept. 29, 2017) (citations omitted):

In April 2016, the Internal Revenue Service and the United States Department of the Treasury (the "Treasury Department") (together, the "Agencies") issued a rule identifying stock of foreign acquiring corporations that is to be disregarded in determining an ownership fraction relevant to categorization for federal-tax purposes because the stock is attributable to prior domestic-entity acquisitions. 26 C.F.R. § 1 .7874-8T (the "Rule"). The Rule was simultaneously issued as a temporary regulation effective immediately and as a proposed regulation subject to notice and comment. 26 C.F.R. § 1.7874-8T(j); Prop. Treas. Reg. § 1.7874-8.

Plaintiffs, the Chamber of Commerce of the United States of America (the "Chamber") and the Texas Association of Business, now bring this lawsuit asserting Defendants, the Internal Revenue Service, Treasury Department, John A. Koskinen, and Jacob J. Lew, violated the Administrative Procedures Act (the "APA") by promulgating the Rule.

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October 2, 2017 in IRS News, New Cases, Tax | Permalink | Comments (1)

Friday, September 22, 2017

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

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

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

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

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

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

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

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

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

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

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

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

Thursday, September 21, 2017

IRS FAQs Are A Trap For The Unwary

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

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

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

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

Friday, September 15, 2017

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

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

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

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

Figure 1

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

Thursday, September 14, 2017

The IRS Scandal, Day 1589: The Better IRS Reform

IRS Logo 2

Wall Street Journal editorial, The Better IRS Reform:

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

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

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

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

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

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

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

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

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

Wednesday, September 13, 2017

Reforming Tax Administration

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

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

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

Tuesday, September 12, 2017

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

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

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

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

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

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

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

Saturday, September 9, 2017

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

IRS Logo 2

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

Thursday, September 7, 2017

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

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

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

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

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

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

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

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

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

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

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

Wednesday, September 6, 2017

The (Lack Of) Human Touch In Collecting Taxes

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

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

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

Tuesday, September 5, 2017

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

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

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

 

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

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

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

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

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

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

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

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

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

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

Friday, September 1, 2017

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

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

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

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

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

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

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

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

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

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

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

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