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Tuesday, April 28, 2015

The IRS Scandal, Day 719

IRS Logo 2Examiner, IRS Attacks Conservative Groups But Silent on Clinton Foundation:

In the midst of the news media coverage of the Hillary Clinton emails, her private Internet server, her thumbing her nose at government regulations and allegations that her and her husband's "charity" was involved in shady deals, no one except for public-interest groups is asking about an IRS investigation. There are several allegations that the Clinton Foundation is nothing more than a sophisticated and elaborate political slush fund, according to news stories on Monday.

More than one group that was targeted by the IRS for daring to be conservative believes that if there ever was an organization that should be investigated and audited by the IRS it's the Clinton Foundation. The Clintons possess a talent for making incriminating documents disappear and Americans are warned to not hold their breath waiting for the IRS or the Justice Department investigate the Clintons and their arguably corrupt foundation.

However, the Clintons' home state of Arkansas has a young attorney general who does possesses the authority to launch a criminal investigation because the foundation claims the state of Arkansas as its headquarters. Attorney General Leslie Rutledge will likely be trashed by the Clinton machine

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April 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, April 27, 2015

The IRS Scandal, Day 718

IRS Logo 2Breitbart, GOP Sen. Presses Obama Administration On Criminal Probe Of IRS Targeting of Conservatives:

On Tax Day, Senate Judiciary Committee Chairman Chuck Grassley (R-IA) pressed the Obama administration for an update on the criminal investigation into the alleged misconduct of IRS personnel in the handling of conservative organizations’ tax exempt status.

“It’s unclear whether all of these cases are open or closed,” Grassley said Wednesday. “The investigative agencies should account for their work. The scandal damaged the public trust in the IRS. Building back any of that trust requires investigation and accountability for any misconduct.”

In a letter to the Acting Deputy Attorney General Sally Quillian Yates and the Treasury Inspector General for Tax Administration J. Russell George, the Iowa lawmaker requested more information about the investigation — or lack thereof.

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April 27, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Sunday, April 26, 2015

The IRS Scandal, Day 717

IRS Logo 2Pittsburgh Tribune-Review, The Gathering Storm: An IRS Defeat:

Attempting to obscure the extent of its alleged targeting of conservative groups, the Internal Revenue Service has been smacked with a serious setback in its court fight in Ohio.

A federal judge granted a motion compelling the IRS to list the 298 targeted organizations, which the IRS had identified for the Treasury Department inspector general. In a lawsuit filed in 2013, 10 conservative groups, through discovery, have been trying to pry free the list of all groups targeted by the IRS. This, in order to seek class certification and expand the lawsuit to "all the organizations on (ex-IRS official) Lois Lerner's hit list," writes Hans von Spakovsky of The Heritage Foundation. ...

The discernible rumbling of distant thunder portends the gathering storm that is going to rain down on the IRS.

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April 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, April 25, 2015

The IRS Scandal, Day 716

IRS Logo 2Forbes, IRS Forced To Release Names Of Targeted Groups, by Peter J. Reilly:

So we had another Tea Party decision on April 1 of all days. NorCal Tea Party Patriots is one of the ten organizations in a lawsuit against the IRS because of delays and intrusive scrutiny while they were applying for exempt status.  They want it to be a class action suit, but they need information from the IRS to determine what organizations should be in the class. ...

The IRS argued that it could not make those disclosures, because they would be in violation of Code Section 6103 which protects the confidentiality of returns and return information.  The judge went with NorCal on this one.

The Court concludes that the return information sought is directly related to the issue of class certification in this federal court proceeding. The names of the putative class member organizations and their control dates—the date which the putative class member organizations submitted their applications for tax exempt status to the IRS—are directly related to the issue of class certification. Plaintiffs seek the return information of the putative class members to prove to the Court that the Federal Rule of Civil Procedure 23(a) and 23(b) requirements such as typicality, commonality, and whether the IRS acted on a grounds that applied generally to the putative class are satisfied. ...

I’m beginning to despair of their ever being an end to the IRS Scandal on Day 714 by the TaxProf count, as I write this. I thought this latest decision might be a good opportunity to reach out to someone who might have a different view on the whole matter.

Frank Wolpe, Professor Emeritus at Bentley University has written a white paper about rebuilding the IRS. (download)

The paper identifies the ill-conceived massive 1998 structural reorganization and division (like salami-slicing) of field operations as a major cause of the IRS’s current legal battles and “downward slide.” In its 1998 aftermath, we were all left with an overly centralized Washington IRS National Office and an undermanaged array of field operations. That’s where the Tea Party scandal started; and, even more importantly, it need never be repeated. Indeed, such events must stop!

“With that recognition, change-makers can travel a 2015 bipartisan pathway to addressing a wrong-headed 1998 “solution” to a 1998 non-existent structural problem by introducing a 2015 proposal for a National Office consolidation (slimming down) coupled with a field operations decentralization (closer to customers and ending the practice of absentee senior management without local accountability).

Of course the notion that the scandal must have actually started in the Oval Office still has an irresistible grip in some circles, so a boring reorganization just won’t be satisfying.  So maybe it never will end.

Hans von Spakovsky of cnsnews.com wrote:

The arguments in this case by the Justice Department are another example of how the IRS has been hiding behind Section 6103. That law was intended to prevent the IRS from publicly disclosing private tax information—such as its illegal disclosure of the tax returns of the National Organization for Marriage (the IRS agreed to pay National Organization for Marriage $50,000 to settle that case in June of 2014). But the IRS has been trying to use this law to prevent having to disclose its abusive treatment of taxpayers.

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

Friday, April 24, 2015

The IRS Scandal, Day 715

IRS Logo 2Breitbart, Did John McCain Know about IRS Targeting?:

When the IRS scandal broke, Sen. John McCain sent out a press release claiming to be shocked at the news. But was he?

Three years’ of IRS e-mail evidence continues to build against the federal government. The most interesting and possibly disturbing piece of information deals with the fact that Republican Senator McCain and Democrat Senator Carl Levin were both aware of the targeting eleven days before Lerner’s public admission of “inappropriate” actions.

E-mails reveal that staffers from McCain’s office met with IRS personnel for six hours, 11 days before Lerner’s public admission of “inappropriate” actions. ...

This revelation served as chilling confirmation of a suspicion Tea Party groups had all along: they were under fire from both sides of the establishment in Washington, D.C. Republicans and Democrats worked together to crush their common enemy, actual conservatives. ...

[W]hat about that six hour meeting? McCain has some serious explaining to do about just how much he knew about the targeting at the IRS. He’s certainly had his differences with the Tea Party and conservative Republicans in the past. And his positions on free speech and political action have more in common with liberals who prefer a one-way street over the marketplace of ideas.

Maybe, just maybe, Senator McCain did not mind the IRS’ attempts to stifle the First Amendment rights of Tea Party citizens. Maybe his shock at Lerner’s revelation was just as fake as the outrage from the White House.

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April 24, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, April 23, 2015

House Report: IRS ‘Deliberately’ Cut Customer Service to Make Tax Season Painful for Taxpayers

House LogoHouse Ways & Means Committee Majority Staff Report, Doing Less With Less: IRS’s Spending Decisions Harm Taxpayers (Apr. 22, 2015):

During the 2015 tax-filing season, the IRS provided what its own Commissioner described as “abysmal” customer service, blaming skyrocketing wait times for telephone and in-person assistance on agency budget cuts. The IRS even called budget cuts “a tax cut for tax cheats.” But a close review of the agency’s spending shows the IRS deliberately cut $134 million in funding for customer service to pay for other activities. Spending decisions entirely under the IRS’s control led to 16 million fewer taxpayers receiving IRS assistance this filling season. Other spending choices, including prioritizing employee bonuses and union activity on the taxpayer’s dime, used up resources that otherwise could have been used to assist another 10 million taxpayers.

The IRS’s spending choices and mismanagement of resources raise serious questions about the nature and extent of the agency’s self-described budget crisis and its commitment to serving the taxpayer.

Press and blogosphere coverage:

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April 23, 2015 in Congressional News, IRS News, Tax | Permalink | Comments (9)

The IRS Scandal, Day 714

IRS Logo 2Forbes, Before IRS Targeting, Lois Lerner Targeted At Federal Election Commission, by Robert W. Wood:

The IRS audits, sends bills, imposes penalties, files liens and levies. Yet incredibly, most of the money the IRS collects is self-assessed. We all fill out tax returns and voluntarily send in money. How much we believe in the system is critical to making it work. Sure, part of the reason we comply is our fear that we’ll be viewed as willful risking jail if we don’t. But there may be a correlation between how much people cheat and their faith that the tax system is impartial. That’s one reason the state of the IRS is so terribly important.

