TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, November 20, 2015

Treasury, IRS Issue New Rules To Curb Tax Inversions

The IRS Scandal, Day 925

IRS Logo 2WND, IRS Target: 'Justice in Their Hands Is a Mockery':

On Friday, [Oct. 23,] the Justice Department announced it was closing its investigation of former IRS official Lois Lerner and would not be filing any charges, chalking up the scandal instead to mismanagement.

However, the head of one of the grassroots organizations that endured unwarranted scrutiny by the IRS says the decision is simply more proof of a “lawless administration” that is making a “mockery” of justice. ...

True the Vote is one group that endured years of IRS harassment over its application for tax-exempt status. Its president, Catherine Englebrecht, is disgusted but not surprised by the Justice Department’s announcement.

“This is a lawless administration,” she said in an interview with WND and Radio America. “They write the rules and then play by those if they choose to follow. It is certainly not a surprise at all that they’ve chosen to try to wipe the slate clean of the IRS scandal, as they have so many other scandals. They don’t look to police themselves. They’re not interested in the better interests of their fellow countrymen. They’re interested in the survival of their party.”

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November 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, November 19, 2015

The IRS Scandal, Day 924

IRS Logo 2Family Security Matters, Why Lois Lerner and the IRS Scandal Are Not Unique:

Bottom Line Up Front:  Political appointees run the nation's bureaucracies.  Former political appointees who are "burrowed" into the system bolster political ideology and decisions.  Furthermore, those who are hired and promoted by the appointee and/or former appointee in charge of an organization are most probably of similar political ilk.

The IRS scandal was felt heavily by those of us who are retired from federal service.  After having spent decades within the bowels of federal bureaucracies - decades that, for us, were not defined at all by politics - the intentional targeting of Americans of ANY political persuasion came as a horrific shock. 

In our day, civil servants would NEVER have targeted political opponents of the ruling administration. Even if a rogue employee had tried, such actions would never have been tolerated.  Warnings against any defiance of the limitations imposed by the Hatch Act of 1939 kept virtually all civil servants from holding much more than personal political opinions expressed only in private.  Politics were certainly not discussed in the office, let alone acted upon.  Until recently, federal employees were decidedly "non-partisan."

The evidence surrounding the Lois Lerner case has shown us how different our government has become. The initial shock that came with revelations of the extent to which government officials within the IRS had been able to intervene in and delay the processing of specific tax-exempt requests (virtually all of which were from conservative organizations) gave way to outrage following testimony to Congress about the "loss" of emails and other files pertinent to the investigation.  When combined with the disreputable conduct associated with the VA, ATF, EPA, DoE, DoD, GSA, and the highest levels of the State Department, is it any wonder that Americans feel exasperated and retired federal workers feel estranged from the very government they had so long served? 

Question:  What has changed?  Answer:  The manner in which political appointees are filtered into the bureaucracies. ...

This is yet another dilemma that the next President will inherit.  If the process does indeed encourage institutionalized political bias, something must be done about it.  Hopefully the next administration will find a way to end the overt expression of bias by employees who see themselves as political avengers, and terminate the practice that gave us the IRS scandal.

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November 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (10)

Wednesday, November 18, 2015

Ex-IRS Official, Successor Clash Over Tax-Free Spinoffs; Darden, Yahoo! Caught By IRS's Sudden Shift

IRSSThe Deal, Ex-IRS Official, Successor Clash Over Tax-Free Spinoffs; Darden, Yahoo! and Other Firms Planning Splits Caught by Dramatic IRS Policy Shift:

When William Alexander left the IRS to take a position at Skadden in January his departure was cited privately by some IRS watchers as another example of Washington's revolving door between government and the private sector.

At the IRS, Alexander, in the position of associate chief counsel, was a central figure in the agency's decision over the years to let operating companies complete tax free REIT and other spinoffs. Bolstered by IRS rulings, activist hedge funds have increased efforts in recent years to have companies with extensive real estate conduct tax free spinoffs, arguing that the moves extract shareholder value at operating companies with misrepresented assets.

It is in this context that Skadden lawyers were hired to advise Yahoo!, which ultimately came to the conclusion in January that it would conduct a tax-free spinoff of its 15% stake in Chinese e-commerce giant Alibaba. ...

However, those plans were cast in doubt when Alexander's replacement at the IRS, Bob Wellen, led the agency to issue a notice in September that has since chilled new spinoff activity. The notice and subsequent remarks made by Wellen have also raised serious questions about whether existing spinoffs in the works will ultimately be treated as tax-free.

"It is a sea change in attitudes," said Robert Willens, president of tax and accounting consulting firm Robert Willens LLC. "Bill Alexander was very permissive of tax-free spinoffs and Wellen has turned against everything Bill stood for. They couldn't be more diametrically opposed to each other." ...

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November 18, 2015 in IRS News | Permalink | Comments (1)

The IRS Scandal, Day 923

IRS Logo 2Politico, Under the Radar:

President Barack Obama's public comments appearing to prejudge the outcome of Justice Department investigations don't affect the decisions in those inquiries, Attorney General Loretta Lynch said Tuesday.

In her first appearance before the House Judiciary Committee since taking office in April, Lynch was questioned by panel chairman Rep. Bob Goodlatte (R-Va.) about remarks Obama made last year declaring there was "not even a smidgen of corruption" in the IRS's handling of applications from nonprofit groups and a statement the president made last month that former Secretary of State Hillary Clinton's private email set-up posed no national security problem.

"With respect to the president's comments, they have no influence or bearing on how the department manages these matters," Lynch said.

Goodlatte tried a couple of times to get Lynch to comment on whether it was unwise for Obama to make such comments while an investigation was pending, but she declined to do so.

"I really don’t have a comment on the president’s expression of his view," Lynch said.

Washington Examiner, Gowdy on IRS Probe: How Much More Evidence Could You Need?:

Rep. Trey Gowdy blasted the Justice Department for stating last month that there was "no evidence" of criminal intent in the Internal Revenue Service's targeting of conservative groups.

"Never do you have direct evidence of intent," Gowdy, a former prosecutor, said during a House Judiciary Committee hearing Tuesday.

The South Carolina Republican cited numerous examples of "circumstantial evidence," all of which resulted in discrimination against Tea Party nonprofits, regardless of the tax agency's intent.

Gowdy noted Lois Lerner, former head of the IRS tax-exempt unit, had sent several emails that indicated she harbored a bias against conservatives.

Washington Examiner, Jordan Blasts Attorney General on IRS Investigation:

Rep. Jim Jordan pressed Attorney General Loretta Lynch Tuesday on why the head of the IRS has not faced consequences for misleading Congress about the status of documents.

"That sure looks like [IRS Commissioner] John Koskinen and the Internal Revenue Service concealed information and destroyed information," Jordan said after outlining a timeline that suggests employees under Koskinen deleted requested emails after he had promised to provide them to lawmakers.

The Ohio Republican noted IRS employees had erased back-up tapes containing the emails of Lois Lerner, former head of the tax agency's nonprofit unit, after receiving three separate preservation orders and two subpoenas for the tapes.

"With respect to the matter that you've raised, we did review the issues surrounding Ms. Lerner's emails and the backup tapes," Lynch told Jordan during a House Judiciary Committee hearing Tuesday. "We are looking for evidence of criminal intent."

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November 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, November 17, 2015

GAO: IRS Lacks Adequate Internal Controls

GAO LogoGovernment Accountability Office, IRS's Fiscal Years 2015 and 2014 Financial Statements (GAO-16-146):

In GAO’s opinion, the Internal Revenue Service’s (IRS) fiscal years 2015 and 2014 financial statements are fairly presented in all material respects. However, in GAO’s opinion, IRS did not maintain effective internal control over financial reporting as of September 30, 2015, because of a continuing material weakness in internal control over unpaid tax assessments. GAO’s tests of IRS’s compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements detected no reportable instances of noncompliance in fiscal year 2015.

The material weakness in internal control over unpaid tax assessments was primarily caused by financial system limitations and errors in taxpayer accounts that rendered IRS’s systems unable to readily distinguish between taxes receivable, compliance assessments, and write-offs in order to properly classify these components for financial reporting purposes. These deficiencies necessitated the use of a compensating estimation process to determine the amount of taxes receivable, the most material asset on IRS’s balance sheet. Through this compensating process, IRS made over $9 billion in adjustments to the 2015 fiscal year-end gross taxes receivable balance produced by its financial systems. To address this material weakness, in fiscal year 2015, IRS took a significant step in developing a long-term corrective action plan. However, the plan does not include milestones or related dates for most of the actions, so it is unclear when IRS will fully address the issues that cause significant inaccuracies in the unpaid tax assessments information maintained in its accounting systems.

