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Friday, February 7, 2014

The IRS Scandal, Day 274

IRS Logo 2Wall Street Journal editorial:  Obama's IRS 'Confusion': New Evidence Undercuts White House Claims About IRS Motivation:

House committees are still digging into the IRS political targeting scandal, and based on a hearing Wednesday there's more to learn. The day produced more evidence blowing apart President Obama's claims that there was "not even a smidgen of corruption" or political motivation in the IRS handling of groups applying for tax-exempt status.

Mr. Obama wants Americans to believe that the targeting resulted from the confusing tax law governing nonprofits, which he says was "difficult" to interpret and resulted in mere "bureaucratic" mistakes. This is also the Administration's justification for issuing new regulations governing 501(c)(4)s that would effectively silence White House opponents this election year. Published in the Federal Register in November, the new rules cite the "lack of a clear and concise" regulation as reason for the rewrite.

House Ways and Means Chairman Dave Camp blew up this fairy tale at Wednesday's hearing with new IRS Commissioner John Koskinen. Mr. Camp unveiled a June 14, 2012 email from Treasury career attorney Ruth Madrigal to key IRS officials in the tax-exempt department, including former director Lois Lerner.

Bloomberg:  Republicans Tell IRS to Scrap Rule on Election Spending:

A proposed rule that may limit groups’ spending on elections “is an affront to free speech” and should be scrapped, congressional Republicans wrote in a letter to Internal Revenue Service Commissioner John Koskinen.

The rule, which hasn’t been finalized, could limit spending from outside groups officially classified as non-profit social welfare organizations.

The groups spent more than $310 million over the two-year 2012 election cycle, according to the Center for Responsive Politics that tracks campaign finance. Some $265 million of that -- about 85 percent -- was from organizations that align with Republicans, according to the watchdog group.

“It is our view that finalizing this proposed rule would make intimidation and harassment of the administration’s political opponents the official policy of the IRS,” said the letter released today. It was signed by House Speaker John Boehner, Senate Minority Leader Mitch McConnell and the top Republicans on committees with jurisdiction over the IRS.

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February 7, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, February 6, 2014

TRAC: IRS Criminal Prosecutions Up 23.4% in Obama Administration

TRAC-IRS The Transactional Records Access Clearinghouse at Syracuse University has released a report, IRS Criminal Prosecutions Rise Under Obama:

The number of criminal prosecutions referred each year by the IRS has risen by nearly a quarter — 23.4% — during the Obama administration when compared with the Bush years. Convictions are also drawing slightly longer average prison terms — 27 months under Obama versus 25 months under Bush (see Table 1).

For both administrations, the odds have been roughly 50-50 that federal prosecutors will accept an IRS referral for criminal prosecution. However, a surge in IRS criminal investigations referred under Obama has fueled an increase in the number of cases prosecuted. This has occurred even though the number of IRS fulltime criminal investigators has not grown: the average of 2,758 IRS criminal investigators during the Bush years has shrunk to 2,705 (a 2% drop) during the Obama administration.

The comparisons of the number of individuals referred to federal prosecutors by the IRS, as well as IRS staffing, are based on case-by-case information obtained by TRAC under the Freedom of Information Act from the Executive Office for United States Attorneys and the Office of Personnel Management.

Last year was a banner year for criminal prosecutions referred by the IRS. During FY 2013 the government reported 2,010 new prosecutions, a jump of 30.6 percent over the past fiscal year when the number of prosecutions totaled 1,539.

TRAC

Update

February 6, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 273

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February 6, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, February 5, 2014

The IRS Scandal, Day 272

IRS Logo 2Wall Street Journal editorial:  Taking the IRS Fifth: If Everything Was Kosher, Why Won't Lois Lerner Talk to Congress?:

Liberals are celebrating President Obama's claim that "not even a smidgen of corruption" occurred when the IRS targeted conservative groups for additional scrutiny in an election season. Less enthused must be Lois Lerner, the former director of tax-exempt organizations who invoked her Fifth Amendment right not to testify before a House committee last May. ...

The President's clairvoyance is extraordinary, since neither the Justice Department nor Congress has finished investigations. ... But hey, if the President says it's all kosher and the FBI doesn't intend to pursue criminal charges in its probe of the selective IRS screening procedures, why should Ms. Lerner take the Fifth?

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February 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, February 4, 2014

IRS Releases Smartphone App IRS2Go Version 4.0

IRS App IR-2014-11 (Feb. 4, 2014), IRS Smartphone App IRS2Go Version 4.0 Now Available:

The IRS today announced the release of IRS2Go 4.0, an update to its smartphone application featuring new added features available in both English and Spanish. The redesigned IRS2Go provides new features for taxpayers to access the latest information to help them in the preparation of their tax returns. ...

There have been about 3.5 million downloads of IRS2Go since its inception in 2011. iPhone and iPod Touch users can update or download the free IRS2Go application by visiting the iTunes App Store. Android users can visit Google Play to download the free IRS2Go app. The newest version of the free mobile app offers a number of safe and secure ways for taxpayers to access other popular tools and the most up-to-date tax information, including: 

  • Refund Status
  • Free Tax Prep Providers
  • Tax Records
  • Stay Connected (Twitter, YouTube, Email)

For more information on IRS2Go, products and services through social media channels and other media products, visit www.IRS.gov.

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

The IRS Scandal, Day 271

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

Monday, February 3, 2014

The IRS Scandal, Day 270

Sunday, February 2, 2014

The IRS Scandal, Day 269

Saturday, February 1, 2014

IRS Kicks Off 2014 Tax Season, Apologizes in Advance for Clogged Phone Lines

IRS Logo 2IR-2014-9 (Jan. 31, 2014), IRS Kicks Off 2014 Tax Season:

The Internal Revenue Service today opened the 2014 filing season by highlighting a growing array of online services and encouraging taxpayers to check out a variety of tax benefits, such as the often-overlooked Earned Income Tax Credit.

Taxpayers have until Tuesday, April 15, 2014, to file their 2013 tax returns and pay any tax due. The IRS expects to receive more than 148 million individual tax returns this year, and more than four out of five returns are now filed electronically.

BloombergBusinessweek, IRS Apologizes in Advance for Clogged Phones as Tax Season Opens:

The IRS won’t be able to answer millions of phone calls from taxpayers this year, Commissioner John Koskinen said today.