It is hard to believe that the IRS scandal is on day 711. More than two years on, we know that Lois Lerner got a pass on prosecution. She even got nice bonuses. And it seems clear that nothing more will happen. Democrats say that is as it should be, since as President Obama remarked that there is not even a smidgen of corruption at the IRS. But Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-IL) spoke in support of Congressman Jim Renacci’s (R-OH) Prevent Targeting at the IRS Act, which passed unanimously along with several other measures to rein in the IRS. Rep. Roskam called the targeting insidious and poisonous. ...

There is arguably no part of the government more important than our tax system. Our country cannot exist without it. Our tax code and how we administer it could be improved. Yet it is still a system with integrity, one that is administered mostly on the honor system. IRS employees deserve better than the black eye they are getting over this mess. American taxpayers deserve better too.

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April 23, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Wednesday, April 22, 2015

The IRS Scandal, Day 713

IRS Logo 2News Max, IRS Tea Party-Targeting Scandal Continues:

If the tea party and other conservative groups had been fully active in the critical months leading up to the 2012 election, would Mitt Romney be president today? The public will, of course, never know for certain.

Thanks to Judicial Watch, however, the American people do now know the Internal Revenue Service (IRS) targeted right-leaning organizations applying for tax-exempt status and prevented them from having their voice heard during that period. ...

In their lawsuit, Judicial Watch is asking the courts to order the IRS to do the following:

  • Conduct a search for any and all records responsive to (Judicial Watch’s) FOIA requests.
  • Produce, by a certain date, any and all nonexempt records responsive to (Judicial Watch’s) FOIA requests and a Vaughn index of any responsive records withheld under claim of exemption.
  • Enjoin the [RS from continuing to withhold any and all non-exempt records responsive to the plaintiff’s FOIA requests.

This targeting of donors and other right-leaning groups is intriguing in light of a new Lerner email Judicial Watch just released.

The email discloses that the IRS audited tax-exempt political groups using a separate investigation arm (under Lerner’s control), the Review of Operations Unit. Lerner wrote: "Also, we often use the ROO [Review of Operations Unit] to do initial research. Before starting audits — they don’t touch taxpayers, but can look at publicly available info about orgs."

These documents should dispel any remaining doubt that the Obama administration used tea party applications to do opposition research on individual citizens and groups opposed to President Obama’s policies.

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

Tuesday, April 21, 2015

The IRS Scandal, Day 712

IRS Logo 2National Review, The IRS Assures an Atheist Group It Will Monitor Churches:

It was bad enough, as I wrote here last August, that the Internal Revenue Service appeared to reach an agreement to monitor the pulpits of ill-favored churches. What’s worse is that the IRS, directly counter to Freedom of Information Act (FOIA) requirements, steadfastly has refused to make public key documents pertaining to that decision.

So the IRS, acting with the whole power of government behind it, seems to be saying it can monitor and presumably punish churches for the content of their sermons, but the churches can’t know exactly if, how, and why they are being monitored.

To fight this combined assault on religious liberty and on government transparency, conservative legal stalwarts Alliance Defending Freedom (ADF) and Judicial Watch together filed suit April 9 to force release of the IRS documents. ADF asserts that the IRS already has shared the documents with the atheist Freedom From Religion Foundation (FFRF). Once again, the IRS bends over backwards on behalf of leftists while harassing and ignoring the rights, on multiple levels, of conservative groups or faith communities.

And if the IRS continues to flout FOIA, we ought to treat its obstinacy as a major scandal. Then again, the IRS’s connivance with FFRF is itself a scandalous and deliberate trampling of our founding freedom of religious exercise and expression, guaranteed by the First Amendment.

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April 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, April 20, 2015

The IRS Scandal, Day 711

IRS Logo 2Charleston Post and Courier editorial, Lack of Transparency a Continuing Scandal:

Hillary Clinton’s disclosure that she used her own email system for official and private business while Secretary of State and has wiped clean its server, after delivering print-outs to the State Department that she and her staff selected, is one more reminder that “the most transparent administration” ever still maintains large walls of darkness around sensitive subjects.

The Justice Department recently bolstered that sad truth when it declined to bring charges of contempt of Congress against former Internal Revenue Service official Lois Lerner.

That means Ms. Lerner can’t be compelled to tell Congress and the public about her role and motives while on the public payroll in supervising an IRS witch-hunt of “Tea Party” and other conservative groups seeking tax-exempt status in the 2011-2012 election cycle. ...

We are left to wonder who at the IRS knew about the crackdown on conservative, but not liberal, groups. Were there higher ups who wanted to tilt the political playing field against conservative candidates?

A reported 298 conservative groups were targeted. U.S. District Court Judge Susan Dlott recently ruled, over the objection of the Justice Department, that the Internal Revenue Service must turn over a list of their names to litigants who want to bring a class-action suit against the government for violating their First and Fifth Amendment rights as well as pertinent federal law.

So the public yet should get some additional information on this scandal from an unwilling administration.

Just over six weeks ago the inspector general for the IRS reported that it was looking into criminal activity by the agency in falsely reporting to Congress that it could not recover Ms. Lerner’s emails because of computer failure and the lack of backup tapes. The IG reported that his office found the backup tapes with little trouble.

That report let a bit of light into the dark subject of the politicization of the revenue service, but the relentless back-checking by the IRS and the Justice Department, like the possibly illegal destruction of records by Mrs. Clinton, will make it hard to learn what happened before the next presidential election is over.

As for the president’s promise that his administration would be the most transparent in history, it is well to remember the advice given by Richard Nixon’s Attorney General John Mitchell on how to evaluate that administration:

“Watch what we do, not what we say.”

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

Sunday, April 19, 2015

The IRS Scandal, Day 710

IRS Logo 2Breitbart, IRS: Mistakes Were Made:

Judicial Watch has just released a new batch of documents forced out of the IRS that show the Obama administration’s scandalous misuse of the IRS to target Tea Party and other conservatives goes far deeper than realized.

Included in the new batch of documents is a February 2012 email from Lois Lerner, who was then head of the IRS’ Exempt Organizations Branch, asking that a special program be set up to “put together some training points to help [IRS staffers] understand the potential pitfalls” of revealing too much information to Congress. Amid the hundreds of released pages, Judicial Watch also found a remarkable Lerner email from 2013 in which she says she is willing to take the blame for not having provided sufficient direction to her underlings on how best to investigate the targeted groups, and then concedes that she “understands why the IRS criteria” leading to targeting of Tea Party groups and other opponents of President Obama “might raise questions.”

In May 2013, the Treasury Inspector General for Tax Administration (TIGTA) released an audit revealing the IRS had used “inappropriate criteria” to identify potential political cases. “Early in Calendar Year 2010,” TIGTA wrote, “the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status to (e.g., lists of past and future donors).” The illegal IRS reviews continued for more than 18 months and, TIGTA reported, “delayed processing of targeted groups’ applications” preparing for the 2012 presidential election.”

Not so coincidentally, during this period of time, Lerner emailed former Director of the Office of Rulings and Agreements Holly Paz, attempting to limit information provided by the IRS to Congress about non-profit classifications. ...

Should Mitch McConnell lead Republicans and Democrats in requiring the appointment of a special counsel for Lynch (or, preferably, a better nominee) to get a vote on the floor of the U.S. Senate? Concerned citizens should let McConnell and other Senate representatives know what they think. McConnell’s office can be reached at 202-224-3121.

In the meantime, Judicial Watch will keep on doing what Justice and Congress won’t. There is more to come. The watchdog currently has thousands more internal IRS documents under review, several other lawsuits and more leads that are keeping the organization working at full capacity. The fight for transparency and accountability is too important to let up now.

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April 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, April 18, 2015

IRS Budget Cuts: Tax Administration v. Tax Handouts

Chris Edwards (Cato Institute), IRS Budget Cuts and Tax Filing:

For taxpayers needing IRS help, this year’s filing season could be a nightmare. The Washington Post today reports on the long lines at IRS offices. The newspaper suggests that five years of Republican budget cuts are to blame, even though Democrats control the White House and, until recently, the Senate. But, whoever is at fault, the IRS commissioner is correct that his agency’s service is “abysmal.”

Let’s take a closer look at those alleged budget cuts. Using data from the OMB budget database, I split total IRS outlays into two activities: administration and handouts. Administration includes tax return processing, taxpayer help, enforcement, and other bureaucratic functions. Handouts are mainly refundable tax credits, particularly the earned income tax credit, child credit, and Obamacare exchange subsidies, which began in 2014.

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

The IRS Scandal, Day 709

IRS Logo 2Letter From Charles Grassley (Chair, Senate Judiciary Committee) to Sally Yates (Acting Deputy Attorney General) and J. Russell George (Treasury Inspector General for Tax Administration) (Apr. 15, 2015):

I am writing in regard to the ongoing criminal investigation into the alleged misconduct by Internal Revenue Service personnel, including Ms. Lois Lerner, in connection with their handling of applications for tax-exempt status by certain conservative organizations. In May of 2013, Attorney General Holder announced that he had ordered the investigation. In January of 2014, the Wall Street Journal, citing unnamed law-enforcement officials, reported that the FBI did not at that time plan to file any criminal charges as a result of the investigation, but noted that the case was ongoing and would likely remain open for months.

