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Monday, October 6, 2014

The IRS Scandal, Day 515

IRS Logo 2Red State:  IRS Cover-Up: IG Report Exposes IRS Lying to American Public, by Matthew Clark:

A new Inspector General (IG) report general report exposes yet more abuse and cover-up at the IRS. As the Washington Examiner reports:

A review of the Internal Revenue Service’s compliance with the Freedom of Information Act found the agency intentionally withheld or failed to “adequately search” for requested information in hundreds of cases.

In others, the IRS released more than it was authorized, dispensing “sensitive taxpayer information,” including individuals’ bank records.

Many of the FOIA requests centered around, you guessed it, the IRS targeting scandal.

The cover-up is stunning.  “The IRS concealed information it should have released in response to an estimated 336 requests in 2013, according to the report.”

In response to a report (from the same IG’s office) detailing the IRS targeting scandal, the American public demanded to know the truth.  The American people sent in numerous FOIA requests, and the IRS concealed pertinent information at least 336 times.

If that’s not a cover-up I don’t know what is.

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

Sunday, October 5, 2014

The IRS Scandal, Day 514

IRS Logo 2New York Post editorial:  The Lois Lerner App:

Imagine if you downloaded something that ended up wiping out all the information you needed before meeting with an IRS agent asking about discrepancies on your tax return. How sympathetic do you think that IRS agent would be?

But when it comes to the IRS itself, this is just what officials would have us believe. Turns out too it’s not just Lois Lerner, whose computer crashed right after Congress asked for info about the tax targeting of conservative organizations.

Now we’re learning of another case where hard drives holding information that would help tell us what the IRS was up to have gone missing in the midst of a contentious lawsuit. That’s precisely the allegation NetJets, a private jet company, is now making in federal court. ...

The Columbus Dispatch reports NetJets has filed a motion with US District Court Judge Edmund Sargus Jr., claiming the IRS has “wiped clean a number of computer hard drives containing e-mails and other electronic documents that the government was required to produce” in the company’s lawsuit against the agency.

Maybe the answer here isn’t a federal lawsuit but a computer-repair firm that can debug every computer in the IRS of all that Lois Lerner malware.

Taxable Talk:  One Good Erasure Deserves Another, by Russ Fox:

I wonder if this sounds familiar to anyone: An organization is looking for key information stored on IRS computers. A lawsuit ensues, and the hard drives were allegedly wiped clean.

No, I’m not talking about the IRS Scandal, Lois Lerner, and the Freedom of Information Act lawsuits. Rather, I’m talking about a tax fight between NetJets and the IRS. NetJets sued the IRS for $643 million alleging, according to the Columbus Dispatch, that a ticket tax was misapplied. The IRS countersued for $366 million, alleging that NetJets hasn’t paid all their taxes. Both sides have petitioned for summary judgement. ...

Most of the time, I wouldn’t believe that the IRS would do this. As of 18 months ago, I wouldn’t believe that the IRS would lie to Congress, would target conservative applicants for nonprofit status, and that the hard drive of any computer (or other electronic device) touched by Lois Lerner would be magically erased.

On a serious note, the fact that the IRS has done these things (even if it’s just a coincidence that the hard drive of any computer Ms. Lerner touched died) will make judges highly skeptical of the IRS. I have no idea who is right on the NetJets vs. IRS fight. I do know that the IRS’s position sure sounds fishy to me.

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October 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, October 4, 2014

The IRS Scandal, Day 513

IRS Logo 2Wall Street Journal op-ed:  The New Bureaucratic Brazenness: Official Arrogance Is the Source of Public Cynicism, by Peggy Noonan:

We’re all used to a certain amount of doublespeak and bureaucratese in government hearings. That’s as old as forever. But in the past year of listening to testimony from government officials, there is something different about the boredom and indifference with which government testifiers skirt, dodge and withhold the truth. They don’t seem furtive or defensive; they are not in the least afraid. They speak always with a certain carefulness—they are lawyered up—but they have no evident fear of looking evasive. They really don’t care what you think of them. They’re running the show and if you don’t like it, too bad.

And all this is a new bureaucratic style on the national level. During Watergate those hauled in and grilled by Congress were nervous. In Iran-Contra, Ollie North was in turn stoic, defiant and unafraid to make an appeal to the public. But commissioners and department heads now—they really think they’re in charge. They don’t bother to fake anxiety about public opinion. They care only about personal legal exposure. They do not fear public wrath.

All this became apparent in the past year’s IRS hearings, and was pronounced in Tuesday’s Secret Service hearings. ...

Sometimes it looks as if everyone in public life is in showbiz, only showbiz with impermeable employee protections. Lois Lerner of IRS fame planted the question, told the lie, took the Fifth, lost the emails and stonewalled. Her punishment for all this was a $100,000-a-year pension for the rest of her life. Imagine how frightened she was. I wonder what the Secret Service head’s pension will be?

A nation can’t continue to be vibrant and healthy when the government controls more and more, and yet no one trusts a thing the government says. It’s hard to keep going that way.

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

Friday, October 3, 2014

The IRS Scandal, Day 512

IRS Logo 2The Blaze:  Not Just Lois Lerner? Multi-Million Tax Suit Claims IRS ‘Wiped Clean’ Email Evidence in Separate Case:

An Ohio-based private jet company entangled in a multi-million dollar lawsuit with the Internal Revenue Service filed a motion this week asserting the tax agency is missing emails from three separate employees that would be evidence in the case, the Columbus Dispatch reported.

The court motion and the federal case are unrelated to the IRS targeting scandal. Nevertheless, it comes after extensive congressional inquiries in Washington over missing emails from Lois Lerner, the former head of IRS tax-exempt organizations unit, who last year admitted to giving extra scrutiny to conservative groups applying for exempt status.