The IRS said it answered 61 percent of calls that came in to customer service lines last year. Koskinen, who became commissioner in December, said he hoped the agency could reach 70 percent this year. “I apologize for the public that we can’t do more,” Koskinen said on the first day of the U.S. individual tax filing season, which lasts until April 15. “I personally just find it unacceptable.”

Forbes:  IRS: Don't Call Us, Look It Up On IRS.Gov, by Janet Novack:

As the Internal Revenue Service begins  processing an expected 148 million individual income tax returns for 2013, IRS Commissioner John Koskinen  is apologizing to taxpayers for the sorry state of telephone and walk-in service and  urging them to use www.IRS.gov instead.

Last year, only 60.5% of taxpayers who called the IRS’ toll-free assistance line got through to a human being and then only after an average of 17.6 minutes on hold.  In a tax season kick-off press conference today, Koskinen said the IRS had been hoping to answer 78% to 80% of calls this year. But after the 2014 budget deal failed to restore the budget sequester cuts imposed on the IRS, the agency is setting its sights lower. “We don’t expect that our customer service is going to be able to improve very much,’’ Koskinen said, adding “we would love” to get as high as 70% of calls answered during this filing season. ...

Along with phone service, the IRS has cut back services at its walk in Taxpayer Assistance Centers, where lines can be long. This year, workers in those centers will no longer answer “complex” tax law questions, only “basic” ones, and will no longer prepare tax returns for low-income and elderly taxpayers.

February 1, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 268

Friday, January 31, 2014

The IRS Scandal, Day 267

IRS Logo 2Wall Street Journal op-ed:  Meanwhile, Back in America . . . The Growing Distance Between Washington and the Public It Dominates, by Peggy Noonan:

The State of the Union was a spectacle of delusion and self-congratulation in which a Congress nobody likes rose to cheer a president nobody really likes. It marked the continued degeneration of a great and useful tradition. Viewership was down, to the lowest level since 2000. ...

Meanwhile, back in America, conservatives targeted and harassed by the Internal Revenue Service still await answers on their years-long requests for tax exempt status. When news of the IRS targeting broke last spring, agency officials lied about it, and one took the Fifth. The president said he was outraged, had no idea, read about it in the papers, boy was he going to get to the bottom of it. An investigation was announced but somehow never quite materialized. Victims of the targeting waited to be contacted by the FBI to be asked about their experience. Now the Justice Department has made clear its investigation won't be spearheaded by the FBI but by a department lawyer who is a campaign contributor to the president and the Democratic Party. Sometimes you feel they are just laughing at you, and going too far.

In the past five years many Americans have come to understand that an agency that maintained a pretty impressive record for a very long time has been turned, at least in part, into a political operation. Now the IRS has proposed new and tougher rules for grassroots groups. Cleta Mitchell, longtime attorney for many who've been targeted, says the IRS is no longer used in line with its mission: "They're supposed to be collecting revenues, not snooping and trampling on the First Amendment rights of the citizens. We are not subjects of a king, we are permitted to engage in First Amendment activities without reporting those activities to the IRS."

All these things ... have the effect of breaking bonds of trust between government and the people. They make citizens see Washington as an alien and hostile power.

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January 31, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, January 30, 2014

The IRS Scandal, Day 266

Wednesday, January 29, 2014

Tax-Free Gifts Quadrupled After Increase of Exemption to $5 Million

Estate & Gift TaxBloomberg:  Tax-Free Gifts Quadrupled in U.S. After IRS Limit Lifted, by Richard Rubin & Margaret Collins:

Congress voted in December 2010 to let wealthy Americans make tax-free gifts of as much as $5 million -- and the money flowed.

U.S. taxpayers reported making $122 billion in nontaxable gifts on the returns they filed in 2012, more than four times the amount in each of the two previous years. The Internal Revenue Service released the data today.

Most of the money -- $84 billion -- came in the form of gifts exceeding $1 million, and those were made by fewer than 30,000 people, according to the IRS&.

January 29, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 265

IRS Logo 2Wall Street Journal:  Enemies of Friends of Abe: How the IRS Chills Freedom of Association, by James Taranto:

These days "IRS Targets Conservative Group" is a dog-bites-man story. But this one was man-bites-dog by virtue of its placement: on the front page of the New York Times, a newspaper that is usually supportive of this administration's efforts to suppress domestic dissent. Put it down to a sudden outbreak of news judgment.

The news value to the Times may lie more in the nature of the organization than its trouble with the IRS. "In a famously left-leaning Hollywood, where Democratic fund-raisers fill the social calendar, Friends of Abe stands out as a conservative group that bucks the prevailing political winds," reads the lead paragraph.

But Friends of Abe--as in Lincoln--has sought nonprofit status under Section 501(c)(3) of the U.S. Tax Code, which would allow it to collect tax-deductible contributions. The IRS has been reviewing the application for some two years, seeking information about meetings where politicians spoke. A 501(c)(3) is prohibited from engaging in campaign activity, such as hosting a fundraiser, but as the Times notes, "tax-exempt groups are permitted to invite candidates to speak at events."

The most troubling revelation in the Times account is that at one point the IRS "included a demand--which was not met--for enhanced access to the group's security-protected website, which would have revealed member names." The Times points out that FOA "keeps a low profile and fiercely protects its membership list, to avoid what it presumes would result in a sort of 21st-century blacklist" and that "tax experts said that an organization's membership list is information that would not typically be required."

With the possible exception of academia, show business is about as totalitarian a subculture as you will find in America. Conservatives are a tiny minority, and they fear for their livelihoods if exposed. A few high-profile celebrities are exceptions--the Times mentions Gary Sinise, Jon Voight, Kelsey Grammer and Lionel Chetwynd--but for lesser-known actors and people who work in off-camera jobs, confidentiality is crucial. ...

The IRS's intrusive tactics thus have a chilling effect on people who wish to exercise their First Amendment right of free association without attracting public attention--or, more precisely, the attention of vicious ideological antagonists. Even calling attention to those tactics can compound the problem, as illustrated by FOA's need to reassure its members in the wake of the Times story. The gradual accretion of power by a vast administrative state, combined with an administration intolerant of dissent, has produced a clear and present danger to basic American freedoms.