On November 3, 2014, the Department of Justice filed a sworn declaration by Mr. Nelson D. Hermilla, an official in the Department’s Civil Rights Division, in a civil case in the U.S. District Court for the District of Columbia. In that declaration, Mr. Hermilla stated that the Justice Department “is currently conducting” the investigation of alleged IRS misconduct, further stating:

The investigation is being conducted by career attorneys in the Civil Rights Division and the Public Integrity Section of the Criminal Division, as well as agents from the Federal Bureau of Investigation and the Treasury Inspector General for Tax Administration.”

In order to evaluate the extent to which your organizations are actively investigating this issue, please provide written answers to the following questions by May 15, 2015:

1. Since January of 2014, who has been assigned to the investigation from each of the offices cited in Mr. Hermilla’s declaration?

2. When were they assigned, and by whom?

3. How many hours has each attorney or agent identified above worked on the investigation since being assigned to it? How many hours since January of 2014?

4. Prior to being assigned to this investigation, had any of these assigned attorneys or agents previously had contact with any of the IRS employees or offices under investigation? If so, please provide a detailed explanation of the nature and extent of the prior contacts.

5. Has a litigation hold or other preservation effort been instituted to ensure that all potentially relevant parties preserve all possible evidence, including electronically stored information that could otherwise be damaged or erased absent such preservation efforts? If so, please provide a copy. If not, please explain why not.

If you have any questions about this request, feel free to contact Patrick Davis of my Committee staff at (202) 224-5225. Thank you for your attention to this important matter.

Forbes, IRS Targeting Investigation Is Probed By Senator Grassley, by Robert W. Wood:

Without hyperbole, Sen Grassley ask logical questions and is entitled to some answers:

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April 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, April 17, 2015

The IRS Scandal, Day 708

IRS Logo 2Wall Street Journal editorial, How Lois Lerner Got a Pass: The Prosecutor Absolved the IRS Witness on His Last Day on the Job:

If Americans know anything about the IRS it’s that it accepts no excuses, and so they trudged wearily on Wednesday to pay their taxes. That’s in notable contrast to the free passes that keep flowing to the tax agency’s most famous former employee, Lois Lerner.

The Obama Administration’s latest gift to the former IRS tax-exempt chief came recently when U.S. Attorney for the District of Columbia Ron Machen informed the House of Representatives that he would not file charges on its formal contempt citation against Ms. Lerner. This absolution, which shields Ms. Lerner from a grand jury probe, came on Mr. Machen’s final day on the job.

To review: Ms. Lerner was summoned to the House on May 22, 2013, to answer questions about her role in the IRS’s politically biased review of Tea Party nonprofit group applications for tax-exempt status.

She began her testimony with a statement recounting her career, reprising the scandal and proclaiming her innocence. She ended by saying: “I have not done anything wrong. I have not broken any laws, I have not violated any IRS rules or regulations, and I have not provided false information to this or any other congressional committee.” Only after she offered this long defense did she claim her right not to incriminate herself by citing the Fifth Amendment, refusing to answer questions.

House lawyers determined that, in making that statement, Ms. Lerner had forfeited her right to remain silent. The House on May 7, 2014 held her in contempt of Congress and sent the citation to Mr. Machen.

The law clearly explains that the U.S. Attorney’s only “duty” “shall be” to “bring the matter before the grand jury for its action.” Mr. Machen instead sat on the contempt citation for 11 months, and on March 31 sent Speaker John Boehner a letter explaining he’d unilaterally decided not to investigate Ms. Lerner.

According to Mr. Machen’s rationale, Ms. Lerner’s statement made only “general claims of innocence” that did not forfeit her Fifth Amendment rights to refuse to answer questions. To reach this conclusion, Mr. Machen had to willfully ignore that Ms. Lerner, in her statement, rebutted specific accusations against her.

“[M]embers of this committee have accused me of providing false information when I responded to questions about the IRS processing of applications for tax exemption,” she said, before claiming she had never done so. Those accusations had been detailed to her in a letter from former House Oversight Committee Chairman Darrel Issa, eight days before she testified.

Mr. Machen also had to ignore that Ms. Lerner had prior to her House appearance voluntarily met for an interview with Justice prosecutors. As the Heritage Foundation’s Hans von Spakovsky has noted, the D.C. Circuit Court of Appeals in its 1969 Ellis v. U.S. decision found that “once a witness has voluntarily spoken out, we do not see how his protected interest is jeopardized by testifying in a subsequent proceeding, provided he is not required to disclose matters of substance which are unknown to the Government.”

Since Ms. Lerner had already disclosed to the “government” (prosecutors), she lost her privilege to clam up before Congress. And we’d note that after her House stonewall, she again chose to speak in an interview with the Politico website. Ms. Lerner wants the right not to answer questions except when it suits her public-relations purposes.

In any event, the job of making these legal calls belonged to a grand jury—not Mr. Machen. Then again, this is the prosecutor who in an exit interview with the National Law Journal about his tenure touted his allegiance to Attorney General Eric Holder, describing him as a “tremendous mentor and a tremendous friend.”

After Mr. Machen’s performance in shielding Ms. Lerner from the consequences of her actions, Mr. Holder would no doubt return the compliment. The handling of the IRS scandal is a blot on both of their careers.

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

Thursday, April 16, 2015

The Mob Museum: The Treasury Department's Special Intelligence Unit

Mob MuseumThe Mob Museum Presents Follow The Money: The Unsung Intelligence Unit That Put Away Some Of The Most Notorious Mobsters:

Who put some of the most notorious mobsters behind bars? Many people don’t realize it was, in fact, the IRS. On Thursday, April 16 at 8 p.m., The Mob Museum, the National Museum of Organized Crime and Law Enforcement, presents its next installment in the Courtroom Conversations series, “Follow the Money: The Unsung Intelligence Unit That Brought Down the Mob.”

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April 16, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 707

IRS Logo 2Wall Street Journal, House Passes Package of Bills Aimed at Curbing IRS Abuses:

The House on Wednesday passed a package of bills aimed at preventing future abuses at the Internal Revenue Service, in the wake of a series of controversies at the agency.

The bills, which were largely noncontroversial, passed the House on voice votes, with support from some Democrats.

Despite the bipartisan agreement on Wednesday, the bills’ future in the Senate remains somewhat unclear, as there is ongoing partisan rancor over the IRS.

Republicans have been harshly critical of the IRS, particularly after an inspector general’s report in 2013 said agency officials had targeted dozens of tea party-type groups for intrusive scrutiny as they sought tax-exempt status, starting in 2010. That controversy in turn led to a series of other scandals, for example over how and why the agency had mishandled some confidential taxpayer information. ...

Democrats have acknowledged problems with some of the agency’s processes. But they have generally blamed bureaucratic incompetence, saying the agency wasn't motivated by political bias. ...

The bills passed on Wednesday were mostly narrow in focus. One would streamline the application process for nonprofit social-welfare groups seeking to become tax-exempt, effectively eliminating the IRS’s ability to hold up their applications indefinitely.

Another would make it a firing offense for an IRS official to target taxpayers for their political beliefs. Still another would clarify that gift taxes don’t apply to donations to social-welfare groups organized under section 501(c)(4). 

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April 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, April 15, 2015

Chodorow: What It Would Mean For The IRS If Scientists Defeat Mortality

WilliamsSlate, Death and Taxes: What It Would Mean for the IRS If Scientists Defeat Mortality, by Adam Chodorow (Arizona State):

It has long been said that the only things certain in life are death and taxes. If you still haven’t filed your taxes, or if you were hit with a big bill this year, the former might seem more appealing than the latter right now. However, the aphorism is death and taxes, not death or taxes. Even kicking the bucket cannot provide an escape.

But what if death isn’t so certain? How would that affect taxes? In a 2012 law review article titled “Death and Taxes and Zombies,” I considered the important question of whether those who die and come back as zombies should be considered dead for estate tax purposes. The answer to this question is important both for the government, which will need significant revenues to protect the living, and for individual taxpayers, who may be tempted to escape the estate tax by becoming zombies.

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April 15, 2015 in IRS News | Permalink | Comments (0)

Camp: Overlooked Costs of IRS Budget Cuts Will Hit Taxpayers Hardest

IRS Logo 2Bryan Camp (Texas Tech), Overlooked Costs of IRS Budget Cuts Will Hit Taxpayers Hardest:

The Internal Revenue Service takes a lot of hits, both from those who are paid to be critics like the National Taxpayer Advocate and from those who just pile on for the fun of it – politicians, pundits and the public.

The nastiest hit has come from Congress in the form of relentless budget cuts for the past five years. While there has been a fair bit of commentary on the effect of these cuts, commentators have missed two important points: (1) the cuts are deeper than most people think, and (2) their effect is both more subtle and insidious.