The IRS said the subpoenaed Lerner emails were destroyed in a hard drive crash. The agency later admitted that other emails related to the targeting were missing.

The jet company, NetJets, asserts that the IRS “wiped clean a number of computer hard drives containing emails and other electronic documents that the government was required to produce,” according to the motion filed with U.S. District Judge Edmund A. Sargus Jr., the Dispatch reported.

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October 3, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, October 2, 2014

The IRS Scandal, Day 511

IRS Logo 2National Review:  IRS Erased Key Records in Lawsuit, NetJets Says, by John Fund:

There may be a pattern involving the IRS losing e-mails and other key computer records. For months, the House Oversight Committee has been pursuing the lost e-mails of Lois Lerner and other figures in the IRS tax-exempt organization scandal. 

Now, the private-jet company NetJets is claiming in a lawsuit that as part of its tax dispute with the agency the IRS “wiped clean a number of computer hard drives containing emails and other electronic documents that the Government was required to produce.”

Washington Free Beacon:  Court: Obama Admin Can’t Hide Investigation into Former White House Adviser; Austan Goolsbee Suspected of Illegally Revealing Koch Tax Details to Press:

The Obama administration must acknowledge the existence of an independent investigation into former White House senior economics adviser Austan Goolsbee’s alleged unauthorized access to the Koch brother’s tax returns, a court ruled Tuesday.

A federal judge ruled the Treasury Inspector General for Tax Administration (TIGTA) must disclose to watchdog group Cause of Action whether records of an investigation exist.

Cause of Action filed a Freedom of Information Act (FOIA) lawsuit after TIGTA refused to confirm or deny the existence of the investigation in what is commonly known as a “Glomar response.”

“The court has ruled that the federal government cannot hide behind confidentiality laws to prevent Americans from knowing if our President has gained unauthorized access to their tax information,” Cause of Action executive director Dan Epstein said in a statement Tuesday. “This is a decisive win for all Americans and for government transparency and accountability.”

Former White House Council of Economic Advisers chairman Austan Goolsbee sparked a mini-scandal in 2010 when he told reporters during a background press briefing that Koch Industries—the company of libertarian philanthropists Charles and David Koch—paid no income taxes.

Conservative lawmakers and activists said Goolsbee’s statements not only unfairly singled out the president’s political opponents but also used confidential IRS documents to do so.

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October 2, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, October 1, 2014

The IRS Scandal, Day 510

IRS Logo 2Daily Caller:  After Holder: Four Things The Next Attorney General Must Address, by Dan Epstein (Executive Director, Cause of Action):

Attorney General Eric Holder may be heading for the exit door at the Department of Justice (DOJ), but numerous gaps in the agency’s enforcement remain. Will the next attorney general address fraud, transparency, and oversight concerns? We recommend four issues the next attorney general can and should resolve. ...

IRS Political Targeting: Americans have known for over a year about the Internal Revenue Service’s political targeting of non-profit groups. Cause of Action first petitioned DOJ to look into this scandal in May 2013. While an investigation has begun, the DOJ assigned an attorney from the Civil Rights Division (CRD), which mostly prosecutes hate crimes cases and conspiracies to violate civil rights, to investigate the IRS. If criminal violations are uncovered in the investigation, the CRD may not have the authority to handle them, given its jurisdiction. That is why the next attorney general should appoint a special counsel to direct the investigation.

Lois Lerner’s Emails: Perhaps the most confounding part of the IRS scandal is the somehow “lost” emails of Lois Lerner, the IRS official at the heart of the scandal. Cause of Action’s investigation indicates that in losing this valuable information, multiple government officials violated the Federal Records Act, which instructs agencies to create their own regulations regarding document retention. IRS regulations, for instance, required Ms. Lerner to print and file her emails and her attachments. By failing to preserve Lerner’s records, the IRS may have violated its own regulations — and therefore the Federal Records Act.

To this day, the Department of Justice refuses to investigate this potential violation of law, so we urge the next attorney general to conduct an investigation to determine if there has been a violation of the Federal Records Act.

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

The IRS Scandal, Days 401-500

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

The IRS Scandal, Days 301-400

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

The IRS Scandal, Days 201-300

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

The IRS Scandal, Days 101-200

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

The IRS Scandal, Days 1-100

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

Tuesday, September 30, 2014

TIGTA: IRS Does Not Adequately Research 57% of Cases, Losing Billions in Taxes Wrongly Labeled Uncollectible

TIGTA The Treasury Inspector General for Tax Administration yesterday released Delinquent Taxes May Not Be Collected Because Required Research Was Not Always Completed Prior to Closing Some Cases As Currently Not Collectible (2014-30-052):

If an IRS employee is unable to contact or unable to locate (UTC/UTL) a delinquent taxpayer, the collection case may be closed as currently not collectible (CNC). If all of the required research steps are not taken prior to the case closure, there is a risk that the Government’s interest may not be protected and that taxpayers will not be treated equitably.

In Fiscal Year 2012, the IRS closed 482,611 tax modules involving approximately $6.7 billion as CNC–UTC/UTL.  This audit was initiated to determine whether these cases were adequately researched, documented, and approved to ensure that all actions were taken to collect outstanding taxpayer liabilities.