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November 17, 2015 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 922

IRS Logo 2The Hill, Republicans to Grill Lynch on Paris, IRS:

Attorney General Loretta Lynch is set to face tough questions from lawmakers Tuesday about the Justice Department’s role on issues ranging from the IRS to the response to the terrorist attacks in Paris.

Republicans will put Lynch on the hot seat during her first appearance before the House Judiciary Committee since replacing Eric Holder as head of the Justice Department. Her scheduled appearance last month was canceled because she was sick. ...

The GOP’s often tumultuous relationship with Holder could extend to Lynch after the DOJ elected last month not to prosecute Lois Lerner, the former Internal Revenue Service official accused of targeting the Tea Party. 

"She has a lot to answer for,” Oversight Committee Chairman Jason Chaffetz (R-Utah) told The Hill. 

"Everything from Lois Lerner and the IRS, to what’s happening with emails, to how they’re operating at the Department of Justice,” he said in an interview before her first scheduled hearing. "There’s such a wide swath of issues they’re involved with."

The DOJ’s abrupt end to its two-year probe of the IRS angered many Republicans, including previous Oversight Chairman Darrell Issa (R-Calif.) who accused Lynch of “white washing” the investigation.

“There are some obvious [questions],” Issa told The Hill last month. “Why they saw no violation at the IRS? Why they could close it out completely without any support for the [inspector general’s] recommendations?"

Issa said he has no intention of taking it easy on Lynch: “After she dismissed and white washed the investigation? Why?” he asked. “I think she made a grievous error.”

“She has to own that,” he added.

Goodlatte also (R-Va.) criticized the DOJ for dropping the investigation: “At every turn President Obama and administration officials have repeatedly and publicly undermined the investigation into the IRS’s targetting of conservative groups,” he said in a statement.

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November 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, November 16, 2015

The IRS Scandal, Day 921

IRS Logo 2The Press Enterprise editorial, IRS Scandal Does No Harm to Ruling Party, So No Foul:

Self-government can collapse when government doesn’t police itself — when abuses of power fester too long. That has happened with the investigation into the Internal Revenue Service’s unjustified 2010 audits of numerous nonprofit conservative groups, which sidelined many of them during President Obama’s 2011-12 re-election campaign.

In a letter to Congress, the Justice Deparment said it will file no criminal charges in the case, not even against Lois Lerner, the former director of the IRS’s Exempt Organizations Office. Yet in 2013, Ms. Lerner herself sparked the uproar, telling an American Bar Association meeting that IRS auditors “actually used case names on this list. They used names like Tea Party or Patriots, and they selected cases simply because the applications had those names in the title.”

Before a congressional investigation, Ms. Lerner invoked her Fifth Amendment right against self-incrimination.

Former House Oversight Committee Chairman Darrell Issa, R-Vista, conducted one of the investigations. He said in a statement, “The Justice Department's decision to close the IRS targeting investigation without a single charge or prosecution is a low point of accountability in an administration that is better known for punishing whistleblowers than the abuse and misconduct they expose.” He charged, “Giving Lois Lerner a free pass only reinforces the idea that government officials are above the law and that there is no consequence for wrongdoing.”

With the 2016 elections approaching, restoring clean, honest government should be voters’ top priority.

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November 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Sunday, November 15, 2015

The IRS Scandal, Day 920

IRS Logo 2Harrison Daily editorial, Why Is No One Held Accountable?:

Never ever does anything serious seem to happen to government officials who fail to do their jobs properly, waste massive amounts of taxpayers' money, harm the innocent unfairly or even engage in criminal activities. It is happening again in the Internal Revenue Service scandal.

IRS officials in the section headed by Lois Lerner singled out conservative groups seeking tax-exempt status for special treatment. It included lengthy delays and sometimes, outright harassment.

Lerner herself was allowed to retire from the IRS — after refusing to testify at two congressional hearings. Then, investigators were told some of her official emails pertinent to the probe had been lost when her computer crashed, ever so conveniently.

Recently, the Justice Department announced it had concluded an investigation of the matter — and would be filing criminal charges against no one.

DOJ officials admitted they found "mismanagement, poor judgment and institutional inertia" that contributed to the IRS problem.

No one has received any substantial punishment for what happened. Lerner will enjoy her full pension. Those she left behind will continue to cruise through the IRS bureaucracy until they, too, retire.

Nowhere in the government — not at the IRS, the Department of Veterans Affairs, the Environmental Protection Agency or any of the other places where actions demand accountability has it occurred.

Why? More important, why does no one in Congress do anything about it?

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November 15, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, November 14, 2015

The IRS Scandal, Day 919

IRS Logo 2The Hill:  IRS Problems Extend Far Beyond its Commissioner, by Brandon Arnold (National Taxpayers Union):

Frustrations with the IRS have reached a boiling point, with a group of House Republicans now calling for the impeachment of IRS Commissioner John Koskinen. His ouster is probably well-deserved -- there is evidence to suggest that he misled Congress while under oath and may have broken other laws along the way.  While firing him might be prudent, the real problems with the IRS can’t be fixed by changing personnel. Congress can oust as many commissioners as it wants, but until the fundamental flaws at the increasingly roguish agency are fixed, individuals, families, businesses and non-profit groups will continue to be mistreated.

Consider for instance, the political targeting of groups categorized as non-profits under the Internal Revenue Code. It’s now clear that the IRS selectively harassed organizations for their ideological orientations, which were overwhelmingly conservative. This inconvenient fact effectively (and rightly) forced out Lois Lerner, the IRS honcho who presided over the mess. Lerner is gone, but has anything fundamentally changed at the agency that would prevent such actions in the future?

Sadly, no. After Lerner refused to testify before Congress on the matter, the Department of Justice opted to not pursue any charges against her. Now, it’s time for Congress to step in on behalf of all taxpayers – and there are plenty of things it can do.

One relatively low-hanging piece of legislative fruit would be passing H.R. 1104 -- a bill that would prevent the IRS from imposing gift taxes on contributions made to nonprofit groups. This has been a “sword of Damocles” that the IRS has been swinging over certain groups for years. Were the sword to fall, affected charitable groups would in essence be shuttered as few donors would be willing to pay taxes on contributions. Though much attention has been paid to the treatment of conservative groups under the current Obama administration, this threat imperils groups of all ideological viewpoints, which is why the bill easily passed the House with bipartisan support earlier this year. The Senate should act on it immediately. ...

All of this is not to say Congress shouldn’t necessarily impeach IRS Commissioner Koskinen. If he, in fact, broke the law he should be held accountable before the law. But the primary focus ought to be on fixing the numerous underlying problems at the IRS. The recent scandals present an opportunity to address some of these in a bipartisan fashion. It would be a shame if Congress was so distracted by Koskinen that it failed to do so.

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November 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, November 13, 2015

The IRS Scandal, Day 918

IRS Logo 2Washington Post op-ed:  Skip the Investigations, Just Work to Win the White House, by Charles Krauthammer:

At a certain point you have to realize you can’t hit a fastball. House Republicans don’t quite get that they are hopeless at oversight hearings. They keep losing — and now the chairman of the House Oversight Committee has just introduced articles of impeachment against John Koskinen, the commissioner of the Internal Revenue Service.

I’m sympathetic to the GOP motive, given how the Obama IRS has consistently obstructed and misled Congress in the tax-exemption scandal. But impeachment is no ordinary move. No agency chief or Cabinet officer has been impeached since 1876. And even proponents admit there is no chance of Koskinen being removed from office, because the Senate will never convict.

Instead, says Committee Chairman Jason Chaffetz, the purpose is public education, “to demonstrate to the American people” that the IRS “will be held accountable” for violating the public trust.

I’m all for demonstrating malfeasance. But the GOP House has given a five-year display of its inability to successfully demonstrate anything. From Benghazi all the way back to Operation Fast and Furious, the impact of its hearings on public perception has been either zero or negative.

Take the IRS case. The Oversight Committee, led at the time by Darrell Issa, blew it, allowing the IRS’ Lois Lerner to deliver a statement proclaiming innocence and then claiming Fifth Amendment protection from having to answer any questions. Committee member Trey Gowdy nearly flew out of his seat to point out that she had just forfeited her immunity.

Too late. She got away with it. That failure is what brings us to impeachment today. But impeachment was never intended to be a mulligan. ...

In each of these cases [Benghazi, Planned Parenthood, Republicans had the facts and the argument. And yet in every one they failed. What makes them think that they will fare any better in the next iteration, the impeachment of a minor official in an expiring administration?

Chaffetz says that the purpose is to rein in the IRS. I’m all for that. You know how you do it? Win the presidency, appoint honest new IRS leadership and get your own Justice Department to do a real investigation.

It’s a harder road to accountability. But it gets you to where you want to go.