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April 15, 2015 in IRS News | Permalink | Comments (2)

Tuesday, April 14, 2015

The IRS Scandal, Day 705

IRS Logo 2Letter From Orrin Hatch (Chair, Senate Finance Committee) to John Koskinen (Commissioner, IRS) (Apr. 13, 2015):

At a recent Senate Finance Committee hearing, I noted the long, historic relationship of the Internal Revenue Service and the Senate Finance Committee. The challenges of the IRS in the coming years will be great, as your agency struggles with the implementation of new federal programs and doing more with limited resources. The next chapter in our relationship is a critical one, and I hope a good one, but as I noted at the hearing, that is ultimately up to you.

I also warned that attempts to limit political speech through the tax code would not be tolerated, and would only serve to “further entangle your agency in political debate and controversy.” Two years ago, your agency put forth proposed regulations that would upend half-century-old rules regarding get out the vote drives, voter registration, and other activities by tax exempt organizations. This rule was withdrawn after intense opposition across the political spectrum. You recently announced that the IRS would seek to broaden the rule, restricting the speech and activities of an even wider range of tax exempt organizations. You are starting down a very dangerous road.

You have explained that this attempt to restrict the rights of groups to organize and speak out was in response to the IRS’s targeting of conservative groups and 2013 recommendations by the Inspector General. You have also explained that new rules were necessary to prevent further targeting. Both claims are false.

Congressional investigations have established that the Treasury Department began work on the proposal in 2011, long before the Inspector General’s recommendations and during the height of the political targeting, rather than in response to it. Furthermore, interviews with front-line IRS employees established that those workers were processing applications from conservative groups in a timely fashion and without difficulty, until political officials in Washington, DC intervened. The problem was not the rules governing tax exempt entities – the problem was officials at IRS and Treasury Department headquarters further involving your agency into the political speech of Americans across the country. Rather than preventing further targeting, the new proposal – should you proceed with it – will be the systemization of targeting through law.

As it is, the IRS faces seemingly insurmountable challenges in implementing the President’s health care overhaul and the Foreign Account Tax Compliance Act with limited resources. The IRS is just beginning to recover its reputation, and your agency is just beginning to regain trust from lawmakers. Do not throw all of that away in a quixotic and bizarre mission to regulate the political activity of Americans. If you do so, in light of your agency’s recent history, your actions will be viewed with the presumption of political bias and bad faith. If you issue this proposed rule, Congress will have no choice but to investigate the reasons behind this power grab, be it political motivation or orders from officials at the Treasury Department or the White House. To that end, and in anticipation of the Administration moving ahead on this issue, I ask that you begin putting in place document retention policies for all documents and communication related to your agency’s work regarding these proposals. This retention should include, but is not limited to, all handwritten notes, memoranda, and electronic communication on the matter.

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April 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, April 13, 2015

WaPo Fact Checker: Who Wrote the 'IRS Code'?

WaPo Fact CheckerWashington Post Fact Checker, Who Wrote the ‘IRS Code’? Hint: It Wasn’t the Internal Revenue Service:

On tax reform, we, right now, have more words in the IRS code than there are in the Bible — not a one of them as good.
–Sen. Ted Cruz (R-Texas), speech at International Association of Fire Fighters legislative conference, March 10, 2015

The Fact Checker previously wrote that Cruz’s comparison was ultimately meaningless — not worthy of a Geppetto Checkmark nor a Pinocchio — because saying one piece of text has more words than another doesn’t really tell you anything. A lot of readers responded to us via e-mail and social media — some critical, some appreciative and a few amused.

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April 13, 2015 in Congressional News, IRS News, Tax | Permalink | Comments (3)

John Oliver and Michael Bolton Defend The IRS

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

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April 13, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 704

IRS Logo 2CNS News, Lerner Email Warned IRS Employees of Emails That ‘Can Be Seen By Congress’:

Lois Lerner, former director of the Exempt Organizations Unit at the Internal Revenue Service (IRS), warned other IRS officials that lower-level employees “are not as sensitive as we are to the fact that anything we write can be public--or at least be seen by Congress,” according to documents obtained by Judicial Watch and released on Thursday.

In the latest batch of documents the IRS released to Judicial Watch under the Freedom of Information Act (FOIA), which the agency heavily redacted before handing over, Lerner proposed training to help IRS employees “understand the pitfalls” of discussing “specific Congress people, practitioners and political parties” in emails that could be "seen by Congress" or the public.

“We are all a bit concerned about the mention of specific Congress people, practitioners and political parties. Our filed folks are not as sensitive as we are to the fact that anything we write can be public--or at least be seen by Congress,” Lerner wrote in an email to Holly Paz, former director of the IRS Office of Rulings and Agreements, on Feb. 16, 2012.

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April 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, April 12, 2015

The IRS Scandal, Day 703

IRS Logo 2Washington Examiner, Lerner Pushed Treasury Watchdog to Back Off 'Targeting' Charge in Probe:

Former IRS senior executive Lois Lerner appeared to be pressuring Treasury Department inspector general investigators to back off their conclusion that the federal tax agency had improperly targeted conservative and Tea Party nonprofit tax exemption applicants.

In an email on Jan. 31, 2013, Lerner encouraged Troy Patterson of the Treasury Inspector General for Tax Administration to back off of his investigators' view that the tax agency was targeting political groups for excessive attention.

"We feel your folks are being too narrow in their view and have decided that because of the language on the earlier BOLO list regarding Tea Party, everything that followed was tainted. They seem to believe that if a case was initially sent to the advocacy group, but ultimately determined to be an approval, that our action in putting it into the advocacy group in the first place is incorrect, and illustrates 'targeting,'" she said.

"BOLO" was the tax agency's abbreviation for categories of nonprofit applicants to "be on the lookout" for as they were received.

PJ Media, Lerner Email Shows Attempt to Pressure IG Conclusions in IRS Targeting Scandal:

About 5 months before former director of the IRS exempt division Lois Lerner casually let slip the revelation that her department had been targeting conservative organizations for special scrutiny, she sent an email to the inspector general investigating the matter, accusing the IG of being “too narrow” in their scope of the targeting investigation, claiming that she was just doing her job.

It is unusual for the subject of an investigation to plead their case so directly with the inspector general. But the email also shows that Lerner was well aware of the problems in her office with targeting and was looking for a break from the IG in reaching his conclusions.

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April 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, April 11, 2015

The IRS Scandal, Day 702

IRS Logo 2The Blaze, ‘America Is Fed Up’: GOP Schedules Votes on Major IRS Reforms Next Week:

The House next week is expected to pass several bills aimed at reforming the IRS, in

particular the way the IRS handles applications for groups seeking tax-exempt status.

That issue has been highly controversial since it was revealed that the IRS applied extra scrutiny to conservative groups seeking tax-exempt status just before the 2012 election. The resulting scandal forced former IRS official Lois Lerner to leave the agency, although Lerner has so far dodged any punishment for her role.

For example, the Justice Department just said it won’t prosecute Lerner for her decision not to testify before Congress about her actions in the targeting scandal.

GOP leaders say the IRS needs real reform, and quickly, to ensure it doesn’t become a political weapon for whichever party runs the executive branch.

“The IRS has maliciously targeted individuals and groups simply because of their personal beliefs,” House Majority Leader Kevin McCarthy (R-Calif.) told his colleagues on Thursday. “The current system is unfair and America is fed up.”

Three of the bills up next week deal with the targeting scandal. One of these, from Rep. George Holding (R-N.C.), would try to to ensure the IRS can no longer play politics with tax exempt applications by allowing groups to declare tax-exempt status on their own, without having to wait for the IRS.

Another from Rep. Jim Renacci (R-Ohio) calls for the firing of any IRS worker that delays their tasks for political reasons, such as slow-walking the tax-exempt status of a political group. And the third, from Rep. Pat Meehan (R-Pa.), would require the Treasury Department to issue regulations allowing groups to appeal decisions by the IRS not to grant them tax-exempt status.

The bills are being considered long after the targeting scandal broke, which shows a lingering resentment among conservatives, and a feeling that reforms are still needed at the tax collection agency. Just last month, some Republicans accused the IRS of quietly working to undo some of the reforms Congress has tried to impose on it, by putting forward a budget plan that doesn’t include language related to ending the political targeting of tax-exempt groups.

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April 11, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Friday, April 10, 2015

The IRS Scandal, Day 701

IRS Logo 2Judicial Watch Press Release, IRS Documents Reveal Lerner Knew Targeting Criteria of Nonprofit Groups ‘Might Raise Questions’:

Judicial Watch today released a new batch of Internal Revenue Service (IRS) documents, including an email from former IRS official Lois Lerner in February 2012 asking that a program be set up to “put together some training points to help them [IRS staffers] understand the potential pitfalls” of revealing too much information to Congress.  The documents also contain a Lerner email from 2013 in which she says she is willing to take the blame on some aspects of the scandal.  She also indicates that she “understands why the IRS criteria” leading to the targeting of Tea Party and other opponents of the President Obama “might raise questions.”