Required case actions were not always completed before closing cases as CNC–UTC/UTL.  Of a stratified sample of 250 cases reviewed, there was no evidence that employees completed all of the required research steps for 57 percent of the cases prior to their closing.  Moreover, 7 percent of the cases did not have a Notice of Federal Tax Lien (NFTL) filed on all delinquent tax periods as required. Collection Field function (Field) employees did not complete all research in 165 of the 204 Field cases, while Automated Collection System function employees did not complete all research in eight of the 38 Automated Collection System cases

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September 30, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 509

IRS Logo 2Christian Post:  Documentary Highlights First-Hand Accounts of IRS Targeting Conservative, Christian Groups:

A documentary set to be released in October aims to show the American public exactly how the IRS is unfairly treating certain groups by sharing first-hand experiences from those "oppressed" by the IRS.

Bothered by the reports that the IRS was targeting conservative activist groups, Craig Bergman, a former Gulf War veteran and syndicated conservative talk show host, traveled across America to get to the bottom of how the IRS was targeting these groups.

In his travels, Bergam interviewed various leaders of conservative activist groups, religious groups, veterans associations, international adoption parents and other groups. His interviewees detailed on camera how the IRS either forced them to fill out "intrusive" paperwork while filing for tax exempt status, or stalled the paperwork, making it difficult for the groups to grow in size.

The documentary, "UnFair: Exposing the IRS," was screened this past weekend at the Values Voters Summit in Washington D.C. and will premiere on Oct. 14 at over 700 theaters nationwide. The documentary uses the first-hand experiences to transition into a call to action to help abolish the IRS and the income tax and promote the Fair Tax, which would be similar to a national sales tax.

USA Today op-ed:  For Next Attorney General, Reach Across Aisle, by Glenn Reynolds (Tennessee):

Perhaps President Obama — and, for that matter, future presidents — should take a lesson from the way we handle the Department of Defense, and apply it to the Department of Justice: Consider naming someone outside his own party as attorney general.

This frequently happens with secretaries of Defense, and it has been of benefit to the administrations that have done it. FDR picked a Republican, Henry Stimson, to be secretary of War in 1940, and that meant that the war — and the war's casualties — became a bipartisan matter instead of fodder for partisan attacks. President Obama retained George W. Bush's Defense secretary, Robert Gates, for most of his first term. He replaced Gates with another Republican, Chuck Hagel, in that position.

Having a Defense secretary from the other party makes war bipartisan, and reassures members of the opposition that the powers of the sword aren't being abused. Likewise, naming an attorney general from the opposite party would tend to make the administration of justice bipartisan, and would provide considerable reassurance, as Holder's tenure in office emphatically did not, that the powers of law enforcement were not being abused in service of partisan ends. In an age of all-encompassing criminal laws, and pervasive government spying, that's a big deal.

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September 30, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, September 29, 2014

Penalty for Opting Out of the Affordable Care Act Is Large ($12,240) and Growing

Wall Street Journal Tax Report:  Penalty for Not Having Health Coverage Can Be Thousands of Dollars; The ACA Penalty Can Top $12,000 for a High-Income Family of Five, by Laura Saunders:

ObamaCareIf you're opting out of the health-care coverage required by the Affordable Care Act, make sure you understand how much you'll owe Uncle Sam as a result.

For a family of five, the penalty could be as high as $12,240 for the 2014 tax year, experts say. And for many people, the penalty will rise sharply in 2015 and 2016.

The massive health-care changes passed in 2010 are phasing in, and this is the first year most Americans must have approved health insurance. Those who don't will owe a penalty under the Individual Shared Responsibility Provision. It's due with your income taxes, payable by April 15, 2015.

While most people will probably obtain qualified health coverage through an employer or an exchange, there will be others who owe the penalty. Eddie Adkins, a health-care and benefits specialist at Grant Thornton in Washington, says this group will likely include affluent and wealthy people who want to self-insure or use a so-called nonconforming policy that doesn't meet Affordable Care Act standards.

Then there are the "young invincibles": healthy young adults, typically in their late 20s or early 30s, who will get little or no tax credit to reduce their premiums. Many would rather spend the cost of health coverage, which can run from several hundred to several thousand dollars a year, on something else, such as paying off college loans.

For those who are thinking of opting out, here's what you need to know.

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September 29, 2014 in IRS News, Tax | Permalink | Comments (3)

The IRS Scandal, Day 508

IRS Logo 2New York Observer:  Eric Holder Runs from a Ticking Time Bomb: IRS Deadline Approaches Fast, Federal Judges are Furious—and Where’s Andrew Selka?, by Sidney Powell:

The surprise resignation of Eric Holder, the first Attorney General ever to be held in contempt of Congress, exploded in the news today. Holder has been under unrelenting assault for the most egregious politicization and abuse of power in the Department of Justice in history—exceeding that of John Mitchell and Alberto Gonzalez. He has made the Department of Obstructing Justice notorious. Federal judges are stepping in to end his stone walling of Congressional and other investigations on several fronts, and now he’s on the run.

Why now? What is about to blow up? ...

Mr. Holder is about to run out of stalling time on the cover-up in the IRS scandal. He has come under increasingly serious fire for refusing to appoint a real special prosecutor to investigate what the Inspector General of the Treasury has already determined to be improper targeting of conservative groups by IRS officials including Lois Lerner. That bomb could detonate any day now.

The IRS has stonewalled production of the relevant documents, suffered astonishing computer crashes, deliberately destroyed Lois Lerner’s Blackberry with no effort to retrieve the “missing” emails from it, and been deceitful and obstructionist in the lawsuit brought by Judicial Watch to obtain documents that would reveal the target selection process and how high up in the White House the knowledge or direction of it can be traced.

Judicial Watch recently requested additional discovery. Judge Emmet Sullivan, the federal judge in the District of Columbia, has just given the IRS until October 17 to file its response to that motion. Judge Sullivan has the power to appoint—and has previously—appointed a special prosecutor to investigate the Department of Justice. ...