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November 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, November 12, 2015

IRS May Challenge Dell's Use Of Tracking Stock In Acquisition Of EMC To Avoid $9 Billion Tax Bill

Dell EMCFollowing up on my previous post, Dell's Use Of Tracking Stock In Acquisition Of EMC Will Save $10 Billion In Taxes:  Re/code, Dell’s EMC Deal Could Fall Apart on Tax Rule:

Michael Dell’s ambitious $67 billion plan to take over storage giant EMC may face a big tax burden that could complicate or derail the deal entirely.

Dell insiders are worried the company could end up being on the hook for a tax bill of up to $9 billion following a regulatory review, sources familiar with the matter told Re/code. The worries stem from Dell’s unusual proposal to use a new type of stock share to help pay for the acquisition. Their concerns are also rooted in EMC’s wildly successful investment in the software company VMware, the value of which has risen by tens of billions of dollars since EMC acquired it in 2003.

The combination of factors has some Dell execs concerned, sources said, that certain key aspects of the deal may not qualify for the sort of tax treatment they consider essential for the transaction — the biggest tech acquisition ever proposed — to succeed.

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November 12, 2015 in IRS News, News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 917

IRS Logo 2Albany Times Union editorial, The IRS Scandal Lives On:

It’s been more than two years since allegations surfaced that the Internal Revenue Service targeted tea party groups seeking tax-exempt status with extra scrutiny. Now the Justice Department has closed the case without any criminal charges. But the controversy seems unlikely to end anytime soon.

And that’s too bad, because the problem at the heart of the IRS’ effort – the widespread abuse of tax-exempt status – hasn’t gone away. 

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November 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, November 11, 2015

Seven Former IRS Commissioners Call For Restoring IRS Budget Cuts

IRS Logo 2Seven former IRS Commissioners  have written this joint letter to the leaders of Congress’s appropriations committees urging them to reconsider proposed cuts in the IRS's budget:

The appropriations reductions for the IRS over the last five years total $1.2 billion, more than a 17% cut from the IRS appropriation for 2010.  None of us ever experienced, nor are we aware of, any IRS appropriations reductions of this magnitude over such a prolonged period of time.

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November 11, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 916

Sign the petition to Impeach IRS Commissioner John Koskinen for:

  • Failing to comply with a subpoena for evidence resulting in the destruction of 24,000 Lois Lerner emails.
  • Failing to testify truthfully and providing false and misleading information to the Congress.
  • Failing to notify Congress that key evidence had gone missing.

John Koskinen has done everything in his power to protect the IRS from its outrageous targeting scandal. Now, the Obama Justice Department has announced it will not press charges. So, it's time for Congress finally to stand up for the American people.

The Hill op-ed:  Impeach Koskinen, by Jenny Beth Martin (President & Co-founder, Tea Party Patriots):

House Republicans have introduced a resolution to impeach Internal Revenue Service Commissioner John Koskinen, about which, a simple thought — it’s about damn time. ...

Remember, it was the IRS that was used as a political weapon to target citizens who were deemed opponents of this Administration. My organization and many affiliated with it have been on the receiving end of this political weapon and I would not wish it upon any American--including my worst political adversaries. 

Not surprisingly, it was announced last month that the Obama Justice Department would not press charges against the person at the center of this scandal – former IRS Director of Exempt Organizations Lois Lerner. So, just when will the American people receive justice? 

A start would be to impeach and convict the man who continued the cover-up and denied justice for the American people, and I truly give House Republicans credit for seeming to understand this. Will Congress step up and do something meaningful to defend the American people? Help make your voice heard by adding your voice to the national petition at

It’s about damn time.

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November 11, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Tuesday, November 10, 2015

The IRS Scandal, Day 915

IRS Logo 2Forbes:  Republicans Want IRS To Target Hillary Clinton, by Peter J. Reilly:

Given the outrage that Republicans have expressed about the “targetting” of the Tea Party by the IRS, you would think that they would be slow to advocate IRS political targetting.  Apparently  it is more a matter of who’s ox is being gored.

When the Council on American-Islamic Relations (CAIR) called for Ben Carson to step out of the Presidential race, he countered by demanding that the IRS immediately revoke its exemption.  Then this week Reince Priebus, Chair of the Republican National Committee, wrote to Commissioner Koskinen about a grave matter concerning the Clinton Health Access Initiative. ...

It has become an article of faith in some circles that the delays and intrusive inquiries involving Tea Party exemption application was politically motivated.  The main evidence of that motivation is Democratic lawmakers complaining about dark money organizations and Lois Lerner and President Obama bemoaning the Citizens United decision.  Everybody agrees that the IRS shouldn’t oughta have targetted the Tea Party, whether it did or not. So why should the IRS now target the Clintons? And launching an audit in response to a clerical error would clearly be political targetting.

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November 10, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, November 9, 2015

Microsoft, IRS Spar Over Long-Running Tax Probe

Microsoft IRSSeattle Times, Microsoft, IRS Spar Over Long-Running Probe of its Taxes:

Microsoft and the Internal Revenue Service sparred in court Friday over the agency’s power to investigate taxpayers.

Microsoft, seeking a court order to overturn a portion of an IRS probe into its books, says the tax agency’s reliance on outside lawyers in the investigation sets a dangerous precedent for taxpayer confidentiality, and could embolden the agency to use powers Congress never intended to it have.

The government’s lawyers counter that a ruling in favor of Microsoft may curtail the IRS’s ability to bring in outside experts to help make sense of complex tax matters, sabotaging the system the government relies on to make sure companies pay the appropriate amount of tax. ...

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November 9, 2015 in IRS News, New Cases, Tax | Permalink | Comments (0)

The IRS Scandal, Day 914

Lawless 2Washington Post — The Volokh Conspiracy:  Obama Administration Lawlessness: The Top Five, by David Bernstein (George Mason):

The most frequent question I get about my book Lawless: The Obama Administration’s Unprecedented Assault on the Constitution and the Rule of Law is what I think are the administration’s most egregiously lawless actions. So here is my somewhat subjective list. ...

4. Failing to prosecute anyone at the IRS for the 501(c)(4) scandal. That the IRS put its massive bureaucratic thumb on the scales against conservative activist groups is one of the great political scandals in recent U.S. history. When the news first broke, President Obama properly declared that he “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.” But tolerate it his administration did.

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November 9, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Sunday, November 8, 2015

The IRS Scandal, Day 913

IRS Logo 2Washington Examiner, Chaffetz: I'm Just Getting Started:

For Rep. Jason Chaffetz, chairman of the House Oversight and Government Reform Committee, the news on Oct. 23 that the Department of Justice had dropped its investigation of the Internal Revenue Service without pressing charges was unwelcome, if unsurprising. His committee had been electrified by the IRS probe under its previous chairman, Rep. Darrell Issa, and tensions over whether the IRS actually targeted conservative groups boiled over in public hearings that many criticized as political sideshows.

But Chaffetz has attempted to usher in a new era for the oversight committee, quietly continuing the IRS investigation while broadening the committee's scope. Chaffetz previewed some "juicy" announcements to look out for from his committee in the coming weeks.

Examiner: You have called for Commissioner John Koskinen to resign. Was there any one particular breaking point where you said, "Koskinen has to go?"

Chaffetz: He had a duly-issued subpoena and despite that subpoena, they destroyed documents. Imagine if you did that to the IRS. They would haul you into jail. And rightfully so. So we're going to hold them accountable.

Fresno Bee, Tell the Truth About IRS Problems:

President Obama stated there is not even a smidgen of corruption at the IRS. False. The IRS pled guilty to releasing names and personal information of the National Organization of Marriage to a gay rights group and was ordered to pay $50,000. We deserve the truth and to know who is accountable for either these deliberate actions, obstruction or gross mismanagement.

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November 8, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, November 7, 2015

The IRS Scandal, Day 912

IRS Logo 2Boston Herald editorial, Impeach the IRS Chief:

The House Judiciary Committee and the House itself should approve impeachment charges filed against the head of the Internal Revenue Service, John Koskinen on charges of allegedly giving false testimony in the investigation of IRS harassment of conservative political groups. The Justice Department’s whitewashing of Koskinen and the IRS is outrageous

The department said it found “mismanagement, poor judgment and institutional inertia” but no evidence of crime when Lois Lerner was in charge of the section that granted tax-exempt status. (She retired after invoking her privilege against self-incrimination.)

Harassment (through delay and offensive questioning) of conservative applicants before the 2012 elections has been fully documented. Ditto the waving through of applications from liberals, and the “Be On the Lookout” instruction to target groups using certain phrases like “Tea Party,” and the destruction of email backup tapes after they were subpoenaed, and a failure to look for relevant emails — which an inspector general soon found. Koskinen was not in charge while Lerner was active, but was during the investigation by the Oversight and Government Reform Committee, whose chairman, Rep. Jason Chaffetz (R-Utah), filed charges on behalf of himself and committee Republicans.