The documents were released under court order in one of the Judicial Watch’s ongoing Freedom of Information Act (FOIA) lawsuits about the Obama IRS’ abuses (Judicial Watch v. IRS (No. 1:13-cv-1559).

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April 10, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, April 9, 2015

NY Times: IRS Shortcut to Tax-Exempt Status Is Under Fire

1023 2New York Times, IRS Shortcut to Tax-Exempt Status Is Under Fire:

Battered by a scandal over delays in approving groups for tax-exempt status and plagued by a backlog tens of thousands of cases long, the Internal Revenue Service unveiled a strikingly stripped-down online application last year to speed the process.

But to critics, the I.R.S.’s version of “don’t ask, don’t tell” is fraught with problems. An unlikely coalition of tax lawyers, state enforcement agents and even many nonprofits that favor simpler rules say that the agency — by not asking any questions about governance, conflicts of interest or function, and saying applicants don’t have to reveal any such issues — is making it too easy to commit fraud.

The form, 1023-EZ, was introduced over the summer and is available to small charities with an annual income of $50,000 or less and assets under $250,000. Instead of wrestling with a painstaking 26-page application that demands extensive documentation, these groups can now fill out a two-and-a-half page checklist that requires no additional paperwork or even a statement of purpose. ...

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April 9, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 700

IRS Logo 2Philip T. Hackney (LSU), Should the IRS Never 'Target' Taxpayers? An Examination of the IRS Tea Party Affair, 49 Val. U. L. Rev. ___ (2015):

In 2013, the Treasury Inspector General for Tax Administration faulted the Internal Revenue Service for the appearance of impartiality because it used names and policy positions such as “Tea Party” and conservative ideology to pick applications for tax-exempt status for greater scrutiny. The Inspector General's review came after members of Congress accused the Service of "targeting" conservative organizations. This Article finds the Inspector General's claim lacks a firm foundation. The use of names to select organizations for closer review fits well within the discretionary space that both Congress and courts provide to the Service to collect revenue. However, a narrower legal and ethical claim is supportable: where an enforcement choice impinges on a fundamental constitutional right the Service should exercise a higher degree of care to ensure that its screening choices do not appear biased in an unconstitutional manner. Thus, this review finds the Inspector General's primary claim regarding it being inappropriate to use names to screen applications to be incorrect. However, it finds that the Service violated an ethical norm because it failed to bring a high level of care to a matter that at least impinged on a fundamental Constitutional right. The Article recommends that the Service continue using names to screen applications for tax-exempt status. However, the Article suggests the Service implement procedures to document an unbiased process when evaluating applications that raise questions of a fundamental Constitutional nature.

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April 9, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, April 8, 2015

IRS Workers Are Miserable and Overwhelmed

Bloomberg, An Emotional Audit: IRS Workers Are Miserable and Overwhelmed:

Paying taxes to the IRS is no fun. Neither is working there.

The IRS has never been an easy place to work. Its 84,000 employees, 65 percent of them women, generally don’t tell people outside the service where they draw a paycheck. It’s no way to make friends. They toil in purposely anonymous buildings—a big sign outside might attract crazies. In 2010 an antigovernment zealot flew a single-engine plane into a building in Austin, Texas, where 190 agency employees worked, killing one of them. “Well, Mr. Big Brother I.R.S. man, let’s try something different, take my pound of flesh and sleep well,” the pilot, Joseph Stack III, wrote in a six-page suicide note.

More recently, the IRS has become a casualty of the budget battles between the Obama White House and House Republicans. Since the GOP won control of the chamber in 2010, the agency’s annual budget has fallen by $1.2 billion, to $10.9 billion in 2015. Meanwhile, the agency has lost 11 percent of its employees. Last year it started 19 percent fewer criminal investigations than 2013. This year alone, it expects to close at least 46,000 fewer audits. Nobody likes being scrutinized by the IRS, but audits are a key component of the tax system that keeps the U.S. afloat. “It’s core to the country,” says Jeffery Trinca, a former Senate aide turned lobbyist who specializes in tax policy.

The agency’s customer service operation has been hobbled, too. In late March, the IRS said fewer than 40 percent of the people who call during this tax season will get through to someone. A decade ago, the figure was 83 percent. The agency is so short on funds that some employees purchase their own office supplies, even though the IRS says they shouldn’t. “I buy my own pens,” says Catherine Ficco, a revenue officer in West Nyack, N.Y. “I buy my own clips and hole punchers and things of that nature. It’s not uncommon. There’s no money to order supplies or paper for my printer.”

Bloomberg

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April 8, 2015 in IRS News, Tax | Permalink | Comments (28)

The IRS Scandal, Day 699

GroverNews Max, Grover Norquist: IRS 'Kneecapped' Tea Party for Obama in 2012:

The IRS stole the 2012 presidential election with its ruthless targeting of the tea party, an order that came from President Barack Obama himself, Grover Norquist, president of Americans for Tax Reform, tells Newsmax TV.

Norquist — author of the new book End the IRS Before It Ends Us: How to Restore a Low Tax, High Growth, Wealthy America — said the agency dramatically slowed the tea party movement's growth when it questioned the validity of their tax-exempt status.

"That the attack on the tea party in 2011 and 2012 actually made sure that Obama got re-elected," Norquist said Tuesday on "The Steve Malzberg Show" on Newsmax TV. "They kneecapped the growing tea party movement, slowed it down, scattered it. ...

"The president said out loud, would somebody please get these people for me? And we saw Lois Lerner say, I'm being told and yelled at to do this even though I'm not legally allowed to," Norquist said.

"The president was saying it out loud, the Democrats in the Senate were saying it out loud on television, on radio. They sent her to go after the tea party and they damaged the tea party. They kneecapped a growing movement."

Washington Examiner, Norquist Book: IRS Assault on Tea Party Saved Obama's Presidency:

The administration-ordered persecution of Tea Party groups shut down the movement in time to save President Obama's reelection and starve Republican Mitt Romney of the 4,262,296 votes needed to take the White House, according to an explosive new book from tax foe Grover Norquist.

In End The IRS Before It Ends Us, a clarion call for a new, fairer tax system, Norquist pieces together the IRS scandal and scholarly electoral studies to show that plot worked to stifle the expanding Tea Party movement in the nick of time to help Obama.

"Had the Tea Party repeated and built on their activism of 2009 and 2010 in 2011 and 2012, Obama would have lost the election. What happened to the Tea Party boost? It didn't grow from 2010. It appeared to weaken," writes Norquist, president of the influential Americans for Tax Reform.

But, he adds, "The Tea Party didn't fall down the stairs. It was pushed."

His theory is built on two key facts.

First, he cited a study on the Tea Party movement that found it pushed up to 5.8 million extra Republican voters to the polls in 2010 when the GOP took control of the House, essentially shutting down Obama's agenda.

Then he cites comments in official reports from former IRS executive Lois Lerner, the key figure in the scandal, who said that she received orders in advance of Obama's reelection to "do something" to shut off conservative funding in the wake of the Supreme Court's Citizens United decision. ...

"In our modern kneecapping, President Obama was Tonya Harding," scoffed Norquist. "The American people who had voted strongly in 2010 and threatened the president's chances of winning in 2010 were Nancy Kerrigan," he added. ...

"In the two years running up to the 2012 Obama re-election campaign, the IRS, driven by a political activist with no experience that would recommend her for that job, decided to smash the Tea Party movement by stopping them from organizing," Norquist concludes.

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April 8, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, April 7, 2015

The IRS Scandal, Day 698

IRS Logo 2Forbes, Despite Lois Lerner Pass, Judge Orders IRS To Release Key Target List Administration Blocked, by Robert W. Wood:

A federal judge, Judge Susan J. Dlott—ironically in Cincinnati, where the Obama administration’s first bumbling explanation for targeting was “rogue IRS agents”—has ordered the IRS to produce a list of all 298 conservative nonprofits the IRS targeted. ‘Huh, what targeting?’ one can imagine Justice Department officials mumbling. Mr. Obama’s Justice Department fought to keep the list private despite promises his would be the most transparent administration ever.

The lawsuit by conservative groups could end up certified as a class action for violating their constitutional right to equal treatment. The judge determined that the litigants were entitled to know so the judge ordered the IRS to release the list of targeted Tea Party groups. If the judge also certifies the case as a class action, the disclosures could be broader still.

The timing is propitious, coming just as Targeter in Chief Lois Lerner was exonerated by the Obama administration. It has confirmed in a tortured seven-page letter that there will be no criminal charges for Lois Lerner. Meanwhile, controversial IRS Commissioner John Koskinen recently claimed that the changes at the IRS are so significant that “you could hang a sign out at the front of the headquarters saying ‘Under New Management.’” That’s right, any alleged targeting was in the past. ...