Mr. Holder tasked Barbara Bosserman, a Civil Rights Division attorney, with the Department’s own purported investigation of the IRS abuses. Congress later learned that she had made substantial contributions to the President’s campaign and renewed its demand for Mr. Holder to name a special prosecutor.

As more of the IRS emails have come to light, they have revealed that Mr. Holder allowed a Justice Department lawyer, Andrew Strelka, to represent the IRS in opposing the lawsuit by Z Street—a group allegedly targeted for abusive treatment by the IRS because of its support for Israel. Mr. Strelka used to work with Lois Lerner, engaged in the political targeting himself, and maintained his close relationship with Ms. Lerner after he joined the Justice Department. Congressmen Issa’s and Jordan’s letter of August 25 to the Attorney General revealed that Mr. Strelka was privy to internal communications of the Exempt Office of the IRS long after he left that office. He was even advised immediately of the crash of Ms. Lerner’s hard drive—unlike Congress or any federal judge.

The letter notes: “Curiously, before his withdrawal from the case [forced by a story reporting this conflict], Strelka also completed a detail to the White House Counsel’s Office from December 2013 to June 2014—during which time the White House learned of Lois Lerner’s destroyed emails.”

The Congressional Committee on Government Oversight and Reform has intensified its inquiry into the Department’s conduct. The Congressmen told the Attorney General that their Committee staff should be contacted to arrange transcribed interviews of Mr. Strelka and Ms. Siegel by September 8. Mr. Strelka quickly and quietly left the Department. By September 5, the Department was stonewalling and refusing to assist the Committee in locating Mr. Strelka—who seems to be as missing as the IRS emails. As the Hill has reported, Rep. Jordan complains that the Justice Department “has declined to give Strelka’s contact information to the Oversight Committee and has reprimanded the panel for trying to get in touch with him directly.” Is this an out-take from House of Cards?

Congress also wants to talk to Nicole Siegel, a Department lawyer in the Office of Legislative Affairs. Turns out she also worked for Lois Lerner, shared Ms. Lerner’s views, and kept in touch. Hardly the disinterested person one should have in the Department office that responds to congressional inquiries on the IRS’s target selection.

Then there was the extraordinary accidental or mistaken call to Congressman Issa’s office by the Justice Department’s Office of Public Affairs. The call was intended for Rep. Elijah Cummings, the ranking minority member of the Oversight Committee, and sought to coordinate a leak of selected Committee documents to selected reporters so the Department could comment on them. The subject of the conversation and documents? None other than Andrew Strelka—regarding his representation of IRS Commissioner Koskinen in the Z-Street case. Meanwhile, other emails reveal extensive communications between Rep. Cummings’ staff and the IRS — referred to as an “executive branch agency” — in 2012 and 2013 regarding conservative group True the Vote.

As of September 12, the Department was still obstructing efforts to locate Mr. Strelka. Meanwhile, the Department’s own Inspector General Michael Horowitz testified before the House Judiciary Committee that the FBI and other components of the Department of Justice “have refused our requests for various types of documents. As a result, a number of our reviews have been significantly impeded.” Mr. Horwitz had already joined an unprecedented letter signed by 47 Inspector Generals for various agencies expressing serious concern that their jobs were being undermined and obstructed by multiple agencies of this presidency, including the Department of Justice.

Mr. Strelka can’t hide forever. Judge Bates is fed up with Department’s delays and ordered the list of documents Mr. Holder and Mr. Obama have been hiding for years now on their Fast and Furious scheme. Soon, Judge Sullivan could appoint a special prosecutor or demand production of the back-up server’s emails, or give Judicial Watch additional discovery after October 17.

One thing is for certain. Mr. Holder didn’t just wake up today and decide he wanted to go fishing. There are truths underlying this resignation that will be shocking when they surface. Mr. Holder will no longer have the shield of the Attorney General and the Department of Justice to protect him from congressional, grand jury, or other subpoenas. The next question is: Which criminal lawyer will he hire to defend him and how soon?

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September 29, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, September 28, 2014

The IRS Scandal, Day 507

IRS Logo 2The Daily Signal:  Eric Holder’s 7 Worst Actions as Attorney General:

3. Failure to conduct a real, criminal investigation of the IRS targeting of conservative organizations and to enforce the contempt citation issued by the House of Representative against Lois Lerner.

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

Saturday, September 27, 2014

The IRS Scandal, Day 506

Friday, September 26, 2014

The IRS Scandal, Day 505

IRS Logo 2Washington Free Beacon:  Politico's Epic Fail in Their Lois Lerner Interview, by Larry O'Connor:

Unrepentant political hack Lois Lerner finally broke her 16-month silence by granting Politico an exclusive interview Monday. She was flanked by not one, but two lawyers running interference for any challenging questions from reporter Rachael Bade.

However, if Politico had been more diligent in approaching their “big get” with a reporter who was well versed in the charges against Lerner and the conflicting narratives that have been floated by the IRS, Department of Justice, and the administration since May 2013, they would have had a fantastic interview with a plethora of challenging moments that might have ended with Lerner’s lawyers shutting down the interview before it could end.

Instead, Lerner had the opportunity to tell her story without the benefit of a real challenge on the facts of the case and how they conflict with the carefully crafted narrative told to Ms. Bade during the headline-grabbing exclusive.

Probably the most glaring example of Politico letting Lerner lie about her involvement in the IRS scandal and the subsequent cover-up comes in one of Lerner’s rhetorical tricks involving the mysteriously crashed hard-drives that contained emails related to the scandal.

Lerner is allowed to pose a rhetorical question that Ms. Bade (and apparently her editors at Politico) cannot or refuse to answer for their readers:

“How would I know two years ahead of time that it would be important for me to destroy emails, and if I did know that, why wouldn’t I have destroyed the other ones they keep releasing?”