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January 29, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, January 28, 2014

IRS Provides Simplified Extension to Make § 2010(c)(5)(A) Portability Election

IRS Logo 2The IRS yesterday released Rev. Proc. 2014-18:

This revenue procedure provides a simplified method for certain taxpayers to obtain an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to make a “portability” election under § 2010(c)(5)(A) of the Internal Revenue Code (Code), by which a decedent’s unused exclusion amount (deceased spousal unused exclusion amount, or DSUE amount) becomes available to apply to the surviving spouse’s subsequent transfers during life or at death. No user fee is required for submissions filed under this revenue procedure.

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

The IRS Scandal, Day 264

Monday, January 27, 2014

The IRS Scandal, Day 263

Sunday, January 26, 2014

The IRS Scandal, Day 262

IRS Logo 2Tax Analysts Blog:  Fortress Secrecy – No News Here, by Christopher Bergin (President and Publisher, Tax Analysts):

The latest chapter in Tax Analysts' ongoing efforts to investigate what did and didn’t happen in the IRS’s self-admitted abuse of power in reviewing the tax-exempt applications of mostly conservative groups was written last week. If you didn’t know, that’s not surprising, because while it got some coverage, it didn’t get a lot and in some ways that makes sense. Other than the fact that the IRS released more documents in response to a Freedom of Information Act request, there wasn’t much news in those documents.

The IRS released the documents in response to a court order that Tax Analysts managed to obtain after the IRS had exhausted every excuse it could think of to delay – I was waiting for "the dog ate my homework” – and continued its whining over how mean we were being in asking it to be transparent to the American people. This is the third installment of documents – documents that are training materials – that the IRS has released and, generally, they haven’t been awfully helpful. And we believe that the odds are good that the IRS's response to a document request that the agency itself agreed was important enough to get "expedited" treatment is not really a response at all.

Last week, Tax Analysts issued a press release, and in it I am quoted as saying:

Retrieving these documents was a small victory in our continuous and ever-growing fight for transparency. But it should be noted that what Tax Analysts asked for were training materials, which should be publicly available to begin with. The fact that it took us eight months, a lawsuit, and a court order to get the training materials the agency released is not, I believe, a positive sign on how the IRS is dealing with its problems.

Since then, I have had more time to think about it, and I believe that where we are is exactly where the IRS wants us to be: Nothing newsworthy here, so just move on. I strongly suggest we not move on.

Anyone familiar with my writing knows that I have bent over backwards to give the IRS the benefit of the doubt in this black eye some call the "exemption scandal." I must admit I'm getting a little tired of bending.

Back in the day, as the saying goes, I often referred to the IRS as Fortress Secrecy, a term meant to describe the agency's obsession with hiding as much of its operations as it can get away with. I am not a casual observer, and I have never seen things this bad. Everything the IRS has done in addressing the exemption scandal leads to just one conclusion: that this agency now believes it is accountable to no one other than itself. Who is responsible for that?

Commissioner Koskinen, you have a problem. President Obama, you have a problem. America, we have a problem. An agency with this much power cannot be unaccountable to the citizens it was designed to serve.

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

Saturday, January 25, 2014

The IRS Scandal, Day 261

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

Friday, January 24, 2014

The IRS Scandal, Day 260

Thursday, January 23, 2014

The IRS Scandal, Day 259

Wednesday, January 22, 2014

The IRS Scandal, Day 258

Tuesday, January 21, 2014

The IRS Scandal, Day 257

USA TodayUSA Today op-ed:  Government Conspiracy Theories Aren't Crazy, by Glenn Harlan Reynolds (Tennessee):

At a tax symposium at Pepperdine Law School last week, former IRS chief counsel Donald Korb was asked, "On a scale of 1-10 ... how damaging is the current IRS scandal?"

His answer: 9.5. Other tax experts on the panel called it "awful," and said that it has done "tremendous damage."

I think that's right. And I think that the damage extends well beyond the Internal Revenue Service. In fact, I think that the government agency suffering the most damage isn't the IRS, but the National Security Agency. Because the NSA, even more than the IRS, depends on public trust. And now that the IRS has been revealed to be a political weapon, it's much harder for people to have faith in the NSA.

As I warned President Obama back in 2009 after he "joked" about having his enemies audited, the IRS depends on trust. ...

Since then, of course, the new "weaponized IRS" has, in fact, come to be seen as illegitimate by many more Americans. I suspect that, over time, this loss of moral legitimacy will cause many to base their tax strategies on what they think they can get away with, not on what they're entitled to. And when they hear of someone being audited, many Americans will ask not "what did he do wrong?" but "who in government did he offend?"

This is particularly true since the Obama administration is currently changing IRS rules to muzzle Tea Partiers.  As Kimberley Strassel reports in the Wall Street Journal, Obama's negotiating strategy on the omnibus spending bill that just passed revolved around using the IRS to keep Tea Party groups silenced. ...

Meanwhile, the person chosen to "investigate" the IRS's targeting of Tea Party groups in 2010-2012 is Barbara Bosserman, a "long-time Obama campaign donor."  So the IRS's credibility is in no danger of being rebuilt any time soon. ...

The problem with government is that to be trusted, you have to be trustworthy. And the problem with the Obama administration is that, to a greater extent than any since Nixon's, it is not. Do not be surprised if the result is that people mistrust those in authority, and order their lives accordingly. Such an outcome is bad for America, but bad governance has its consequences.

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January 21, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Man Sues IRS After Tripping at Audit, Receives Tax-Free $862k

New York Post:  Man Wins $862K for Tripping at IRS Audit:

AuditA Long Island man tripped over a telephone cord during an audit, sued the IRS and came away $862,000 richer — and he doesn’t have to pay any taxes on the windfall, The Post has learned.

William Berroyer, 66, the father of a Suffolk County cop, claimed he could no longer enjoy activities from golf to sex because of injuries suffered when the cord wrapped around his leg in a Haup­pauge IRS office in 2008.

The IRS argued that Berroyer, of Nesconset, was exaggerating his injuries, but Judge Arthur Spatt found the agency liable for pain and suffering, court papers show.

The former businessman was hammering out a repayment deal with the IRS for his $60,000 bill when he was injured. ...

Berroyer claimed he and his wife had sex several times a week before the injury, but could manage only a single monthly session after the accident.