The Justice Department has been inexcusably partisan and, therefore, not trustworthy by the American people.

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November 7, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, November 6, 2015

The IRS Scandal, Day 911

IRS Logo 2Washington Post op-ed:  The Supreme Court’s Opportunity to Tackle Sinister Trends, by George Will:

The IRS scandal — the denial of essential tax-exempt status to conservative advocacy groups, thereby effectively suppressing the groups’ activities — demonstrates this: When government is empowered to regulate advocacy, it will be tempted to suppress some of it. And sometimes government will think like Oscar Wilde: “The only way to get rid of temptation is to yield to it.”

These truths should be on the Supreme Court’s nine fine minds on Friday when they consider whether to hear a challenge to a lower court’s decision that disregards some clear Supreme Court pronouncements pertaining to the First Amendment. The amendment says there shall be no laws abridging freedom of speech, but various governments are persistently trying to regulate, and perhaps chill, advocacy. The most recent wrinkle in this disreputable project comes from California.

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November 6, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, November 5, 2015

IRS Estate Tax Data On Assets Held At Death

Wall Street Journal, When the Superrich Die, Here’s What’s in Their Wallets:

Estate tax data recently released by the Internal Revenue Service show what the wealthiest Americans possess when they die—and where the money goes. ... Fewer than 12,000 estate tax returns were filed in 2014, and more than half of those returns didn’t yield any tax for the federal government.

The data break down what assets people hold at death, offering a glimpse into the holdings of the ultrawealthy. ... The composition of assets changes as people get wealthier. The merely rich have houses, cash, farms and retirement accounts. The very rich have bonds and real estate. And the very, very rich own art and stock of closely held businesses, often the ones they are trying to pass to future generations. 


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November 5, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 910

IRS Logo 2Forbes:  Impeaching The IRS Commissioner Is The Wrong Thing To Do, by David Brunori (Tax Analysts):

The House Republican attempt to impeach IRS Commissioner John Koskinen is one of the most unseemly developments of the Lois Lerner affair. Unseemly is probably not a strong enough word to describe the partisan effort to remove a sitting commissioner. It is just wrong.

I say that without any particular bias in favor of the commissioner. Indeed, I think the Department of Justice went too easy on Lerner and the IRS. Nor do I carry any water for the administration. I disagree far more often than I agree with President Obama on tax policy. Yet, I believe impeachment should be reserved for “big things.” It should not be used as a weapon in the political arena or in policy debates. ...

House GOP members say they are frustrated with Koskinen. Since when did frustrating someone equate to a high crime or misdemeanor? Those calling for impeachment say that Koskinen failed to comply with a congressional subpoena ordering him to locate and preserve IRS records related to congressional investigations of the IRS’s handling of conservative groups’ exemption applications; lied in his testimony before Congress regarding the e-mails of Lois Lerner, the former IRS exempt organizations director at the center of the investigations; failed to act with competence and forthrightness in overseeing the investigation of the IRS’s handling of exemption applications; and acted in a manner inconsistent with the trust and confidence placed in him as an officer of the United States. ...

Koskinen may be guilty of being combative with Congress. He may be guilty of caginess during his testimony. He may be guilty of being a lousy commissioner. But none of those are reasons for impeachment.

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November 5, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, November 4, 2015

IRS Use Of 'Stingray' Devices To Track Cellphones Sparks Bipartisan Senate Outrage

Sting RayUSA Today, IRS Use of 'Stingray' Devices to Track Cellphones Sparks Senate Inquiry:

The Internal Revenue Service's newly revealed use of controversial "Stingray" cellphone trackers has prompted an inquiry by Senate Judiciary Committee leaders about how and why the IRS is using the surveillance equipment.

“We were surprised to learn that IRS investigators may be using these devices,” Chairman Chuck Grassley, R-Iowa and ranking member Patrick Leahy, D-Vt., wrote in a letter to Treasury Secretary Jack Lew, who oversees the IRS.

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November 4, 2015 in IRS News, Tax | Permalink | Comments (1)

IRS Audits of Individuals Drop to 11-Year Low

Wall Street Journal, IRS Audits of Individuals Drop to 11-Year Low:

The Internal Revenue Service’s audits of individual taxpayers fell to the lowest rate in 11 years, a revenue-sapping result that the agency’s commissioner blames on budget cuts.

The IRS audited 0.84% of individual taxpayers in the 2015 fiscal year, the lowest level since 2004, the agency said Tuesday. Revenue from audits declined by 41% to $7.3 billion and fell to the lowest level since 2002, the IRS said.

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November 4, 2015 in IRS News, Tax | Permalink | Comments (5)

The IRS Scandal, Day 909

IRS Logo 2New York Post editorial, Yes, the IRS Chief Has Earned Impeachment:

He still won’t wipe that smirk off his face, but the House of Representatives is quite right to get the ball rolling on impeaching IRS chief John Koskinen.

Brought into the agency to clean house after the IRS’s unlawful targeting of conservative groups, Koskinen instead presided over endless stonewalling of congressional probes — including the destruction of evidence that had been subpoenaed.

If you responded to an IRS audit the way Koskinen’s IRS has behaved, you’d be looking at huge penalties and maybe prison time.

He waited months to tell the IRS that an “accident” had destroyed the e-mail records of Lois Lerner, the woman at the scandal’s heart. Indeed, he made no real effort to secure those e-mails, despite a subpoena — allowing key backups to be destroyed.

Then he nonchalantly testified that Lerner’s e-mails were all gone forever — and then showed not a hint of shame after an inspector general came up with thousands of them.

All along, he sniffed in outrage at the very idea that the people’s representatives would dare question blatant abuses of power by the most feared federal agency.

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November 4, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, November 3, 2015

The IRS Scandal, Day 908

IRS Logo 2Ted Cruz (Chair, Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts, Senate Judiciary Committee) Press Release, Sen. Cruz Asks DOJ to Preserve All IRS-Related Documents:

Today, U.S. Sen. Ted Cruz (R-Texas) sent a letter to Attorney General Loretta Lynch requesting that the Department of Justice (DOJ) preserve all Internal Revenue Service (IRS) documents and information for investigation under the next administration. Sen. Cruz’s letter comes after the DOJ recently closed its investigation into improper targeting of conservative groups by the IRS.

“Make no mistake: the IRS’s targeting of ordinary citizens for their political viewpoints under this Administration is not a minor issue, and represents a significant breach of the public trust.  Even a casual observer of the IRS targeting scandal could not help but come to the conclusion that there is a strong appearance that the IRS, under this Administration’s political leadership, used the coercive tools available to the tax collection agency to harass people with conservative viewpoints,” Sen. Cruz wrote. “It is important for you and other officials in this Administration to understand that this Administration’s decisions to neither continue this investigation nor appoint a special prosecutor do not represent the conclusion of this matter.”

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November 3, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, November 2, 2015

The IRS Scandal, Day 907

IRS Logo 2Breitbart, Sen. Tim Scott: IRS Has ‘Created a Culture of Discrimination’:

Sen. Tim Scott (R-SC) appeared on Saturday’s “America’s News HQ” on Fox News Channel, talking about the IRS scandal, saying the IRS has “created a culture of discrimination.”

Scott said people would “challenge the system immediately” if the scandal was over racial discrimination rather than discrimination over conservative groups.

“It’s very important for us to restore confidence in the IRS,” he said. “I was very frustrated with the fact that we continue to see people targeted. And imagine if this was racial targeting. We would explode with amazement and challenge the system immediately. We’ve had no such challenge in the IRS.”

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November 2, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Sunday, November 1, 2015

The IRS Scandal, Day 906

IRS Logo 2Tax bloggers on the House Republicans' articles of impeachment against IRS Commissioner John Koskinen:

Russ Fox (Taxable Talk):

While it is theoretically possible that the IRS scandal is all due to an extraordinary amount of coincidences, it’s far more likely that one individual ordered it. ...

My view of this is simple: Mr. Koskinen has become a mouthpiece of the Administration rather than an independent head of the IRS. New leadership and a resolution of the IRS scandal is needed before the people regain full confidence in the IRS. Mr. Koskinen has failed in that task. The IRS’s budget does need to be increased, but that’s not happening until Mr. Koskinen leaves the agency (and the scandal is resolved). The Wall Street Journal’s conclusion on the impeachment mirrors my thoughts:

Yet the exercise will have the salutary effect of reminding executive-branch officials that they are not a government unto themselves. The U.S. Attorney has refused to honor Congress’s contempt charge against Ms. Lerner for refusing to testify, the Justice Department has closed its investigations into IRS targeting without prosecutions, and the press corps winks at abuses of power when conservatives are the targets. With an executive who refuses to honor the normal separation of powers, Congress is obliged to use its authority to hold government accountable.