We, the reader, never hear Ms. Bade’s answer and her editors never research the issue in any real way to inform us of the facts behind Lerner’s supposed “gotcha” moment.

The truth is divulged in a Wall Street Journal analysis of evidence uncovered via a congressional investigation, not a puff piece bit of rah-rah “journalism.” (emphasis mine)

As to Ms. Lerner’s behavior, consider that House Ways & Means Chairman Dave Camp first sent a letter asking if the IRS was engaged in targeting in June, 2011. Ms. Lerner denied it. She engineered a plant in an audience at a tax conference in May 2013 to drop the bombshell news about targeting (maybe hoping nobody would notice?). She has subsequently asserted a Fifth Amendment right to silence in front of the only people actually investigating the affair, Congress. Now we learn that her hard drive supposedly defied modernity and suffered total annihilation about 10 days after the Camp letter arrived.

The answer to Lerner’s suggestion is pretty simple. “Ms. Lerner, there is a letter from Chairman Camp asking you about the tea party group targeting in June of 2011. Your hard drives ‘crashed’ ten days after you received that letter. Why are you pretending you didn’t learn about the targeting until 2013”

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

Thursday, September 25, 2014

The IRS Scandal, Day 504

IRS Logo 2Daily Caller:  500 Days After IRS Scandal Broke, Reporter Still Refuses To Pay His Taxes, by Patrick Howley:

This week the IRS conservative targeting scandal turned 500 days old. It’s been 500 days since we learned that Lois Lerner’s former agency targeted right-leaning groups applying for nonprofit status and audited ones that already exist. And it has been 500 days since I righteously decided to stop paying my taxes.

500 days later, the IRS still hasn’t produced emails from Lerner and the more than 20 other IRS employees whose computers allegedly crashed, whose Blackberries were thrown away and “upgraded,” and, in Lerner’s case, whose hard drive was “scratched” and destroyed. But we know that Lerner exchanged confidential taxpayer information on conservatives with top White House adviser Jeanne Lambrew during the 2012 election cycle. We know that Lerner and her White House-visiting underling Nikole Flax were involved in a “secret research project” involving conservative donor information that was approved by then-IRS commissioner Steven T. Miller. President Barack Obama first called the whole thing “outrageous.” Then he said there’s “not a smidgen of corruption.”

How much longer will this go on? New IRS chief John Koskinen said that “hard drive crashes continue as we speak.” Lerner is giving softball interviews with Politico about how conservatives (who she once called “assholes”) are trying to ruin her life. The White House has yet to be subpoenaed for the emails it exchanged with Lerner. Same goes for the Department of Justice. ...

500 days ago, we learned that the most powerful tax-collecting agency in the United States has been turned into a political weapon and their enemy is average hardworking American citizens. When people find out such a thing, it tends to lead to feelings of hopelessness. It makes people cynical. Important institutions have been corrupted and there’s nothing we can do about it because they claim that the computers crashed and that’s the end of it? And 500 days later, we still don’t have the emails?

This 500-day mark should be the point where we as Americans decide we’re not going to take it anymore, when we demand answers, when we try to get basic information out of our government so we can have just one tiny fragment of justice and decency and common sense back in our lives. But it doesn’t feel like it. It feels instead like the force of 315 million people shrugging. It feels like a country accepting that we’re circling the drain as a free-market democracy, putting their headphones in and going back to looking down at their not-at-all-private cell phones. 500 days of this. 500 days.

I did not pay my taxes this year. I will not pay my taxes until every single Lois Lerner email is released and the people who planned and carried out this governmental travesty are held accountable. So start watching that clock, John Koskinen, if you think you’re going to get my overdue money, and every day this goes on is another day I’m not giving you a dime (soon it will hit 619 days, one for every hard-earned dollar I “owe.”)

Go ahead and take me to court, federal government. I’m not giving you $619 I need so I can subsidize a fraction of a new salary bonus for some unethical bureaucrat who audited my friends and fellow countrymen. Your corruption cast a hopeless pall over this great but troubled country and its great but jaded people.

I will not pay, IRS. Because America already did.

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September 25, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, September 24, 2014

60 Minutes: Is It Too Easy to Become a Tax Preparer?

(Click here to view video directly on CBS to avoid interruption caused by blog's refresh rate.)

September 24, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 503

IRS Logo 2The Volokh Conspiracy:  Targeting the Constitution, by Nicholas Quinn Rosenkranz (Georgetown):

It is now well known that the IRS targeted tea party organizations. What is less well known, but perhaps even more scandalous, is that the IRS also targeted those who would educate their fellow citizens about the United States Constitution.

According to the inspector general’s report (pp. 30 & 38), this particular IRS targeting commenced on Jan. 25, 2012 — the beginning of the election year for President Obama’s second campaign. On that date: “the BOLO [‘be on the lookout’] criteria were again updated.” The revised criteria included “political action type organizations involved in … educating on the Constitution and Bill of Rights.”

Grass-roots organizations around the country, such as the Linchpins of Liberty (Tennessee), the Spirit of Freedom Institute (Wyoming), and the Constitutional Organization of Liberty (Pennsylvania), allege that they were singled out for special scrutiny at least in part for their work in constitutional education. There may have been many more.

The tea party is viewed with general suspicion in some quarters, and it is not difficult, alas, to imagine the mindset of the officials who decided to target tea party organizations for special scrutiny. But federal officers swear an oath to “support and defend the Constitution of the United States against all enemies, foreign and domestic.” It is chilling to think that these same officials who are suspicious of the tea party are equally suspicious of the Constitution itself.