IRS attorneys accepted that he fell because of the wayward wire — but argued that Berroyer was grossly exaggerating his injuries to score a payday.

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

Monday, January 20, 2014

The IRS Scandal, Day 256

IRS Logo 2

Wall Street Journal:  IRS Targeting and 2014: Democrats Are Working Hard to Make Sure Conservative Groups Are Silenced in the 2014 Midterms, by Kimberley A. Strassel:

President Obama and Democrats have been at great pains to insist they knew nothing about IRS targeting of conservative 501(c)(4) nonprofits before the 2012 election. They've been at even greater pains this week to ensure that the same conservative groups are silenced in the 2014 midterms.

That's the big, dirty secret of the omnibus negotiations. As one of the only bills destined to pass this year, the omnibus was—behind the scenes—a flurry of horse trading. One of the biggest fights was over GOP efforts to include language to stop the IRS from instituting a new round of 501(c)(4) targeting. The White House is so counting on the tax agency to muzzle its political opponents that it willingly sacrificed any manner of its own priorities to keep the muzzle in place. ...

The fight was sparked by a new rule that the Treasury Department and the IRS introduced during the hush of Thanksgiving recess, ostensibly to "improve" the law governing nonprofits. What the rule in fact does is recategorize as "political" all manner of educational activities that 501(c)(4) social-welfare organizations currently engage in.

It's IRS targeting all over again, only this time by administration design and with the raw political goal—as House Ways and Means Chairman Dave Camp (R., Mich.) notes—of putting "tea party groups out of business." ...

This week's Democratic rally-round further highlights the intensely political nature of their IRS rule. It was quietly dropped in the runup to the holiday season, to minimize the likelihood of an organized protest during its comment period. That 90-day comment period meantime ends on Feb. 27, positioning the administration to shut down conservative groups early in this election cycle.

Mr. Camp's committee has meanwhile noted that Treasury appears to have reverse-engineered the carefully tailored rule—combing through the list of previously targeted tea party groups, compiling a list of their main activities and then restricting those functions.

And an IRS rule that purports to—as Mr. Werfel explained—"improve our work in the tax-exempt area" completely ignores the biggest of political players in the tax-exempt area: unions. The guidance is directed only at 501(c)(4) social-welfare groups—the tax category that has of late been flooded by conservative groups. Mr. Obama's union foot soldiers—which file under 501(c)(5)—can continue playing in politics.

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

Sunday, January 19, 2014

The IRS Scandal, Day 255

Tax ReformFrom the Q&A session of Panel #3: Tax Reform in a Time of Crisis: Institutional Perspectives (begins at 1:01:30 on the video) at Friday's  Pepperdine/Tax Analysts Symposium on Tax Reform in a Time of Crisis:

Question:  On a scale of 1-10, 1 being no damage and 10 being permanent long range damage, how much have the IRS and tax administration been damaged by the current IRS scandal?  (And I would append to that the question: was it a scandal?)

Donald Korb (Partner, Sullivan & Cromwell; former IRS Chief Counsel):  I think it is incredibly damaging.  Frankly, I see it as one of the seeds of the next tax shelter era. ... And in terms of scandal, I don't think we really know. We have not been permitted to understand exactly what happened. So, who knows.

George Yin (Edwin S. Cohen Distinguished Professor of Law and Taxation, Virginia; former Chief of Staff, Joint Committee on Taxation):  I think there has been tremendous damage.  Almost without regard to what actually happened.  And I actually despair of finding out what actually happened. ...

Donald Tobin (Frank E. and Virginia H. Bazler Designated Professor in Business Law, Ohio State):  I think it is awful. I agree with Don and George.  7 or 8.  I think this is ultimately going to have huge implications. ...

Ellen Aprill (John E. Anderson Chair in Tax Law, Loyola-L.A.):  I agree with all of that.  I have myself avoided the word "scandal" because I just don't know.  And some of the people I know personally.  I don't think that was their political motivation.  So I've used "controversy" and "brouhaha" and everything but tried not to go all the way to scandal. ...

Korb: ... This is very, very damaging.  Maybe we are at a 9.5

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January 19, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, January 18, 2014

The IRS Scandal, Day 254

Friday, January 17, 2014

The IRS Scandal, Day 253

IRS Logo 2

Washington Examiner op-ed:  What FBI 'Investigation' of the IRS Scandal?, by Cleta Mitchell (Foley & Laudner, Washington, D.C.):

Let's all be very clear: The FBI did not conduct an “investigation” into the IRS scandal.

Not unless there are new protocols for investigating potential unlawful activities, which discard the quaint notion of speaking to the victims.

In May, President Obama hurriedly called a White House news conference to stem the outrage about the IRS's admitted targeting of conservative groups, and emphatically told the nation: “I will not tolerate this kind of behavior in any agency but especially in the IRS, given the power that it has and the reach that it has into all of our lives." He appointed Attorney General Eric Holder to conduct a criminal investigation into possible wrongdoing -- and since then, many of us have wondered, when actually is this investigation going to start? ...

Now we learn that the FBI has “concluded” that there was no actual illegal activity involved in the IRS scandal, conclusions reached without ever speaking to a single conservative or Tea Party organization leader or attorney to learn what actually happened these past four years.

Having represented dozens of groups before the IRS over the years, including many victimized by the IRS in this scandal, one might have thought the FBI might have called me or even one of my clients.

But, to paraphrase the song, if our telephone ain’t ringin,’ I guess it must be the FBI “investigating” the IRS.

Had the FBI bothered to contact or interview me, any of my clients, or anyone who actually could tell the FBI what the IRS did, we could have provided some specific facts about the IRS scandal.

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January 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, January 16, 2014

Conservative Groups Urge Congress to Reject Proposed 501(c)(4) Regs

A coalition of 55 conservative organizations has sent this letter to Congress requesting it to reject the IRS's proposed regulations limiting the political speech of 501(c)(4) groups:

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January 16, 2014 in Congressional News, IRS News, IRS Scandal, Tax | Permalink | Comments (2)

The IRS Scandal, Day 252

IRS Logo 2

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January 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, January 15, 2014

The IRS Scandal, Day 251

IRS Logo 2

New York Post:  Why Bridgegate Made Headlines, by John Podhoretz:

Government officials and political operatives working for Christie, for weird and petty reasons, chose to make traffic worse. That’s the takeaway. When they are reminded of the fact that people working on Christie’s behalf thought it was a good political game to mire tens of thousands of their fellow Americans in the nightmarish gridlock that is a daily dreaded prospect for tens of millions, they will be discomfited by that and by the politician in whose name it was done.