Joe Kristan (Tax Update Blog):

A resolution has been introduced to impeach IRS Commissioner Koskinen. While his conduct in office has been awful, I hope they don’t really try to make it happen. It could backfire, and even if he were impeached, there will never be a conviction. I would rather they spend the time and energy reducing the powers of all IRS commissioners by reducing the power of the IRS through tax reform.

Peter Reilly (Forbes):

Unless, like a sensible person, you have been shielding yourself from learning about developments in the interminable, never-ending IRS scandal, now on Day 902 by Tax Prof count, you are aware that impeachment articles against IRS Commissioner John Koskinen have been drawn up. ...

Mr. Koskinen came into the IRS after what I call the “core scandal”, delays and intrusive inquiries on tax-exempt application by Tea Party and similar groups. His “high crimes and misdemeanors” relate to IRS response to the investigation by the Committee on Oversight and Government Reform of the House of Representatives.  IRS employees in Martinsburg, West Virginia erased 422 backup tapes destroying as many as 24,000 Lois Lerner e-mails.  A couple of months later Mr. Koskinen testified that nothing had been destroyed.  He also testified that backup tapes from 2011 had been recycled.  Previously he had promised to provide all the Lois Lerner e-mails. He was slow in informing the Committee that there were problems with crashed hard drives and backup tapes.  Subsequently TIGTA investigators found more than 1,000 Lois Lerner e-mails that the IRS had missed in all its rooting around. ...

At any rate, I tend to think that the Koskinen impeachment might not play out that well for Republicans.  I could see Koskinen turning the tables on them in his defense in the Senate and making a case that Issa’s committee never was interested in finding out what actually happened, but was mainly looking for stupid remarks by Lois Lerner that could be played up by Fox News. ...

You will be able to find links to a wealth of commentary on the Tax Prof Blog – The IRS Scandal Day 902. If you have been following this you will probably not be surprised to learn that Elijah Cummings does not think the impeachment proposal is such a good idea. “Calling this resolution a stunt or a joke would be insulting to stunts and jokes."

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November 1, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, October 31, 2015

The IRS Scandal, Day 905

IRS Logo 2The Weekly Standard, A Good Start:

On October 27, the House of Representatives moved to impeach the commissioner of the Internal Revenue Service, John Koskinen. It may seem odd that Koskinen is being punished since he wasn’t commissioner when the IRS scandal broke two years ago. But make no mistake, Koskinen is a worthy candidate for impeachment.

To get to the bottom of the scandal—the deliberate slow-walking or outright denial of applications for tax-exempt status from conservative groups—Congress subpoenaed all the emails of the IRS’s Exempt Organizations Unit head, Lois Lerner. Koskinen, who was sworn in as commissioner on December 23, 2013, failed to act on this subpoena, and on March 4, 2014, the agency erased 422 backup tapes, destroying as many as 24,000 of Lerner’s emails, despite a congressional order mandating relevant IRS records be preserved.

Koskinen knowingly sat on the information that the emails had been destroyed for four months. When he finally offered an explanation of what had happened to the emails, it was buried on page seven of the third attachment to a letter sent to the Senate Finance Committee in a Friday news dump. Koskinen testified before Congress that he had personally confirmed that none of the IRS’s other email backup tapes was recoverable.

This was a lie. Employees from the inspector general’s office later drove to the IRS office in West Virginia, where the backup tapes were kept, and asked for whatever was there. They recovered 700 backup tapes, and with them 1,000 new emails from Lois Lerner. Finally, a Government Accountability Office report in July indicated that the agency had introduced no new safeguards to prevent the targeting of “organizations’ religious, educational, political, or other views” despite a clear mandate to do so. ...

The federal bureaucracy has always been bad at policing employees, but President Obama bears direct responsibility for the problem getting immeasurably worse. Last year, 47 of the 73 federal inspectors general signed a letter decrying the Obama administration for stonewalling their investigations and in some cases actively intimidating investigators. ...

To address the systemic problem, the GOP has to reclaim Congress’s oversight power and push for sweeping civil service reforms. Without them, no significant conservative policy overhaul will ever be implemented, and Americans will be increasingly subject to a complex web of unaccountable and unconstitutional administrative fiefdoms.

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October 31, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, October 30, 2015

The IRS Scandal, Day 904

IRS Logo 2Canada Free Press, The Koskinen Impeachment: A Factual Necessity and a Likely Political Failure:

Pursuing impeachment against an agency leader is exceedingly rare, and a step beyond contempt charges, which is the tool House Republicans tried to use against both Lerner and former Attorney General Eric Holder in past disputes.

While impeachment is often thought of as a congressional weapon reserved for presidents, it can apply to “all civil officers of the United States,” on the grounds of treason, bribery or other “high crimes and misdemeanors.”

The charges against Koskinen should not be difficult to prove. They’re backed by plenty of documented detail. ...

Given the seriousness of Koskinen’s actions, combined with a Democratic administration’s refusal to enforce the law, you’d think this would be seen as an obvious and necessary case of Congress stepping in to provide accountability where the executive branch has utterly refused and/or failed to do so. But we all know that’s not how political/media narratives work these days. Even conservatives expect the Koskinen impeachment to be portrayed as ridiculous folly on the part of Republicans, because there is virtually no chance of getting 13 Senate Democrats to join with their 54 Republican colleagues to achieve the two-thirds vote necessary for conviction. ...

I’m sure Krauthammer is right about the politics because we’ve seen how this sort of thing has played out in other scenarios. The evidence against Koskinen will be convincing, but Democrats and the media will claim that because it all involves his defiance of congressional directives - and in their opinion Congress shouldn’t have been investigating in the first place - he really didn’t do anything wrong. They used the same argument in defense of Bill Clinton. Sure, he lied under oath and obstructed justice, but there never should have been an investigation in the first place. That is no legal defense of any kind, but they made it work as a political defense and they’ll try to do the same thing with Koskinen.

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October 30, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, October 29, 2015

The IRS Scandal, Day 903

IRS Logo 2The Maddow Blog (MSNBC), GOP Begins Impeachment Process, But Not Against Obama:

For years, congressional Republicans have been very excited about the prospect of impeaching President Obama. At various times, GOP lawmakers have also considered impeaching then-Attorney General Eric Holder, Homeland Security Secretary Jeh Johnson, and EPA Administrator Gina McCarthy. Last week, one Republican congressman said he’s eager to impeach Hillary Clinton, and she hasn’t even won yet.

In each instance, far-right members of Congress have struggled to explain why, exactly, any of these officials actually deserve to be impeached, and Republicans never took their efforts beyond the rhetorical stage.

Yesterday’s actions, however, represent an escalation.

House Republicans filed papers Tuesday to begin impeachment proceedings against IRS Commissioner John Koskinen over the agency’s alleged campaign to revoke the tax-exempt status of tea party-affiliated groups.

The resolution – filed by Rep. Jason Chaffetz, R-Utah, chairman of the Oversight and Government Reform Committee, and 18 other members of the committee – accuses Koskinen of lying to Congress about agency emails that were found to be missing.

Just on the surface, it’s alarming that too many Republicans look at Congress’ impeachment power as if it were some kind of toy, to be pulled off the shelf and played with whenever it offers opportunities for entertainment.

But what’s also striking about this is the GOP lawmakers’ sense of timing. It was late last week that the Justice Department completed a lengthy and rigorous investigation into the imaginary IRS “scandal,” concluding that no laws were broken and no charges would be filed.

It’s against this backdrop that House Republicans have decided to pursue impeachment against the IRS commissioner who not only did nothing wrong, but who wasn’t even at the IRS at the time of the institution’s alleged misdeeds. ...

That doesn’t change the fact that this partisan tantrum is indefensible. Koskinen took on the job of improving the IRS out of a sense of duty – the president asked this veteran public official to tackle a thankless task, and Koskinen reluctantly agreed. For his trouble, Republicans want to impeach him, for reasons even they can’t rationalize.

It’s ridiculous, even by the low standards of this Congress.

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October 29, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, October 28, 2015

The IRS Scandal, Day 902

House Resolution, Impeaching John Andrew Koskinen, Commissioner of the Internal Revenue Service, for high crimes and misdemeanors:

Resolved, That John Andrew Koskinen, Commissioner of the Internal Revenue Service, is impeached for high crimes and misdemeanors and that the following articles of impeachment be exhibited to the Senate:  

Articles of impeachment exhibited by the House of  Representatives of the United States of America in the name of itself and of the people of the United States of America, against John Andrew Koskinen, Commissioner  of the Internal Revenue Service, in maintenance and support of its impeachment against him for high crimes and misdemeanors.