What is most corrosive about this IRS tripwire is that it is triggered by a particular point of view; it is not, as First Amendment scholars say, viewpoint-neutral. It does not include obfuscating or denigrating the Constitution; only those “involved in … educating on the Constitution” are captured by this criterion. This viewpoint targeting potentially skews every national debate about politics or government. And the skew in not strictly liberal; indeed, it should trouble liberals as much as conservatives. The ultimate checks on executive power are to be found in the United States Constitution. Insidiously, then, suppressing those “involved in … educating on the Constitution” actually skews national debate in favor of unchecked executive power. ...

“We the People” do not yet know who first decided to target “political action type organizations involved in … educating on the Constitution and Bill of Rights.” But there is at least one person who does know. Ironically, though, Lois Lerner, former director of the Exempt Organizations Division of the IRS, is making full use of her own constitutional education: “I have been advised by my counsel to assert my constitutional right not to testify …. One of the basic functions of the Fifth Amendment is to protect innocent individuals, and that is the protection I’m invoking today.”

Five years ago, Obama, our constitutional law professor-in-chief, presented his first, ringing Constitution Day proclamation: “To succeed, the democracy established in our Constitution requires the active participation of its citizenry. Each of us has a responsibility to learn about our Constitution and teach younger generations about its contents and history.” Quite so. Perhaps this year, Obama could explain why his IRS would target those who answered this call.

Legal Inusrrection:  Imperial Bureaucrat: Lois Lerner Denies Everything; Media Savvy Lerner Speaks to Politico, But Not Congress, by William Jacobson (Cornell):

The Politico article has been excoriated as a puff piece, and that it is. But it’s more. It’s a reflection of how savvy Lerner is, how she is able to manipulate not just tax exempt approvals, but also the congressional oversight system.

Lerner knows that to a large extent congressional oversight and findings of contempt are empty threats. So Lerner feels comfortable reading a statement professing her innocence while refusing to “testify,” and to spreading her word via Politico while never subjecting herself to proper cross-examination.

Lerner is the Imperial Bureaucrat, secure in the knowledge that she is all but untouchable in the warm embrace of a Democratic administration which sees not a smidgen of corruption despite the facts the administration itself has admitted or produced. ...

It’s said that in jest there is truth. Lerner joked how she hoped for a D.C. office job with a pro-Obama organizing group. ...

Why isn’t Lois Lerner worried now? Why is there no contrition? Why does she feel safe talking to Politico?

Because Lerner knows that the Imperial Bureaucracy will protect one of its Imperial Bureaucrats.

And that there will be a job out there for Lerner with Democratic operative groups once this has all blown over. After all, she has years of experience acting as a Democratic operative.

Reason:  Lois Lerner Claims the IRS Did Nothing Wrong. The Data Say Otherwise.:

Reason

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September 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, September 23, 2014

Treasury Department Takes Action to Rein in Tax Inversions

Press and blogosphere coverage:

See also Steven M. Rosenthal (Tax Policy Center), Professor Shay Got It Right: Treasury Can Slow Inversions, 144 Tax Notes 1445 (Sept. 22, 2014).

(Hat Tip: Brian Davis.)

September 23, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 502

IRS Logo 2Politico:  Exclusive: Lois Lerner Breaks Silence, by Rachael Bade: 

Employers won’t hire her. She’s been berated with epithets like “dirty Jew.” Federal agents have guarded her house because of death threats. And she’s spent hundreds of thousands of dollars defending herself against accusations she orchestrated a coverup in a scandal that has come to represent everything Americans hate about the IRS.

Lois Lerner is toxic — and she knows it. But she refuses to recede into anonymity or beg for forgiveness for her role in the IRS tea party-targeting scandal.

“I didn’t do anything wrong,” Lerner said in her first press interview since the scandal broke 16 months ago. “I’m proud of my career and the job I did for this country.”

Lerner, who sat down with POLITICO in an exclusive two-hour session, has been painted in one dimension: as a powerful bureaucrat scheming with the Obama administration to cripple right-leaning nonprofits. Interviews with about 20 of her colleagues, friends and critics and a survey of emails and other IRS documents, however, reveal a much more complicated figure than the caricature she’s become in the public eye.

The portrait that emerges shows Lerner is, indeed, fierce, unapologetic and perhaps even tone-deaf when she says things that show her Democratic leanings. She had a quick temper and may have intimidated co-workers who could have helped her out of this mess. It’s easy to see how Republicans have seized on the image of a devilish figure cracking down on conservative nonprofits.

Wall Street Journal:  IRS Apologists, by James Taranto:

Politico landed an exclusive interview with Lois Lerner, the former IRS official at the center of the still-unresolved scandal, and to call it a whitewash would be an insult to lime.

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September 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, September 22, 2014

Tax Court Approves Taxpayer's Use of Predictive Coding to Respond to IRS's Discovery Request, Reducing Costs by 80%

In a case of first impression, the Tax Court has approved a taxpayer's use of predictive coding technology to respond to the IRS's discovery demand for tax information.  Dynamo Holdings LP v. Commissioner, 143 T.C. No. 9 (Sept. 17, 2014):

Predictive CodingRespondent requests that petitioners produce the electronically stored information (ESI) contained on two specified backup storage tapes or, alternatively, that they produce the tapes themselves (or copies thereof). Petitioners assert that it will take many months and cost at least $450,000 to fulfill respondent’s request because they would need to review each document on the tapes to identify what is responsive and then withhold privileged or confidential information. Petitioners request that the Court ... let them use predictive coding, a technique prevalent in the technological industry but not yet formally sanctioned by this Court, to efficiently and economically identify the nonprivileged information responsive to respondent’s discovery request [at a cost of $80,000]. ...