And yet, you know what is also something everybody would find “relatable”? Politicians who sic the tax man on others for political gain. Everybody has to deal with the IRS and fears it. Last year, we learned from the Internal Revenue Service itself that it had targeted ideological opponents of the president for special scrutiny and investigation — because they were ideological opponents.

That’s juicy, just as Bridgegate is juicy. It’s something we can all understand, it speaks to our greatest fears, and it’s the sort of thing TV newspeople could gab about for days on end without needing a fresh piece of news to keep it going.

And yet, according to Scott Whitlock of the Media Research Center, “In less than 24 hours, the three networks have devoted 17 times more coverage to a traffic scandal involving Chris Christie than they’ve allowed in the last six months to Barack Obama’s Internal Revenue Service controversy.”

Why? Oh, come on, you know why. Christie belongs to one political party. Obama belongs to the other. You know which ones they belong to. And you know which ones the people at the three networks belong to, too: In surveys going back decades, anywhere from 80% to 90% of Washington’s journalists say they vote Democratic.

Scandals are not just about themselves; they are about the media atmosphere that surrounds them. They are perpetuated and deepened by the attention of journalists, whose relentless pursuit of every angle keeps the story going. That is exactly what has been missing from the IRS scandal from its outset; Republicans in Congress have been the dogged pursuers, not the press.

There was plenty of material. Just as journalists remain skeptical today about who exactly might have gotten the idea for the lane closures, they could have been asking without letup who got the idea to dig into conservative tax-status applications. Several officials at the IRS resigned, retired and took the Fifth, just as was the case with Christie-aligned Port Authority officials.

It’s pretty clear the questions about how high up Bridgegate went are going to be pursued far more diligently than they have been in the IRS case.

What gives?

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January 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, January 14, 2014

The IRS Scandal, Day 250: FBI Says No Criminal Charges in IRS Probe

IRS Logo 2

Wall Street Journal:  Criminal Charges Not Expected in IRS Probe:

The Federal Bureau of Investigation doesn't plan to file criminal charges over the Internal Revenue Service's heightened scrutiny of conservative groups, law-enforcement officials said, a move that likely will only intensify debate over the politically charged scandal.

The officials said investigators didn't find the kind of political bias or "enemy hunting" that would amount to a violation of criminal law. Instead, what emerged during the probe was evidence of a mismanaged bureaucracy enforcing rules about tax-exemption applications it didn't understand, according to the law-enforcement officials.

While the case is still being investigated and could remain open for months, officials familiar with its progress said it is increasingly unlikely any criminal charges will result. That could change, the officials cautioned, if unexpected evidence is discovered that alters their thinking.

With this year's midterm elections heating up, the FBI's decision will feed both parties' stories about why—or whether—the IRS scandal mattered. ...

The FBI explored a number of possible violations, including those involving statutes within the IRS code that prohibit the misuse or improper disclosure of taxpayer information. Another area examined was whether any IRS officials lied about what happened and the reasons for it. The people familiar with the probe wouldn't say who was interviewed.

The probe has been freighted with political suspicions. Cleta Mitchell, a lawyer who has represented about a dozen groups that faced such IRS questioning, said the FBI has yet to contact her clients over the issue. "As far as I can tell, nobody has actually done an investigation. This has been a big, bureaucratic, former-Soviet-Union-type investigation, which means that there was no investigation," she said. "This is a deplorable abuse of the public trust, but I am not surprised."

Wall Street Journal editorial:  The IRS Gets a Pass:

President Obama continues to express puzzlement that the public holds government in such low esteem—in some polls, lower than it's ever been. Maybe one reason is the report Monday evening in the Journal that law enforcement officials say the FBI plans to bring no criminal charges in the IRS targeting of conservative political groups.

The story by Devlin Barrett says that investigators found no political bias but instead merely bureaucratic mismanagement. We'd be willing to credit that conclusion if there were more evidence that anyone did much of an investigation. Congressional probers say FBI director James Comey has refused to provide details about the resources it has devoted to the probe, though such basic information would not interfere with the investigation. Cleta Mitchell, a prominent lawyer who represents several conservative groups that applied for tax-exempt status, reports that the FBI hasn't contacted any of her clients. That's like investigating a burglary without interviewing the burgled.

Not every scandal is a crime, but if the report is right it means no one will be held accountable in any meaningful way for the misuse of the taxing power of the state. This is why Americans don't trust government.

New York Post editorial:  The ‘Crime’ of the IRS:

Only days after we learned the Obama administration had appointed an Obama donor to head investigations into the IRS targeting of conservative organizations, we now have a leak from law enforcement saying the FBI doesn’t expect to file criminal charges. ...

Without the evidence, we’re not in a position to say. But criminal liability never been our priority. All along our position has been that federal agencies such as the IRS should be held accountable the way the Founders intended: through our democratic system. For the IRS outrages extend well beyond the targeting of individuals and groups opposed to President Obama’s agenda. High on that list is the way the woman at the center of this storm, Lois Lerner, basically took her own version of the Fifth at hearings, telling Congress she’d done nothing wrong but wasn’t planning on saying anything else.

Maybe the FBI is right, that it’s just all a big misunderstanding, that IRS officials were only at the White House for Easter Egg rolls. Even so, our Constitution doesn’t leave accountability to the judgement of the FBI. To the contrary, our system holds that the American people, through their elected representatives in Congress, have the right to know what their government is doing.

In short, if the threat of criminal charges has in fact been removed, there’s no more excuse for Lois Lerner not to tell us, under oath, what she was apparently afraid to say in May. 

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

Monday, January 13, 2014

Taxpayer Advocate: The IRS Is Too Tough on Americans With Foreign Accounts

FATCACNN:  IRS Top Cop Says the Agency Is Too Hard on Offshore Tax Dodgers, by Lynnley Browning:

[T]he harshness -- and, at times, unevenness -- of the IRS in pursuing offshore tax dodgers has an official critic: the ombudsman of the agency.