On February 26, 2015, the Treasury Inspector General said he is investigating possible criminal activity at the IRS. Remember all the millions and millions in taxpayer money spent looking? One report said over 250 IRS employees spend 100,000 hours, costing taxpayers at least $14 million. IRS Commissioner John Koskinen testified that recovery efforts had been thorough, and the tapes and emails couldn’t be found.

Yet the Inspector General now reports that the IRS had not even asked for the backup tapes when the ‘hard drive crash’ excuse was first used. The tapes were easy to find and the emails were easy to recover. It is astounding, and yet Democrats still pooh-pooh the targeting and imply it is the fault of the conservative groups in the first place. ...

[N]ow Judge Susan J. Dlott has said that Tea Party groups can pursue their claims that the IRS violated their First and Fifth Amendment rights, along with a section of federal law that prohibits the government from releasing private information contained in tax returns. The lawsuit wants a list of ‘all dissenting groups targeted for additional scrutiny by the IRS from January 20, 2009, through July 15, 2013.’ The court said this information was “directly related to the issue of class certification in this federal court proceeding.”

Some names on the list will be no surprise, as a partial list was unearthed by USA Today in September 2013. An IRS spreadsheet characterized the activities of some groups as “propaganda.” Judge Dlott ordered the IRS to tell the court whether or not that list was authentic, The Washington Times reported. It sad to see the IRS used for political purposes, and sad to see the endless difficulty private parties and Congress have had getting answers. Perhaps that will change.

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April 7, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, April 6, 2015

Scamming the IRS With Losing Lottery Tickets

IRSThe Daily Beast, Scamming the IRS With Losing Lotto Tix:

Here’s one way to dodge the taxman—buy thousands of losing lottery tickets.

It’s true. Gamblers have concocted a scheme to repurpose the dud ducats to offset their winnings. A winner can go online and get $5,000 worth of losing lottery tickets to cover their $5,000 in gambling winnings. The lottery tickets serve as a sort of security blanket if the auditor comes calling.

Ads captured on Craigslist and eBay from Florida to California hawk the tickets so the potential lotto buyer can defraud Uncle Sam. ...

“There is a gray market out there for these lottery tickets,” said Reece Morrel Jr., an Oklahoma-based CPA who files taxes for some high rollers and oversees the online Lady Luck Diary website, where gamblers can get schooled on tax laws.

But hoarding stacks of scratchers or Powerball game tickets to prove that you suffered losses could very well land you in trouble with the IRS. ...

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April 6, 2015 in IRS News, Tax | Permalink | Comments (3)

The IRS Scandal, Day 697

IRS Logo 2Legal Insurrection, Judge Orders IRS to Release Tea Party Target List:

If Bush had done this to liberals, people would be in jail by now.

The Department of Justice may have let Lois Lerner off the hook, but a judge has ordered the IRS to release the names of the Tea Party groups that were singled out for scrutiny. ..

I still enjoy wondering how different this would be if it happened on Bush’s watch. Do you think the media might be more interested?

Hot Air, Judge Orders IRS to Release List of Targeted Conservative Nonprofit Groups:

Lois Lerner didn’t care to speak when she was invited for tea before congressional committees, and it turns out that no charges will be filed against her over her shyness. But that may not be the end of the story for the IRS scandal. A judge in Ohio has consented to a request filed by representatives of several Tea Party groups which calls for the IRS to turn over the full list of conservative groups selected for extra special scrutiny when they filed for nonprofit status. ...

There are several layers to this particular onion. The White House fought back from day one against any such disclosures, saying that releasing the requested information would require exposing private data which the IRS is forbidden to reveal. But that’s only intended to protect individuals, businesses and groups from having all the particulars about their internal business exposed, not the simple fact that they exist and pay taxes. In this suit, rather than asking for all of the numbers, the IRS is simply being asked to provide a spreadsheet containing the identities of the groups under scrutiny. The judge agreed that the case couldn’t be decided without that bare minimum data.

More interesting are the possibilities which follow if the data finally comes to light. If the groups can establish that they all fall under the same umbrella of potential discrimination, they can be bound together in a class action suit. This opens up a range of possibilities, including the hope that the secretive agency will be forced to expose their practices to the public.

Exit question: The Feds are, at this point, refusing to go after Lerner. If this suit succeeds and all of the internal workings of the system are brought to light, including how they selected the groups singled out for “special attention” in the application process, is there another bite at the apple in the offing? Could Lerner wind up back before Congress? And if so, will she just plead the 5th again?

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April 6, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, April 5, 2015

The IRS Scandal, Day 696

IRS Logo 2National Review, Making the Lois Lerner Problem Disappear, by Hans von Spakovsky:

On March 31, Ronald Machen, the outgoing U.S. attorney for the District of Columbia, wrote House Speaker John Boehner to inform him that the Justice Department would not present Lois Lerner’s contempt citation to a federal grand jury.

The letter explaining his decision is an exercise in misdirection—the kind of misdirection that magicians use to fool an audience. Why? Because at no point in his detailed, seven-page legal analysis does Machen mention the most important point demonstrating that Lerner did, in fact, waive her Fifth Amendment right. ...

In the March 31 letter, although acknowledging that the House Committee found that Lerner’s “opening statement was the equivalent of ‘voluntary’ testimony,” Machen concludes that, in declaring her innocence, Lerner did not waive her Fifth Amendment privilege because “case law establishes that Ms. Lerner’s general denials of wrongdoing did not amount to ‘testimony’ about the actual facts under the Committee’s review.”

Having decided that Lerner did not waive her Fifth Amendment privilege, Machen goes on to claim that it is within his discretion not to present the House’s May 7 contempt citation to a federal grand jury. He bases that claim on his reading of a 1984 legal opinion from the Justice Department’s Office of Legal Counsel. That despite the federal law, which provides that, once the House of Representatives has voted to find a witness in contempt, the speaker of the House must certify the matter to the “appropriate United States Attorney, whose duty it shall be to bring the matter before the grand jury for its action” (emphasis added).

Although this is debatable from a legal standpoint, and lawyers can disagree on whether Lerner’s declaration of innocence at the public hearing was or was not testimony that waived her Fifth Amendment privilege, what is not debatable is that there is a gaping hole in Machen’s recitation of the facts and his legal analysis.

According to The Wall Street Journal, right after Lerner’s frustrating March 5, 2014 appearance before the House committee, her lawyer, William Taylor III, told reporters at a press conference that Lerner had given a “lengthy interview” to Justice Department prosecutors “within the last six months, as part of the agency’s investigation into IRS targeting of conservative tea-party groups.” Taylor even admitted that Lerner had freely given DOJ her testimony without getting any promise of immunity from prosecution.

Why is this significant? Because, if Taylor is to be believed, Lerner obviously did not assert her Fifth Amendment privilege when she gave Justice prosecutors a “lengthy interview” about the very subject she had been subpoenaed to discuss with the House Oversight and Government Reform Committee. While the prevailing rule in most federal courts is that a waiver of the Fifth Amendment privilege at one proceeding does not carry through to another proceeding, that is not the rule in the District of Columbia. ...

Ignoring highly relevant, although perhaps inconvenient, facts, outgoing U.S. Attorney Ronald Machen has issued a flawed legal analysis. It reaches an erroneous, but politically expedient, conclusion—one that gives Lerner a pass and further hinders congressional efforts to get to the bottom of this scandal. It’s a pretty slick trick. No wonder Machen’s pulling a disappearing act.

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April 5, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, April 4, 2015

The IRS Scandal, Day 695

IRS Logo 2Daily Mail, Tea Party Groups Win Round 1 in Court as Federal Judge Demands IRS's List of All 298 Conservative Nonprofits It Targeted:

  • Right-wing groups want court to let them sue the IRS in a class-action lawsuit for violating their constitutional right to equal treatment
  • IRS applied different criteria to right-wing groups, holding up their applications for years while liberal organizations skated through
  • Obama administration fought the release of a list of 298 groups it denied tax-exempt status beginning in 2010, citing privacy concerns
  • Judge in Cincinnati overruled the government and ordered the IRS to hand over the list
  • If court 'certifies' class-action status, the tea party groups will be free to demand emails, phone records and other documents

Additional press and blogosphere coverage:

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

Friday, April 3, 2015

Ex-IRS Ethics Office Lawyer Disbarred For … Ethics Violations

Washington Times, Ex-IRS Ethics Office Lawyer Disbarred For … Ethics Violations:

A lawyer who worked in the IRS ethics office was disbarred Thursday by the District of Columbia Court of Appeals, which concluded she misappropriated a client’s funds from a case she handled in private practice, broke a number of ethics rules and showed “reckless disregard for the truth” in misleading a disbarment panel looking into the matter.