Although it is a proper role of the Court to supervise the discovery process and intervene when it is abused by the parties, the Court is not normally in the business of dictating to parties the process that they should use when responding to discovery. If our focus were on paper discovery, we would not (for example) be dictating to a party the manner in which it should review documents for responsiveness or privilege, such as whether that review should be done by a paralegal, a junior attorney, or a senior attorney. Yet that is, in essence, what the parties are asking the Court to consider--whether document review should be done by humans or with the assistance of computers. ...

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September 22, 2014 in IRS News, New Cases, Tax | Permalink | Comments (1)

Tax Court: Couple Failed to Report $30 Million Gift, But Not Liable for Penalty Due to Reliance on Advice From EY, WilmerHale

EYWHIn Cavallaro v. Commissioner, T.C. Memo. 2014-189 (Sept. 17, 2014), the Tax Court held that a Massachusetts couple failed to report a $30 million gift to their sons as a result of misvaluations in a merger of their company with their sons' company, but were not liable for penalties because they reasonably relied on the advice of Ernst & Young (now EY) and Hale & Dorr (now William Cutler Hale & Dorr).

Mr. and Mrs. Cavallaro made the requisite showing of reasonable cause. They had little to no advanced education, including no formal accounting, legal, or business education. Mr. and Mrs. Cavallaro hired advisers who were competent professionals with sufficient expertise to justify reliance. They engaged professionals from a well-known accounting firm and a well-known law firm to structure the tax-free merger of their S corporation, Knight Tool, with their sons' S corporation, Camelot Systems. As discussed above, the professionals initially had differing opinions regarding the ownership of the CAM/ALOT technology, and the issue was explicitly considered by those professionals. The team of advisers eventually structured the merger transaction according to the idea proposed by the Cavallaros' attorney Mr. Hamel at Hale & Dorr -- that is, that on the date of the merger, the CAM/ALOT technology belonged to Camelot and not to Knight (and therefore that no gift occurred) because of a prior transfer. They obtained the valuation report by Mr. Maio based on this assumption and allocated the post-merger stock accordingly.

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September 22, 2014 in IRS News, New Cases, Tax | Permalink | Comments (0)

The IRS Scandal, Day 501

IRS Logo 2Forbes:  Congress Moves To Reform The IRS, by Robert W. Wood:

Does the IRS need reforming? Many people think so, and not just people focused on the Tea Party targeting scandal, Lois Lerner and the missing emails. Anyone who has had a seriously bad tax audit or a run-in with an overly aggressive IRS Revenue Agent who many seem to take no for an answer may have a bone to pick.

It still isn’t a happy time for the IRS, and it seemed somehow lackluster when the IRS announced a Taxpayer Bill Of Rights. Many observers yawned. Even so, there is no question but that the IRS has a tough job to do. On the whole, the IRS does an amazingly even-handed job at it too. Yet if you are in the crosshairs, that may not be comforting. And seeing the poor and sometimes evasive testimony for top IRS officials over the last year or so hasn’t been inspiring.

So perhaps it’s not surprising that bills are getting introduced in Congress and some are passing. Well, sort of. The House has passed several recently. All were intended to highlight complaints that the IRS mistreated conservative political groups when they applied for tax-exempt status.

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September 22, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, September 21, 2014

The IRS Scandal, Day 500

IRS Logo 2Wall Street Journal: Stonewall Koskinen: The IRS Commissioner Was Supposed to Clean Up the Mess. Instead, He's Running Interference, by Kimberley A. Strassel:

Nine months have passed since President Obama installed John Koskinen as IRS Commissioner, charged with unearthing the agency's targeting scandal and restoring its credibility. It's about nine months past time to acknowledge that Mr. Koskinen is the problem, not the answer.

The 75-year-old former Fannie Mae executive on Wednesday put in another superficial appearance before House investigators, spent another two hours dodging questions, jabbing at investigators, and excusing the misdeeds of the least-trusted organization in America. This from the guy brought in to clean up the mess—a man presented in confirmation as a "turnaround artist" and "reformer."

The Koskinen fail is now becoming a central political focus, as Republicans and even some Democrats question his tenure. Mr. Obama had declared him someone who "knows how to lead in difficult times, whether that means ensuring new management or implementing new checks and balances." Where are the sweeping changes? Where's the accountability? When the best the IRS commissioner can promise America is that "whenever we can, we follow the law"—we're in worse shape than nine months ago.

The only thing Mr. Koskinen has seemed remotely interested in turning around is his agency's ugly story-line. He has yet to even accept his agency did anything wrong, spending a March hearing arguing that the IRS didn't engage in "targeting" and claiming the Treasury inspector general agreed. This was so misleading the Washington Post gave Mr. Koskinen "three Pinocchios, " noting the IG had testified to the exact opposite.

Under his management, the agency has ignored and strung out congressional demands for documents and witnesses. Mr. Koskinen waited months to tell Congress the IRS had "lost" the emails of Lois Lerner, the former IRS official at the center the probe, and arguably only did so because an outside lawsuit revealed that the email record was incomplete. He testified that there were no backup tapes with Lerner emails, but we have since learned there are 760 server drives that may contain copies.

The "reformer" has bristled at every question. He's indignant that investigators might question how the Lerner emails were lost; indignant that they'd ask why her BlackBerry BB.T +0.93% was wiped after their investigation began; indignant that they'd wonder why he didn't tell them about the lost email. We're still waiting for him to show any indignation at the IRS employees who abused the law, and hid the fact.