The Congressionally appointed watchdog, Nina E. Olson, unleashed a fresh critique Thursday of the IRS's amnesty programs for Americans with undeclared offshore bank accounts. The unmistakable message from Olson, also known as the national taxpayer advocate: Many Americans get screwed over financially by entering the programs.

"The IRS Offshore Voluntary Disclosure Program Disproportionately Burdens Those Who Make Honest Mistakes," the report says. ...

Olson's report found that for the 2009 program, launched after a landmark crackdown on Swiss bank giant UBS AG for enabling wealthy Americans to dodge taxes through hidden private accounts, the average taxpayer ended up paying penalties averaging nearly four times, or 386%, of the basic tax owed.

Less wealthy taxpayers fared even worse. Olson found that the bottom 10% of those who entered the 2009 program, as measured by an average account balance of $44,885, got hit with penalties equal to nearly six times the amount of tax owed. Taxpayers wending their way through the program without legal representation got hosed even more, paying penalties of eight times. By contrast, the largest tax dodgers got socked with penalties equal to three times their unreported tax bills -- perhaps a sign of good lawyering affordable by the wealthy.

"The penalties are extraordinarily high as compared with most other penalties the IRS administers," Olson's report says.

Olson also found new evidence of another trend: Entering an amnesty program but then dropping out in exchange for being audited is a better deal, financially. Such taxpayers ended up paying on average penalties totaling only 70% of the unpaid taxes and interest -- hefty, but far less than nearly 600%.

January 13, 2014 in IRS News, Tax | Permalink | Comments (11)

The IRS Scandal, Day 249

Sunday, January 12, 2014

The IRS Scandal, Day 248

IRS Logo 2

FreedomWorks:  FreedomWorks Activists Fight Newly Proposed IRS Rules Restricting 501(c)(4) Activity:

FreedomWorks activists will submit testimony in protest of proposed Internal Revenue Service (IRS) guidelines that would restrict the political activities allowed by tax-exempt 501(c) (4) organizations. The proposed changes would expand the already unchecked discretionary power of the IRS, and institutionalize the agency’s targeted harassment of conservative and libertarian non-profits in recent years.

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

Saturday, January 11, 2014

NY Times: Charting the Decline in Service at the IRS

New York Times:  Charting the Decline in Service at the IRS, by Catherine Rampell:

The national taxpayer advocate, the ombudswoman for the Internal Revenue Service, has released her annual report about the biggest issues facing the agency. One major concern that the advocate, Nina E. Olson, emphasized was declining customer service at the agency, driven by budget cuts.

How much has the service declined? Here’s a chart showing the share of taxpayers who called wanting to speak with a customer representative and actually spoke to one (blue line), and the wait before reaching a representative (green bars):

NYT

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

The IRS Scandal, Day 247

IRS Logo 2

Wall Street Journal editorial:  Christie and the IRS Contrast the Governor's Contrition with Obama's Lack Thereof:

Now that we have your attention, allow us to explain. Governor Chris Christie apologized to New Jersey on Thursday for aides who closed traffic lanes in order to punish a Democratic mayor, and he fired a deputy chief of staff. We mention the IRS because Mr. Christie's contrition contrasts so sharply with President Obama's handling of the tax agency's abuse of political opponents and his reluctance to fire anyone other than a military general for anything. ...

Which brings us to the Obama Administration, which quickly leaked to the media that the U.S. Attorney is investigating the lane closures as a criminal matter. Well, that sure was fast, and nice of Eric Holder's Justice Department to show its typical discretion when investigating political opponents.

This is the same Administration that won't tell Congress what resources it is devoting to the IRS probe, and appears to be slow-rolling it. It has also doubled down by expanding the political vetting of 501(c)(4) groups seeking tax-exempt status. Lois Lerner, who ran the IRS tax-exempt shop and took the Fifth before Congress, was allowed to "retire," presumably with a pension. Acting IRS commissioner Steven Miller resigned under pressure but no other heads have rolled. Yet compared to using the IRS against political opponents during an election campaign, closing traffic lanes for four days is jaywalking. We raise this mostly because our media friends have been complicit in dismissing the IRS abuses, and for that matter every other legal abuse during the Obama years.

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January 11, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, January 10, 2014

The IRS Scandal, Day 246

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January 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, January 9, 2014

IRS Releases FY2013 2006 Enforcement Stats

IRS Logo 2The IRS has released Fiscal Year 2013 Enforcement and Service Results, showing among other things:

  • Individual audit rate:  0.96% (lowest since 2005)
  • Large corporation audit rate: 15.8% (lowest since 2009)
  • Revenue from audits:  $9.8 billion (lowest since 2003)
  • Number of IRS agents:  19,531 (lowest since pre-2000)
  • Conviction rate:  93.1% (highest since pre-2000)

Bloomberg, IRS Audits of Individuals Reached Lowest Rate Since 2005, by Richard Rubin

January 9, 2014 in IRS News, Tax | Permalink | Comments (0)

National Taxpayer Advocate Releases Annual Report to Congress

Volume-1 CoverNational Taxpayer Advocate Nina E. Olson today released (IR-2014-3) her 2013 Annual Report to Congress, urging the IRS to adopt a comprehensive Taxpayer Bill of Rights – a step she said would increase trust in the agency and, more generally, strengthen its ability to serve taxpayers and collect tax:

The Advocate also expressed deep concern that the IRS is not adequately funded to serve taxpayers, pointing out that the IRS annually receives more than 100 million telephone calls from taxpayers and that, in fiscal year 2013, the IRS could only answer 61 percent of calls from taxpayers seeking to speak with an IRS customer service representative.

“The year 2013 was a very challenging one for the IRS. Because of sequestration, the IRS’s funding was substantially cut, which translated into a reduction in taxpayer service,” Olson said in releasing the report. “Public trust in its fairness and impartiality was called into question because of reports the IRS subjected certain applicants for tax-exempt status to greater review based on political-sounding names. And because of the 16-day government shutdown, the agency could not complete preparations for the upcoming tax filing season on time, delaying the date on which taxpayers can first file returns and claim refunds.” Olson continued: “From challenges can come opportunities, and this report presents a ‘21st century vision’ designed to meet taxpayer needs and enhance voluntary tax compliance.”

January 9, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 245

IRS Logo 2Daily Caller:   Covert Cronies? Obama’s Attorney General Appoints Obama Donor to Investigate Obama’s IRS:

President Barack Obama’s deputies have picked one of his political donors to investigate the IRS’ attack on independent political groups during the 2012 election, according to California Republican Rep. Darrell Issa, chairman of the House investigations committee.