Article I:  John Andrew Koskinen, in his conduct while Commissioner of the Internal Revenue Service, engaged in a pattern of conduct that is incompatible with his duties as an Officer of the United States. ...

Article II:  John Andrew Koskinen engaged in a pattern of deception that demonstrates his unfitness to serve as Commissioner of the Internal Revenue Service. Commissioner.  Koskinen made a series of false and misleading statements to Congress in contravention of his oath to tell the truth. ...

Article III:  John Andrew Koskinen, throughout his tenure as Commissioner of the Internal Revenue Service, has acted in a manner inconsistent with the trust and confidence placed in him as an Officer of the United States. ...

Article IV:  John Andrew Koskinen has failed to act with competence and forthrightness in overseeing the investigation into Internal Revenue Service targeting of Americans because of their political affiliations. ...

Wall Street Journal editorial, Impeaching the IRS Director: The House Acts to Remove John Koskinen for Breach of Trust:

The IRS targeting and muzzling of conservative groups during the 2012 presidential campaign is an outrage for which almost no one has been held accountable. Which brings us to the news that House Oversight Committee Chairman Jason Chaffetz introduced articles of impeachment on Tuesday against IRS Commissioner John Koskinen. ...

The last impeachment of a cabinet officer or agency head was War Secretary William Belknap in 1876. Then again, no Presidency in decades has treated Congress with the disdain that President Obama has. With rare exceptions he has also refused to dismiss officials when they fail at their most basic obligations. If the House votes to impeach Mr. Koskinen, the Senate then would need a two-thirds vote to convict in a trial, which is unlikely.

Yet the exercise will have the salutary effect of reminding executive-branch officials that they are not a government unto themselves. The U.S. Attorney has refused to honor Congress’s contempt charge against Ms. Lerner for refusing to testify, the Justice Department has closed its investigations into IRS targeting without prosecutions, and the press corps winks at abuses of power when conservatives are the targets. With an executive who refuses to honor the normal separation of powers, Congress is obliged to use its authority to hold government accountable.

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October 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, October 27, 2015

Budget Deal Changes Partnership Tax Audits

Wall Street Journal, IRS Would More Easily Audit Large Partnerships Under Proposal; Provision in Budget Deal Would Make It Easier to Audit Private-Equity Firms, Hedge Funds:

The Internal Revenue Service would have an easier time auditing large partnerships, including private-equity firms and hedge funds, under a provision in the bipartisan budget deal announced late Monday night.

The proposal, built on ideas from both parties, would revamp a 33-year-old law that sets the rules for partnership audits and requires the IRS to pass additional taxes to each of the partners. That task has proven difficult for the IRS and has made the biggest and most complex multitiered partnerships extremely tough to audit.

A Government Accountability Office study last year found the IRS audited just 0.8% of large partnerships—those with at least 100 partners and $100 million in assets—compared with a 27.1% audit rate for corporations with at least $100 million in assets. Most of those partnership audits resulted in no additional taxes, and the GAO said it wasn’t sure whether that was because of high compliance or the agency’s inability to find noncompliance.

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October 27, 2015 in Congressional News, IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 901

IRS Logo 2Politico, Koskinen Back in the Hot Seat:

Let’s be honest: The Justice Department’s decision not to seek criminal charges against Lois Lerner or anyone else for the IRS controversy is about as surprising as the news dribbling out on a Friday afternoon. After all, The Wall Street Journal reported at the beginning of 2014 — more than 21 months ago — that this was the likely outcome. But the timing could make life uncomfortable for the IRS commissioner, John Koskinen, who returns to Capitol Hill to testify on Tuesday about the Senate Finance Committee’s findings [Part 1, Part 2, Part 3, Part 4] on the agency’s improper scrutiny of Tea Party groups seeking tax-exempt status. The news, unsurprising as it is, that Lerner won’t face criminal charges will undoubtedly add a little edge to the GOP senators’ questioning of Koskinen — though the IRS chief at least won’t have to face the more strident House Republicans this time around.

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October 27, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Monday, October 26, 2015

Number Of Americans Renouncing Their U.S. Citizenship Hits All-Time High

International Tax Blog, 2015 Third Quarter Published Expatriates – A Record High:

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the third quarter of 2015.

The number of published expatriates for the quarter was 1,426.  This is the highest quarterly number of published expatriates ever, surpassing the previous record of 1,335 that was set earlier this year (Q1 2015).


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October 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

The IRS Scandal, Day 900

IRS Logo 2Atlanta Journal-Constitution, With IRS Decision, Another Favorite GOP Myth Crumbles Into Dust, by Jay Bookman:

Once again, the Republican response is to brush aside that contradiction as just further evidence of the dark forces that conspire against them. Once again, facts be damned, they refuse to even entertain the notion that their collective mythology might be wrong.

The latest example — coming the same week that the Benghazi story exploded on them — is the decision by the Justice Department not to file charges against former IRS official Lois Lerner, whom conservatives had long ago identified as the perpetrator of a White House-orchestrated plot to use the agency to punish its political enemies. In a letter explaining its findings, the Justice Department said it had indeed found “substantial evidence of mismanagement, poor judgment and institutional inertia” at the agency, all of which had been previously documented.

However, it uncovered “no evidence that any IRS official acted based on political, discriminatory, corrupt, or other inappropriate motives that would support a criminal prosecution. We also found no evidence that any official involved in the handling of tax-exempt applications or IRS leadership attempted to obstruct justice.”

Note the definitive nature of that statement. They found NO evidence. Not insufficient evidence for a prosecution, but NO evidence. After conducting more than 100 interviews over a two-year period, including extensive interviews with Lerner, and after perusing more than a million IRS documents and almost 500 non-profit applications, NO evidence of any criminal wrongdoing or malign intent.


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October 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (7)

The IRS Scandal, Days 801-900

October 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, October 25, 2015

The IRS Scandal, Day 899

IRS Logo 2Investor's Business Daily editorial, IRS' Lois Lerner Skates; An Ugly Precedent Is Set:

The Justice Department declined to file charges against IRS enforcer Lois Lerner, who singled out Tea Party groups for scrutiny on political grounds. With no accountability, it's now open season on dissidents. ...

That's the message the Justice Department sent when, in a classic Friday night news dump, it decided to not file charges against IRS tax-exempt groups chief Lois Lerner. In a letter to the House Judiciary Committee, Justice said that while it found "mismanagement, poor judgment and inertia," there was no case for a criminal prosecution.

This is absurd. Lerner was caught red-handed targeting Tea Party and other conservative groups, wrote partisan emails to prove it, then engaged in a massive cover-up effort — with a suspiciously crashed server, an oddly missing BlackBerry and plenty of excuses.

She evaded even more accountability by shielding herself with the Fifth Amendment in Congress. The consequences to her have been . .. retirement on a full pension with all her bonuses to a multimillion-dollar mansion in the deep D.C. suburbs.

As for her victims — and they were many — there is no justice. Now everyone, no matter what their political leanings, will wonder if they too are a political target by an out-of-control agency protected by the Justice Department.

Because that's the real consequence of this failure to hold Lerner accountable: A precedent has been set.

IRS officials now know they can go after any political opponent they want, ruin them any way they wish, swing an election — as occurred with Lerner's actions — and get away with it. ...

The Democrats may giggle with glee at seeing another of their own skate free based on the president's executive actions through his DOJ flunkies.

But two can play that game. If a Republican as unscrupulous as Obama wins the election, the same banana republic politics in government will make Democrats the next victims.

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October 25, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Saturday, October 24, 2015

The IRS Scandal, Day 898

IRS Logo 2Wall Street Journal, Obama’s Lobbying of the FBI Flouts the Law: President Obama Is Signaling to Any Willing Listener in the FBI What Action He Wants the FBI to Take:

President Obama’s recent comments in his “60 Minutes” interview about the Hillary Clinton email scandal remind me of his 2010-11 comments about right-wing PACs, which led Lois Lerner to deny fair and equal treatment to conservative PACs. Just by making the comment, President Obama is signaling to any willing listener in the FBI what action he wants the FBI to take. Let’s hope that there is no “Lois Lerner” figure in a position to follow the president’s instructions, and instead that the FBI will proceed in accordance with independent efforts to fulfill its legitimate duties and not subvert those duties to a desired political outcome.

Letter From Peter J. Kadzik (Assistant Attorney General) to Bob Goodlatte (Chair, House Judiciary Committee) and John Conyers, Jr. (Ranking Member, House Judiciary Committee), Oct. 23, 2015:

We write to inform you about the Department of Justice's criminal investigation into whether any IRS officials committed crimes in connection with the handling of tax-exemption applications filed by Tea Party and ideologically similar organizations. Consistent with statements from the Department of Justice (the Department) throughout the investigation, we are pleased to provide additional information regarding this matter now that we have concluded our investigation. In recognition of not only our commitment to provide such information in this case, but also the Committee's interest in this particular matter, we now provide a short summary of our investigative findings.