The lawyer, Takisha Brown, reportedly had bragged that she would never be punished because her boss would protect her, but an IRS spokesman said Wednesday that she was no longer an employee at the agency.

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

The IRS Scandal, Day 694

IRS Logo 2Investor's Business Daily editorial, Lois Lerner Gets Off - Hillary Clinton Breathes Easier:

The Justice Department says Lois Lerner, who used her IRS office to target the Tea Party, didn't waive her Fifth Amendment rights before Congress and won't be prosecuted for contempt over her missing emails. ...

Lois Lerner, poster child for hard-drive crashes and missing emails, won't face charges for contempt of Congress. ... After pleading her innocence at that 2013 hearing, Lerner went on to invoke her Fifth Amendment right to remain silent. This raised the question of whether the Constitution let her remain silent after she was not silent and pleaded her case.

The House decided that no, it doesn't. In May of last year it voted to hold her in contempt of Congress. The Ways and Means Committee went so far as to send the Justice Department a criminal referral with potential charges that could have meant 11 years in jail.

Lerner waived her rights not only when she pleaded her innocence before Congress, but also when she shared with DOJ information she was withholding from Congress.

Hans Von Spakovsky, senior legal fellow at the Heritage Foundation, says government officials can't pick and choose when and where they invoke their Fifth Amendment rights. They can't legally give information to the DOJ that they withhold from Congress. "When Lerner gave a lengthy interview to the government, she waived the Fifth. There's no doubt about it," says Von Spakovsky. "The law is crystal clear here in the District of Columbia."

But not so clear, it seems, to the political wagon circlers at the Justice Department.

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April 3, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, April 2, 2015

The IRS Scandal, Day 693

IRS Logo 2On his final day in office as the U.S. Attorney for the District of Columbia, Ronald Machen Jr. sent this 7-page letter to Speaker John Boehner informing him that the Department of Justice will not pursue contempt of Congress charges against Lois Lerner.

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April 2, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Wednesday, April 1, 2015

The IRS Scandal, Day 692

IRS Logo 2Bloomberg, IRS Chief Says Agency’s High-Profile Mistakes Are Behind It:

The IRS has fixed its errors, such as improper extra scrutiny of Tea Party groups, and they won’t happen again, the tax agency’s commissioner said Tuesday.

“The changes are so significant throughout the agency that you could hang a sign out at the front of the headquarters saying ‘Under New Management,’” Internal Revenue Service Commissioner John Koskinen said in a speech at the National Press Club in Washington.

The IRS has imposed limits to prevent problems such as overspending on conferences and videos, and inappropriate scrutiny of politically oriented nonprofit groups, he said.

“The problems do come from a prior era. We have addressed them so we think they won’t happen again,” he said. “It really is a new day at the IRS. It’s not the IRS of 2010, 2011 or even 2012.”

To bolster his point, Koskinen said 46 percent of the agency’s executives -- including two-thirds of the senior leadership team -- have left since October 2011. While the IRS is a large agency and will always have some problems, the key is to find and address them quickly, he said.

Congress has been investigating the IRS and restricting its budget since May 2013, when the agency revealed it had given extra scrutiny to the applications of Tea Party groups seeking tax-exempt status. Other issues -- including lavish conferences, an embarrassing Star Trek-themed video and bonuses paid to tax-delinquent employees -- emerged after that.

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

Tuesday, March 31, 2015

Robin Williams Left Publicity Rights (Restricted For 25 Years) to Charity, Avoiding IRS Dispute Embroiling Michael Jackson's Estate

WilliamsHollywood Reporter, Robin Williams Restricted Exploitation of His Image for 25 Years After Death:

[O]ne of the more innovative aspects of Robin Williams' estate planning ... might just might become a model for other celebrities preparing for their demise. ... According to a review of the Robin Williams Trust — filed as an exhibit last Wednesday — Williams bequeathed rights to his name, signature, photograph and likeness to the Windfall Foundation, a charitable organization set up by Williams' legal reps at the law firm of Manatt, Phelps.

There are two important facets of this provision.

First, the Trust restricts exploitation of Robin Williams' right of publicity for 25 years after his death. ...

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March 31, 2015 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (0)

Sign Up For An Account At IRS.gov Before Crooks Do It For You (And Steal Your Refund)

RefundKrebs on Security, Sign Up at irs.gov Before Crooks Do It For You:

If you’re an American and haven’t yet created an account at irs.gov, you may want to take care of that before tax fraudsters create an account in your name and steal your personal and tax data in the process. ...

The IRS’s process for verifying people requesting transcripts is vulnerable to exploitation by fraudsters because it relies on static identifiers and so-called “knowledge-based authentication” (KBA)  — i.e., challenge questions that can be easily defeated with information widely available for sale in the cybercrime underground and/or with a small amount of searching online.

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March 31, 2015 in IRS News | Permalink | Comments (3)

The IRS Scandal, Day 691

IRS Logo 2Forbes, How Obama's IRS And Justice Department Killed The Targeting Scandal, by Robert W. Wood:

The IRS applied extra scrutiny because Mr. Obama’s IRS and Justice Department didn’t like the Supreme Court’s decision, presumably fearing that organizations could exercise free speech rights the Supreme Court said they had. Five years later, and two years after the planted bar association question, we remain partly in the dark. Ms. Lerner won’t testify, and we are still told, including by the President of the United States, that there was not a smidgen of corruption at the IRS.

We are told that the IRS is fixed, the targeting will never happen again, and this was not audit targeting anyhow. Some say these organizations shouldn’t be exempt in any event. Now, though, a comprehensive and disturbing report from Politico enumerates the results the IRS has actually achieved despite platitudes from the Obama administration that the system is fixed.

Far from fixed and never happening again, Politico has exposed the seemingly well designed IRS action of death by delay. It is just one more nail in the coffin Professor Paul Caron catalogs in the IRS scandal, now in day 689. Politico painstakingly describes the tale of woe by at least a half-dozen conservative applicants who, amazingly, are still waiting for an answer. The extent of their hardship varies, and some may still receive relief.

Yet we have by now so often been told by IRS Commissioner John Koskinen that the good works of un-targeting the targeted is done. Maybe, but some people are waiting still five years on.  ... Many conservative groups withdrew their applications and gave up. Others changed their names and focus. Some went belly-up while waiting. Of course, in all this recent history, it is worth recalling that in March 2012, former IRS Commissioner Doug Shulman testified there was “absolutely no targeting” by the IRS of conservative and/or Tea Party organizations. On November 9, 2012, Mr. Shulman stepped down as Commissioner, replaced by Steven Miller.

On May 14, 2013, four days after Ms. Lerner’s planted question and feigned lament about it, the Inspector General issued a report confirming targeting. On May 22, 2013, Ms. Lerner professed her innocence, then took the Fifth. Next day, she was placed on administrative leave. On June 20, 2013, the IRS paid $70 million in bonuses. Ms. Lerner received $42,000, and former Commissioner Miller received $100,000.

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March 31, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, March 30, 2015

The IRS Scandal, Day 690

Scientology 2Wall Street Journal, Some Things to Fear in ‘Going Clear’:

Watching Going Clear: Scientology and the Prison of Belief can be a depressing experience, and not just for the two hours in which the HBO documentary runs. The haunting archival imagery—a powerful element here—fades after a few days, and much of what is said has been said before. Yet whether you come away seeing Scientology as a cult that ensnares vulnerable people or as a faith of self-empowerment, the film leaves a terrible taste of too much information. This must be its point, but take heed just the same.

The documentary is based on the 2013 book, Going Clear: Scientology, Hollywood and the Prison of Belief, by Lawrence Wright, who provides on-screen commentary here. It was directed by Alex Gibney, who also made the 2012 HBO documentary Mea Maxima Culpa: Silence in the House of God, about sexual abuse in the Catholic church. ...

As grim and creepy as much of “Going Clear” is, nothing is more disturbing than the account of how Scientology heavies bullied the IRS—using some 2,400 lawsuits and personal investigations of agency officials—into granting Scientology tax-exempt status as a church in 1993. What does it tell you that even back then, some unelected folks in California had more power than members of the U.S. Congress do today as they attempt to investigate the IRS—for using targeting tactics to intimidate people.

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March 30, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, March 29, 2015

The IRS Scandal, Day 689

IRS Logo 2Politico, From IRS: 'Death by Delay':

Nearly two years after the IRS was exposed for improperly sidetracking requests for tax exemptions from tea party groups, POLITICO has learned that at least a half-dozen conservative applicants are still waiting for an answer.

This challenges repeated assertions by IRS Commissioner John Koskinen that his embattled agency has “completed” a set of recommendations to fix the problem and address a backlog of nearly 300 applications, some of which had been pending already for three years.

The groups that are still waiting include Karl Rove’s giant Crossroads GPS, which spent at least $26 million against Democrats in the last election cycle. But most of the half dozen are mom-and-pop outfits from New Mexico to New Jersey, run by volunteers out of their own houses and operating at a fraction of Crossroads’ budget.