“We request you immediately remove Ms. [Barbara] Bosserman from the ongoing investigation,” said a Jan. 8 letter from Issa to Attorney General Eric Holder.

The secret selection of Barbara Bosserman, a lawyer in the Department of Justice’s civil rights division, was revealed by a committee investigation after the DOJ stonewalled the legislators.

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January 9, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, January 8, 2014

The IRS Scandal, Day 244

Tuesday, January 7, 2014

The IRS Scandal, Day 243

Monday, January 6, 2014

IRS Releases Fall 2013 SOI Bulletin

SOIThe IRS's Statistics of Income Division has released (IR-2014-2) the Fall 2013 SOI Bulletin (Vol. 33, No. 2), with these articles:

Press coverage:

January 6, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 242: Lois Lerner Is 2013 Tax Person of the Year

Tax Analysys Logo (2013)The 2013 Tax Person of the Year: Lois Lerner, 142 Tax Notes 7 (Jan. 6, 2014):

Last year was a struggle for the IRS. The effects of years of frozen or cut budgets began to take their toll on tax administration. The agency had a tough tax season because of the late passage of the American Taxpayer Relief Act of 2012. Guidance for the Foreign Account Tax Compliance Act and the Affordable Care Act was slow in coming. And, of course, the IRS spent the last eight months dealing with a major controversy involving the handling of exempt organization applications.

While many of the Service's problems were not necessarily its own fault, the exempt organization scandal was an almost entirely self-inflicted wound. No one personifies that scandal more than Lois Lerner.

Lerner ignited a political and media firestorm when she confessed in May that the exempt organizations unit of the IRS Tax-Exempt and Government Entities Division inappropriately handled many Tea Party groups' exemption applications.

mThe now former exempt organizations director's admission and subsequent refusal to testify before Congress contributed to her becoming the public face of the scandal. Although Lerner does not bear sole responsibility for the IRS's missteps in processing conservative groups' exemption applications, the publicity of her role in one of the year's biggest news stories earns her the distinction of being Tax Notes' 2013 Person of the Year.

All Tax Analysts content is available through the LexisNexis® services.

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January 6, 2014 in IRS News, IRS Scandal, Tax, Tax Analysts | Permalink | Comments (0)

Sunday, January 5, 2014

The IRS Scandal, Day 241

IRS Logo 2People's Pundit Daily, Top 10 News Stories of 2013 That Affected Our Lives:

2. IRS Scandal

Most presidents pray with Pastor Billy Graham when they get elected, but President Obama audited him to get reelected. In May of 2013, the IRS scandal was revealed when officials admitted it had improperly targeted Tea Party and other conservative groups for audits who had requested tax-exempt status.

Democrats tried to calm the storm with the false claim that the IRS targeted “progressive” groups as well as conservatives. But rebuffing that ridiculous charge, the Treasury Department’s inspector general revealed that 292 – which is 100 percent – of Tea Party groups seeking special tax status were put under IRS review, while just 6 progressive groups were targeted.

The scandal appeared to be fading following the resignation of Lois Lerner, but a round of emails leaked by the Ways and Means to the Wall Street Journal, showed Lois Lerner and other Washington bureaucrats were involved in a huge partisan undertaking that was nearly impossible to execute on their own. But that was the end of the road for accountability, despite the worst aspect of the IRS scandal not even making it to a press room.

A research paper from Stan Vueger of AEI, Andreas Madestam of Stockholm University, Daniel Shoag and David Yanagizawa-Drott (both from the Harvard Kennedy School), took a look at how much impact the Tea Party had on voter turnout in the 2010 election. Their conclusions provide the most troubling element to this story, and everyone in the media ignored it.

According to the joint conservative-liberal scholarship paper: “The data show that had the Tea Party groups continued to grow at the pace seen in 2009 and 2010, and had their effect on the 2012 vote been similar to that seen in 2010, they would have brought the Republican Party as many as 5 – 8.5 million votes compared to Obama’s victory margin of 5 million.”

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January 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, January 4, 2014

IRS Releases Publication 17, Your Federal Income Tax

The IRS has released a revised edition of Publication 17, Your Federal Income Tax (288 pages), for use in preparing 2013 tax returns:

Publication 17

January 4, 2014 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 240

IRS Logo 2Judicial Watch Announces List of Washington’s “Ten Most Wanted Corrupt Politicians” for 2013:

Former IRS Commissioner Steven Miller/Former IRS Official Lois Lerner:

Steve Miller, then head of the IRS, resigned in May 2013, after admitting to the targeting of anti-Obama Tea Party groups during the 2012 presidential election, which he offhandedly tossed off as “horrible customer service.” Under Miller, the IRS purposely stonewalledthe approval of nonprofit applications from “Tea Party” and other conservative groups that were seeking tax exempt status. According to a report by the agency’s inspector general released in May 2013, for more than 18 months beginning in early 2010: “The IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention.”

As reported by CNN:

Among the criteria used by IRS officials to flag applications was a “Be On the Look Out” list, or a BOLO, which was discontinued in 2012 according to the report. The criteria on the BOLO included:

  • Whether “Tea Party,” “Patriots” or “9/12 Project” was referenced in the case file.
  • Whether the issues outlined in the application included government spending, government debt or taxes.
  • Whether there was advocating or lobbying to “make America a better place to live.”
  • Whether a statement in the case file criticized how the country is being run.
  • Whether it advocated education about the U.S. Constitution and the Bill of Rights.

Miller was eagerly aided in his suppression of conservative groups by former IRS Director of Exempt Organizations Lois Lerner. Subpoenaed to testify before Congress in May 2013, Lerner disdainfully refused to answer inquiries, demanding full immunity concerning her role in the targeting scandal. Eventually, the IRS acknowledged that while she was in charge, IRS agents improperly targeted Tea Party groups for extra scrutiny when they applied for tax-exempt status from 2010-2012. Lerner retired from the IRS on September 23 with full benefits, even after an internal investigation found she was guilty of “neglect of duties” and was going to call for her firing, according to news reports.