In collaboration with the FBI and Treasury Inspector General for Tax Administration (TIGTA), the Department's Criminal and Civil Rights Divisions conducted an exhaustive probe. We conducted more than 100 witness interviews, collected more than one million pages of IRS documents, analyzed almost 500 tax-exemption applications, examined the role and potential culpability of scores of IRS employees, and considered the applicability of civil rights, tax administration, and obstruction statutes.  Our investigation uncovered substantial evidence of mismanagement, poor judgment, and institutional inertia, leading to the belief by many tax­ exempt applicants that the IRS targeted them based on their political viewpoints. But poor management is not a crime. We found no evidence that any IRS official acted based on political, discriminatory, corrupt, or other inappropriate motives that would support a criminal prosecution. We also found no evidence that any official involved in the handling of tax-exempt applications or IRS leadership attempted to obstruct justice.  Based on the evidence developed in this investigation and the recommendation of experienced career prosecutors and supervising attorneys at the Department, we are closing our investigation and will not seek any criminal charges.

Throughout the investigation, not a single IRS employee reported any allegation, concern, or suspicion that the handling of tax-exempt applications-or any other IRS function­ was motivated by political bias, discriminatory intent, or corruption. Among these witnesses were several IRS employees who were critical of Ms. Lerner’s and other officials’ leadership, as well as others who volunteered to us that they are politically conservative. Moreover, both TIGTA and the IRS’s Whistleblower Office confirmed that neither has received internal complaints from IRS employees alleging that officials’ handling of tax-exempt applications was motivated by political or other discriminatory bias. ...

The Department searched exhaustively for evidence that any IRS employee deliberately targeted an applicant or group of applicants for scrutiny, delay, denial, or other adverse treatment because of their viewpoint. Intentional viewpoint discrimination may violate civil rights statutes, which criminalize acting under color of law to willfully deprive a person of rights protected by the Constitution or federal law. See 18 U.S.C. §§ 241, 242. Intentional viewpoint discrimination may also violate criminal tax statutes that prohibit IRS employees from committing willful oppression under color of law, for example by deliberately failing to perform official duties with the intent of defeating the due administration of revenue laws, or by corruptly impeding or obstructing the administration of the Tax Code. See 26 U.S.C. §§ 7214(a)(l ), 7214(a)(3), 7212(a). These statutes require proof beyond a reasonable doubt that an IRS official specifically intended to violate the Constitution, Tax Code, or another federal law.

As applied to this case, a criminal prosecution under any of these statutes would require proof that an IRS official intentionally discriminated against an applicant based upon viewpoint. It would be insufficient to prove only that IRS employees used inappropriate criteria to coordinate the review of applications, acted in ways that resulted in the delay of the processing applications, or disproportionately subjected some applicants to burdensome or unnecessary questions. Instead, we would have to prove that such actions were undertaken for the very purpose of harassing or harming applicants. Proof that an IRS employee acted in good faith would be a complete defense to a criminal charge; and proof that an IRS employee acted because of mistake, bad judgment, ignorance, inertia, or even negligence would be insufficient to support a criminal charge.

Our investigation found no evidence that any IRS employee acted with criminal intent. We analyzed the culpability of every IRS employee who played a role in coordinating for review applications or handling them afterwards, from line-level revenue agents and managers in the Cincinnati-based Determinations Unit, to tax law specialists and senior executive officials based in Washington, D.C. Apart from the belief by many tax-exempt applicants affiliated with the Tea Party and similar ideologies that they had been targeted, we found no evidence that any IRS employee intentionally discriminated against these groups based upon their viewpoints. To the contrary, the evidence indicates that the decisions made by IRS employees, though misdirected, were motivated by the desire to treat similar applications consistently and avoid making incorrect decisions. Their plans to treat applications consistently were poorly implemented, due to a combination of ignorance about how to apply section 501(c)(4)'s requirements to organizations engaged in political activity, lack of guidance from subject matter experts about how to make decisions in an area most witnesses described as difficult, and repeated communication and management issues. Moreover, many employees failed to engage in critical thought about the effect their actions (or inactions) would have upon those who applied for tax-exempt status. We found that many IRS employees' failure to give adequate attention to the applications at issue was caused by competing demands on their time and an unwillingness to be held accountable for difficult decisions over sensitive matters. We did not, however, uncover any evidence that any of these employees were motivated by intentional viewpoint discrimination.

The IRS mishandled the processing of tax-exempt applications in a manner that disproportionately impacted applicants affiliated with the Tea Party and similar groups, leaving the appearance that the IRS' s conduct was motivated by political, discriminatory, corrupt, or other inappropriate motive.  However, ineffective management is not a crime.  The Department of Justice's exhaustive probe revealed no evidence that would support a criminal prosecution. What occurred is disquieting and may necessitate corrective action - but it does not warrant criminal prosecution.

We hope this information is helpful. We have made a substantial  effort  to  provide detailed information regarding our findings in this letter, and would be pleased to offer a briefing to address any questions you may have on this matter. Please do not hesitate to contact this office if we may provide additional assistance regarding this or any other matter.

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October 24, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, October 23, 2015

The IRS Scandal, Day 897

IRS Logo 2Daily Kos, Karl Rove's Newest 'Social Welfare' Group Spending Millions to Keep the Senate in Republican Hands:

If you're a regular Digest reader, you've seen reference recently to a new conservative group called One Nation that's been spending money to run ads on behalf of vulnerable Republican senators. The organization is not a super PAC but a 501(c)(4), a type of non-profit that is supposed to promote "social welfare" causes and cannot primarily engage in political activity. Unlike super PACs, these non-profits don't have to disclose their donors, and of course, the rules on limiting political activity are regularly flouted.

There had been talk in recent years about clamping down on these abuses, but after Republicans in Congress successfully mau-maued the IRS with trumped-up charges that the agency had unfairly targeted tea party groups, those enforcement efforts have collapsed. (One grotesque example: A North Carolina "social welfare" outfit called Carolina Rising spent 97 percent of its $5 million budget on ads to help Republican Thom Tillis defeat Democratic Sen. Kay Hagan last year.)

(Hat Tip: Ted Seto.)

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October 23, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, October 22, 2015

IRS Releases 2016 Inflation Adjustments

IRS Logo 2The IRS has released various inflation-adjustments for 2016 (IR-2015-118IR-2015-119,  & Rev. Proc. 2015-53), including:

  • Gift Tax Exemption:  $14,000 (same as 2015)
  • Unified Credit:  $5,450,000 (up $20,000 from 2015)
  • Top 39.6% Income Tax Rate:  $415,050 single/$466,950 joint (up $1,850/$2,100 from 2015)
  • Standard Deduction:  $6,300 single/$12,600 joint (same as 2015)
  • Personal Exemption:  $4,050 (up $50 from 2015)

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October 22, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Treasury Department Issues Proposed Regs Implementing Obergefell And Windsor On Same-Sex Marriage

IRS Logo 2U.S. Treasury Department, Treasury Announces Proposed Regulations Implementing the Supreme Court’s Same-Sex Marriage Decision for Federal Tax Purposes:

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today announced proposed regulations providing that a marriage of two individuals, whether of the same sex or the opposite sex, will be recognized for federal tax purposes if that marriage is recognized by any state, possession, or territory of the United States.  The proposed regulations would also interpret the terms “husband” and “wife” to include same-sex spouses as well as opposite-sex spouses.  These regulations implement the Supreme Court’s decision in Obergefell v. Hodges.

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October 22, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

The IRS Scandal, Day 896

IRS Logo 2Washington Times, The Leader of the Free World Is Corrupt:

Mr. Obama tried to influence the outcome of an active FBI investigation while on national television. He telegraphed that of course his Department of Justice would not pursue charges against Mrs. Clinton, no matter what the FBI found and what opinion they put forth. Obviously, this is not the first time. We all remember his comments that there was not a smidgen of corruption in the IRS as the agency destroyed evidence, obstructed justice, lied, withheld information from Congress, and did anything to prevent the truth about this administration’s actively targeting the conservative political opposition with federal power during the last election.

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October 22, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, October 21, 2015

The IRS Scandal, Day 895

IRS Logo 2Breitbart, Judge Jeanine to Obama: Is the FBI’s Hillary Email Investigation ‘Nothing More Than a Charade?’:

Judge Jeanine Pirro opened her Fox News Channel show “Justice” Saturday with a monologue ripping Democratic presidential candidate Hillary Clinton and President Barack Obama for the Benghazi investigation, including Obama’s standing up for Clinton and her server for saying he did not think it posed a national security issue.