The years-long delay has gutted these groups’ membership, choked their ability to raise funds, forced them to reserve pots of money for possible back taxes and driven them into debt to pay legal bills. ...

The agency said it cannot comment on specific cases, but it deflected blame, in part, to the Justice Department. When an applicant is suing the IRS, Justice also has a say in whether to issue a final ruling during litigation. Almost all the groups in limbo have taken the IRS to court.

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March 29, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, March 28, 2015

Low Income Taxpayer Clinic Grant Recipients For 2015

LITC LogoThe IRS announced yesterday (IR-2015-61) that it has awarded $10.25 million in matching grants to 132 Low Income Taxpayer Clinics (LITCs) for the 2015 grant cycle (Jan. 1, 2015 through Dec. 31, 2015). Through the LITC program, the IRS awards matching grants of up to $100,000 a year to qualifying organizations. For the 2015 grant cycle, the IRS awarded LITC grants to 132 organizations. For the full list of grant recipients, see here. For a list of the 39 law school tax clinic grant recipients, and the amount of their grants, see below the fold:

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

The IRS Scandal, Day 688

IRS Logo 2Forbes, House Considers Bill To Stop IRS Targeting, Fire IRS Employees Who Do, by Robert W. Wood:

The House Committee on Ways and Means is busy with a bill that could change the IRS. H.R. 709, the Prevent Targeting at the IRS Act, calls for firing IRS employees who take certain official actions for political purposes. The fact that such a bill has been introduced makes you wonder. Isn’t that the law already? Not really.

Everyone wants to feel secure that they will be dealt with fairly by the IRS. The tax system is full of special rules, and no one can master them all. Thus, one taxpayer may be treated very differently from another who is seemingly in the same position. That probably isn’t fair, but don’t confuse this with fundamental procedural fairness and non-discrimination. That is at the heart of the IRS targeting debate, and why the issue is so terribly important to the tax system as a whole. ...

The proposed law would expand the scope of the violation concerning an IRS employee threatening to audit a taxpayer for the purpose of extracting personal gain or benefit. It would also cover an IRS employee who threatens to audit someone for political purposes.

The proposal requires the IRS to terminate an employee who, for political purposes or personal gain, undertakes official action with respect to a taxpayer or, depending on the circumstances, fails to do so, delays action or threatens to perform, delay or omit such official action. An ‘official action’ here would include an audit or examination.

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March 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, March 27, 2015

The IRS Scandal, Day 687

IRS Logo 2Town Hall, Congress Should Protect the Fair Treatment for All Donations:

Beginning in 2010, the Internal Revenue Service (IRS) systematically targeted taxpayers based on their political beliefs. Unaccountable, unelected bureaucrats at the IRS deliberately slowed and denied applications for tax-exempt status because the applicants did not share their politics. Although it’s deeply concerning that unelected, unaccountable bureaucrats at the IRS were using the tax code to restrict free speech, what’s more unfathomable is that Congress has done very little to date to protect individuals from future IRS targeting.

Congress should act to protect citizens of all political persuasions from similar politically-motivated targeting in the future. Thankfully the House Ways and Means Committee is currently working on legislation that would help. The bill prohibits the IRS from applying the federal gift tax to contributions to tax-exempt organizations.

The original intent of the federal gift tax was to stop taxpayers from sidestepping the federal death tax—i.e., transferring gifts of money while an aging taxpayer is still alive instead of paying a 40 percent tax on the entire estate after death. Congress did not enact the gift tax to apply to contributions made to tax-exempt organizations.

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March 27, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, March 26, 2015

The IRS Scandal, Day 686

IRS Logo 2National Journal, There's an IRS Investigation That's Bipartisan and Leak-Free. Really.:

The Senate Finance Committee's investigations team is highly caffeinated.

How else could it have gotten through more than a million pages of documents in the last two years? There is an art to the kind of mind-numbing digging that these sleuths do. They set weekly goals for the number of pages reviewed, but they build in time for breaks. The Republican lead investigator tries to make sure her team spends only half its days in document-review mode and the other half doing something else. Every discovery must be fact-checked; the most important goal is to be as meticulous and thorough as possible, no matter how long it takes.

Welcome to the only bipartisan investigation of the Internal Revenue Service in town. The group consists of roughly half a dozen staffers from both Chairman Orrin Hatch's committee roster and that of ranking member Ron Wyden. They have become chummy over the last few years. Republican and Democratic aides meet regularly to share "hot docs" and observations from their individual perusals. As one aide put it, "There's no 'hide the ball' going on."

The goal of the investigation is to reach a common understanding of the facts, which is no small endeavor when it involves one of the highest-profile scandals of the Obama presidency. If IRS officials did actually subject tea-partiers' tax-exempt applications to questionable scrutiny, that is an intolerable breach of public trust, said Hatch and then-Chairman Max Baucus in a 2013 joint letter to the IRS. Hatch was the committee's ranking member at the time, and that letter launched the investigation. Wyden took over the project when Baucus stepped down last year to become the U.S. ambassador to China.

Democrats and Republicans definitely don't agree about whether there was a political conspiracy at work in the IRS before the 2012 elections. Those kinds of conclusions are matters of interpretation and ideology that have derailed other congressional investigations that attempted to include Democrats.

To keep away from such incendiary questions, investigators on the Finance Committee have pledged to focus solely on what happened. Did the IRS selectively subject certain groups based on their political orientation to additional scrutiny when they requested tax-exempt status? What words or phrases did IRS staff look for when determining which applications would be pulled for additional review? Did that strategy violate internal policy? Was the White House involved?

Since the investigators' primary goal is to keep Republicans and Democrats at the table, they work hard to keep politics out of it. ...

The Finance Committee's report will be a different animal, aides from both parties say. They are examining the same questions that others have probed, but they aim to be seen—if such a thing is even possible on Capitol Hill—as completely objective in their conclusions. Something obviously went awry at the IRS. They want to give the public specifics about what it actually was.

Hatch and Wyden plan to offer their staff's findings of IRS misconduct together and (hopefully) free of political statements. That will happen later this year, barring any unforeseen developments. Staffers say the bulk of the report will consist of the facts on which both sides have agreed and the conclusions they have jointly drawn.

But bipartisanship can only go so far. After the joint conclusions, each side will then release its own views about what those agreed-upon facts mean—separately.

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March 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, March 24, 2015

305,000 Federal Workers/Retirees Owe $3.3 Billion in Back Taxes

The IRS yesterday released its annual federal employee/retiree tax delinquency report, showing that 304,665 federal workers and retirees owed more than $3.5 billion in back income taxes as of September 30, 2014 (a 6.95% increase over last year), a delinquency rate of 3.12%.

The highest delinquency rates among Executive Departments are:

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March 24, 2015 in IRS News, Tax | Permalink | Comments (1)

IRS Releases FY 2014 Data Book

2014 Data Book CoverIR-2015-58 (Mar. 24, 2015), IRS Releases FY 2014 Data Book:

The Internal Revenue Service today released the 2014 IRS Data Book [individual tables] snapshot of agency activities for the fiscal year.

“Fiscal Year 2014 marked the fourth consecutive year IRS appropriations were reduced,” said IRS Commissioner John Koskinen. “These reductions required us to change our approach to taxpayer service and enforcement operations; with fewer resources, we saw decreases in the number of phone calls answered and the number of audits completed.”

The report describes activities conducted by the IRS from Oct. 1, 2013, to Sept. 30, 2014, and includes information about returns filed, taxes collected, enforcement, taxpayer assistance, and the IRS budget and workforce among others. The 2014 Data Book contains charts that show trends, such as the decline in the number of audits and the decline in telephone and in-person tax assistance and increases in the use of online resources and volunteer tax assistance.

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March 24, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 684

IRS Logo 2Forbes, Report Says Former IRS Employees -- Think Lois Lerner -- Can Still Peruse Your Tax Returns, by Robert W. Wood:

Could Lois Lerner still take a look at your tax returns on IRS computers? It sounds preposterous, but a new watchdog report says former IRS employees still have access to IRS computer systems long after they have no official business with the information. The report is by the U.S. Government Accountability Office, an independent, nonpartisan agency that works for Congress. The GAO investigates how the federal government spends taxpayer dollars. In the case of IRS security, the report says not well.

This report cites significant deficiencies in the security of IRS financial reporting systems. Millions of Americans who are legally required to file taxes are fearful about fraud. The report says the IRS needs to continue improving controls over financial and taxpayer data. In the case of former IRS workers with continuing access to IRS data systems, they need to be cut off.

One co-author of the report said the IRS horde of taxpayer data can be used by identity thieves. The timing couldn’t be worse for the IRS. The IRS is failing to secure its massive computer systems, leaving private taxpayer data vulnerable to fraudsters and hackers, the new report from the GAO reveals.

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March 24, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)