Subsequent to Lerner’s lavish retirement, Judicial Watch, in October 2013, obtained email exchanges between her and enforcement attorneys at the Federal Election Commission (FEC) indicating that under Lerner’s direction, the IRS provided detailed, confidential information concerning the tax exempt application status and returns of conservative groups to the FEC – in violation of federal law.

Not only did Miller and Lerner deliberately target conservative organizations for IRS harassment, they both lied about it in separate appearances before Congress. In July 2012, Miller was asked at a congressional hearing, “What kind of … action is taking place at this time that you are aware of” to address complaints that groups seeking nonprofit status were being harassed. Claiming that an overload of applications had caused the problem, Miller covered up the fact that he had learned two months earlier that conservative groups were being inappropriately singled out for extra scrutiny. In May 2013, Lerner told a congressional committee that she found out about the harassment when she read about it “in the press” in early 2012. But, according to the IG report timeline, she was informed in June 2011 about the IRS’s BOLO criteria that included words such as “Tea Party” or “patriots.”

The true damage wrought by the Miller/Lerner witch-hunt may never be fully known. One can certainly speculate as to impact the Tea Party movement could have made had Miller and Lerner not cowed much of it into silence with their ruthless, reckless assault on Barack Obama’s political opponents. In short, the Obama IRS duo may have perfected the formula for stealing an election in plain sight.

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January 4, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, January 3, 2014

The IRS Scandal, Day 239

IRS Logo 2TaxProf Blog:  The Top 10 Tax Stories of 2013:

2.  The IRS Scandal

Andy Grewal (Iowa):  Whether one believes it a case of a few errors being blown way out of proportion, or a case of a conspiracy from the White House on down, the Tea Party Scandal surely ranks as among the year's top tax stories. The events began strangely, with the disclosure of the IRS mistakes via a planted question at a practitioner conference, and the story continued to take on strange turns, with the pleading of the Fifth by a senior official probably being the high (or low) point. Although the IRS has released substantial information regarding its practices, its refusal to disclose certain documents to the highly respected Tax Analysts organization, and the related lawsuit, could put this story back in the headlines in 2014.

Richard Schmalbeck (Duke):  The story was broken by the IRS itself, at a meeting of the ABA Tax Section in May. Lois Lerner, then the director of the Service’s Exempt Organization Division, apologized for subjecting applications for exempt status determinations from Tea Party organizations to special scrutiny. The regretful tone was no doubt intended to mollify critics who had brought this situation to the attention of Congress, and to upstage an inspector general’s report that was about to reveal the “targeting.” But the IRS statements—both from Lerner and from the agency press office—essentially admitted wrong-doing, and offered no reasonable explanation for the IRS actions. They did nothing to defuse the explosive quality of the IRS admissions.

In fact, however, there was a reasonable explanation, to a point. The applications that were singled out for special processing offered some reason to believe that the organizations in question—which were seeking recognition of exemption as “social welfare organizations” under section 501(c)(4)--were better described as “political organizations,” that might qualify for exemption under section 527 instead. After all, many of these organizations had the word “party” in their very name, and section 527(e)(1) defines “political organization” to include “a party . . . .”

The primary difference between the two categories—at least the one that appears to have had the most salience to the groups themselves—is not truly a matter of tax law. Rather, it is that federal election law requires political organizations to disclose the names of their donors, while no such requirement is imposed on social welfare organizations. Confidentiality of donor lists is really what the Tea Party applicants were fighting for.

Of course, an organization is entitled to seek any particular type of exempt status that it believes it qualifies for. And social welfare organizations—the ACLU and the NRA are nice polar examples illustrating the range of this category—are permitted to have and to express viewpoints on public policy issues. But the IRS has an obligation to patrol the borders of the several categories as well as it can; and closer scrutiny of applications that raise facially obvious questions about whether the applicant’s activities really fit within the category they seek to occupy is not merely legitimate; it is one of the duties of the IRS.

True, the IRS bungled this, primarily by choosing search strategies that were nearly certain to put more right-of-center organizations in the line of fire. One wonders how this crisis would have played out if it had simply occurred to the IRS to use the word “party” as a search term rather than “tea party.” The former would catch all the organizations that the latter would, and might snare at least a few organizations with names like “progressive party,” or even “socialist workers’ party” in the high-scrutiny net. Such a search would have been more neutral, and would have had a strong statutory basis founded on the definition of political organization as including “parties.”

“Tea party” was not the only search term, and (it came out much later) at least some of the terms used did identify primarily left-of-center groups for special scrutiny. But it is clear that a substantial majority—estimates run as high as 80%--of the organizations that received special scrutiny were conservative organizations. Needless to say, a wide range of right-of-center interests—in Congress, the media, and the nonprofit sector—were aggrieved, even outraged. And the outrage continues. The last day of the year will be the 236th day of the scandal, a count that will be duly noted in the Tax Prof blog, which will also cite the new set of protestations that occur on that day. (There will no doubt be several; there is something about auld lang syne that brings the grievances of the past year into renewed focus.)

This saga has several distressing aspects. At least a few senior IRS officials have lost their jobs, their reputations, and perhaps more. Opinion polls have reported that a narrow majority of the American public believe that the IRS broke the law in subjecting Tea Party applications to special scrutiny. And even the White House seems to have decided that jumping on the bandwagon of disparaging the IRS is a more prudent choice than defending any part of the IRS efforts to determine as accurately as possible the appropriate categories for exempt status for any particular applicant.

Sound government depends on confidence in the agency that collects the revenue to fund that government. That confidence took a severe blow in 2013. Let’s hope that 2014 is a better year.

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

Thursday, January 2, 2014

The IRS Scandal, Day 238

IRS Logo 2Washington Examiner:   Best of 2013: Rep. Darrell Issa Takes on the IRS:

Rep. Darrell Issa likes to show visitors to his office a bullet-riddled body-armor plate that was manufactured in his district.

He holds up a new model that offers better protection for soldiers, but cautions that even the latest prototypes have limits.

"Ultimately, these things are not bulletproof," Issa said as he examined a shield. "When you are getting riveted, you've got to get out of there. You don't stand there like one of those movie stars, taking bullets in the chest forever."

It's a fitting metaphor for Issa, Republican chairman of the House Oversight and Government Reform Committee, whose aggressive style of taking on government agencies, most recently the Internal Revenue Service, has drawn a barrage of hit pieces in the news media.

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January 2, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)