“Our national security not endangered?” she said. “There you go again, Mr. President. Like not a smidgen of corruption in the IRS and then Ferguson and Trayvon Martin and law enforcement. Mr. President, you pre-judge situations before knowing the facts. Why did you appoint Jim Comey if you weren’t going to let him do the job at the FBI? You undercut the investigation. Were you signaling that you’re not going to let the Justice Department bring charges, even if the FBI puts together a case? Is this investigation nothing more than a charade?”

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October 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, October 20, 2015

The IRS Scandal, Day 894

IRS Logo 2Wall Street Journal, Mrs. Clinton Gets a Pass:

PauL Gigot:  Kim, what did you make of President Obama’s comments about the email scandal, saying there was no intent, no national security problem, No. 1; No. 2, there was no intent to violate federal law. Was that a signal to the FBI?

Kimberly Strassel:  It was an enormous signal to the FBI, saying back off, don’t go after the woman who was likely to be our nominee.

By the way, Paul, this is a habit of the president. Think about it. He did the same thing back when the FBI was supposedly investigating and is still supposedly investigating the IRS scandal. It only took a few months after the revelations about the targeting that happened that he came out and was dismissing it. Within a few months of that, he had declared there was not a, quote, “smidgen of corruption.” Now, there is no way for him to know, just as we assume there’s no way he knows about what has actually happened with Hillary’s server. This isn’t him giving information. This is him giving orders.

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October 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, October 19, 2015

The IRS Scandal, Day 893

IRS Logo 2Bloomberg View:  House Republicans' Latest Bad Idea: Impeaching the IRS Chief, by Albert R. Hunt:

If the House Republicans' Benghazi investigation craters after former Secretary of State Hillary Clinton's testimony this week, the chamber's right-wing caucus has a sequel in mind: attempting the second impeachment of an executive branch appointee in 226 years.

The target is Internal Revenue Service Commissioner John Koskinen. The specifics of any supposed impeachable offenses are vague. Koskinen, 76, is a respected, successful business and government executive who, at the behest of the White House, took on the job of cleaning up the beleaguered tax agency in December 2013, after offenses had been committed.

Since 1789, the House has impeached 19 officials: two presidents, 15 judges, a senator in the 18th century. The only executive branch appointee was William Belknap, President Ulysses S. Grant's war secretary.

Now, the 40-member Freedom Caucus, which played a role in Speaker John Boehner's resignation, wants to try again. The House Oversight Committee, where proceedings would start, is stacked with right-wing Republicans.

The accusations stem from 2013, when the IRS's tax-exempt division was found to have disproportionately targeted conservative groups for scrutiny. Although Koskinen was brought in after the damage had been done, Ohio Representative Jim Jordan and his Freedom Caucus followers say he has tried to cover up some wrongdoing. Some, rather recklessly, accuse him of lying. The tax agency is unpopular and makes an appealing political target.

Democrats say the allegations against Koskinen are unfounded: "It is despicable character assassination," said Representative Gerald Connolly, a Virginia Democrat who serves on the Oversight Committee. "They are manufacturing a phony issue for ideological reasons."

The case has problems. The specific charges seem specious: There may have been miscommunication, but there is no evidence of wrongdoing by Koskinen. ...

A partisan impeachment probably would seem a foolish distraction from the real issues of jobs, health care, debt and terrorism. It could backfire in the same way as the impeachment of President Bill Clinton 17 years ago, the politically motivated government shutdowns and the fizzling Benghazi inquest is likely to.

The fight within the House Republican caucus reflects less an ideological split than the manifestation of an apocalyptic view from the right-wing minority that the political system has to be destroyed before it can be reformed. That justifies actions such as impeachment.

More than a few Republicans fear their colleagues would be making a huge mistake.

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October 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (7)

Sunday, October 18, 2015

The IRS Scandal, Day 892

IRS Logo 2Media Tracker, GAB Official’s Relationship with IRS’s Lerner Spanned Personal to Professional:

E-mails obtained by a Republican lawmaker and a conservative organization, along with travel records and expense reports portray a wide-ranging relationship between Wisconsin’s controversial top elections official and the disgraced former head of the federal Internal Revenue Service’s tax-exempt division. The relationship between Kevin Kennedy, head of the Government Accountability Board, and Lois Lerner, the Obama Administration IRS official who used her perch to harass and threaten conservative non-profit groups, was first revealed by the Wall Street Journal and further explained by the MacIver Institute.

But the entire story found in the numerous e-mails – and verified by state travel records – has never been fully told.

Kennedy has been extremely defensive about his interaction with Lerner, accusing a state senator of being like U.S. Sen. Joe McCarthy, the Wisconsin senator who fear-mongered about communists in government in the 1950s, when that senator asked Kennedy this week about the nature of the relationship.

State Rep. Dave Craig, a Republican who is leading the fight to reform Wisconsin’s John Doe investigation process, first obtained e-mails between Kennedy and Lerner in an open records request. Under Kennedy’s leadership, the GAB worked in tandem with the Milwaukee County District Attorney’s office to use the state’s current John Doe law to harass, investigate and bully conservatives. The e-mails were also obtained by True the Vote, a conservative Texas-based election watchdog that was targeted by Lerner and the IRS. True the Vote also obtained several years’ worth of Kennedy’s travel schedules.

The e-mails show that Kennedy and Lerner, in addition to sending each other a few e-mails about professional work, would share travel details – including hotel addresses – with each other and circulate random photographs and generic poems with a tight circle of acquaintances. ...

Although Kennedy may think his relationship with Lerner is off-limits to questioning, simply dismissing it as McCarthyism doesn’t explain why Wisconsin’s top elections official would work so closely with an IRS official who had to leave her job in the Obama Administration because of her targeting of conservative organizations. Kennedy’s own work targeting conservatives may offer more insight than his manufactured outrage in front of a legislative committee.

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October 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, October 17, 2015

The IRS Scandal, Day 891

IRS Logo 2Washington Post op-ed:  Democrats Protect Each Other Better Than Republicans Do, by Ed Rogers:

The fix is in. No less then the leader of the Democratic Party — that is, the current president of the United States of America — has declared that the matter of Hillary Clinton’s home-brew server and e-mail escapades is political in nature and of no harm to national security. That is remarkable, given that any honest outside observer would not draw the same conclusion and that even many of the usual suspects in the media have been tempered in their efforts to vindicate Hillary Clinton. ‎Not to mention, just as President Obama essentially gave Clinton a get-out-of-jail-free card, it turns out that the FBI is actually expanding the scope of its probe to include possible violations of an Espionage Act provision that refers to gross negligence in handling classified information — a violation that could be punishable by up to 10 years in prison.

While the president’s definitive declaration on “60 Minutes” that he didn’t think Hillary Clinton’s e-mail situation “posed a national security problem” reportedly “angered FBI agents” working the case, it’s not like the president hasn’t done this before. Remember his assertion that there was “not even a smidgen of corruption” regarding the IRS targeting scandal? Well, that scandal is also still being investigated — but conveniently for the president, the person in charge of that investigation is a partisan Democratic donor, Justice Department lawyer Barbara Bosserman. ‎I guess as long as the president’s former employee Lois Lerner continues to take the Fifth and Barbara Bosserman continues to be in the lead, the smidgens will stay locked out of sight. If the FBI didn’t get the message yesterday with the president’s direct order that the conclusion on Hillary’s e-mails should be that it “is not a situation in which America’s national security was endangered” and they get too close to the truth, maybe the White House will put Bosserman in charge of the e-mail investigation as well, just to make sure everything comes out the way the president wants it to.

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October 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, October 16, 2015

The IRS Scandal, Day 890

IRS Logo 2Breitbart, Ben Carson’s Book Tour Threatens to End Civilization As We Know It:

Ben Carson is going to suspend his presidential campaign for two weeks to hawk his book! This is unprecedented! It shows he’s not serious about running for president! It proves he doesn’t understand anything about how politics works! It’s the end of the world as we know it, and nobody feels fine!

“Sen. John McCain suspended his presidential campaign for a financial crisis. Famed neurosurgeon Ben Carson is doing so for a book tour,” gasped the Huffington Post. The notion that Carson was “suspending” his campaign appeared in headlines and news stories across the Internet. ...

In the ABC report, Carson spokesman Doug Watts explained that leaving the campaign staff behind while Carson spends a few days focusing on his book tour alleviates concerns about “co-mingling from the corporate standpoint to the Federal Election Commission standpoint so it’s just better to avoid any bad appearance.”

Does anyone, post-IRS scandal, think it’s a bad idea for Republican candidates to be extra-careful about attracting the interest of Obama Administration regulatory agencies? Does everyone remember which agency IRS scandal kingpin Lois Lerner worked for, before she signed up with Internal Revenue?

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October 16, 2015 in IRS News, IRS Scandal, Political News, Tax | Permalink | Comments (1)