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September 21, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, September 20, 2014

The IRS Scandal, Day 499

IRS Logo 2Press Release,  Citing IRS Wrongdoing, Judicial Watch Asks Federal Court to Permit Discovery to Find ‘Missing’ Emails in IRS Abuse Scandal:

Judicial Watch announced today that it has filed a Motion for Limited Discovery in its Freedom of Information (FOIA) lawsuit against the Internal Revenue Service (IRS) in order to force the agency to comply with federal court orders to produce information about how “lost and/or destroyed” IRS records relating to the targeting of conservative groups may be retrieved. The motion was filed on September 17, 2014, in the U.S. District Court for the District of Columbia, and requests a hearing for oral argument. The matter is before U.S. District Court Judge Emmet Sullivan (Judicial Watch v. IRS (No. 1:13-cv-1559)).

Judicial Watch notes that this litigation “presents a rare case in which revelations about crashed hard drives and missing emails, conflicting public reports about backup systems, and material omissions to the Court raise serious questions about the agency’s compliance with FOIA. Limited discovery is needed to answer these questions.”

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

Friday, September 19, 2014

The IRS Scandal, Day 498

IRS Logo 2Government Executive:  IRS Chief Rebuts Claim of Governmentwide Email Backup:

Internal Revenue Service Commissioner John Koskinen on Wednesday responded for the first time to assertions by a legal nonprofit that missing emails relating to the political targeting controversy at the tax agency exist on a governmentwide backup system.

His conclusion: There is no such governmentwide email trove, and confusing media accounts were based on a misunderstanding.

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

Thursday, September 18, 2014

The IRS Scandal, Day 497

IRS Logo 2Wall Street Journal:  Koskinen Faces Fresh IRS Fire at House Hearing:

House Republicans took Internal Revenue Commissioner John Koskinen to task again on Wednesday, citing his recent criticisms of congressional investigations into alleged IRS targeting of conservative groups. Wednesday’s hearing marked a renewal of GOP attacks on the IRS chief, after a period of relative quiet while Congress was on its summer break.

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September 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, September 17, 2014

The IRS Scandal, Day 496

IRS Logo 2New York Times op-ed:  Apples and Hurricanes: Obama Beyond Bush, by Frank Bruni:

Whenever Barack Obama seems in danger of falling, do we have to hear that George W. Bush made the cliff? ... The I.R.S. scandal was not as bad as Watergate. (Nothing’s ever as bad as Watergate, which serves a nifty historical function as the gold standard of executive malfeasance and mendacity.) ...

If we’re determined to glance back at a figure who flatters Obama, let’s really have at it and look all the way to Warren Harding. Golf wasn’t his only distraction. He also had a thing for poker. And when it came to seeming and feeling overwhelmed, the 29th president, an Ohio Republican, reputedly confessed to friends that he was lost in the job. By that measure Obama is a rock. But it doesn’t make him a boulder.

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

Tuesday, September 16, 2014

Retired IRS Agent Pushes NY to Audit Tax Cheats

Following up on my previous posts (links below):  Albany Times-Union, Audits Sought on Tax Cheats:

New York StateFor two years, a retired Internal Revenue Service officer has been urging state officials to audit big real estate partnerships, particularly in Manhattan, to track down tax cheats owing the state hundreds of millions of dollars.

But Jerry Curnutt hasn't gotten traction at the state Department of Taxation and Finance, and he hasn't been able to impress upon the state comptroller or attorney general how big a deal the matter is. "Why are they not doing them?" he said. "The reason: Don't make waves."

David Cay Johnston, the Pulitzer-Prize winning tax reporter for the New York Times, is so sure of Curnutt's abilities in finding real estate partnership tax cheats that the journalist said he would pay $10,000 out of his own pocket to cover Curnutt's fees. Curnutt, a 77-year-old consultant from Texas who retired from the IRS in 2000, was employed by Pennsylvania for six years on such an assignment through 2008. During that time he charged the state $190,483, at $140 an hour plus expenses. The Keystone State assessed $49 million against real estate partners who had not reported gains, its tax department said. "Additionally, Curnutt helped the department develop a case involving $700 million in nonreported income," said Department of Revenue spokeswoman Elizabeth Brassell.

September 16, 2014 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 495

IRS Logo 2Wall Street Journal editorial:  Covering for the IRS:

The IRS targeting of conservative groups has now become a story about the cover-up. More than a year after the scandal became public, the most transparent Administration in history has done everything in its power to spin the story, stymie Congressional investigators and run out the clock.

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September 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, September 15, 2014

The IRS Scandal, Day 494

IRS Logo 2The Hill:  Rand Paul Jokes He's 'Really Worried' About Anthony Weiner:

Sen. Rand Paul (R-Ky.) poked some fun at former Rep. Anthony Weiner (D-N.Y.) over his sexting scandal on Thursday.

“How many people here have a cellphone?” Paul asked an audience in New Hampshire, according to Breitbart News. “How many people think it’s none of the government’s damn business what you have on your cellphone?”

“I’ve been thinking that’s true,” Paul continued. “But I’m really, really worried about Anthony Weiner. Because you know he likes to take his selfies, and he’s had trouble finding a place to put them where the government can’t find them. So I’m thinking maybe Anthony Weiner should put his selfie in Lois Lerner’s emails.”

New York Post:  5 Lies That Have Shaped the Obama Presidency:

3. “Not even a smidgen of corruption.”

Obama said this in response to Bill O’Reilly’s question about the IRS scandal: “You’re saying no corruption?”

If there were not even a “smidgen of corruption,” as Obama insisted, it is hard to understand what outraged him, or at least seemed to, when news of the IRS scandal first broke. “It’s inexcusable, and Americans are right to be angry about it, and I am angry about it,” Obama said in May 2013. Obama routinely expressed anger when some new scandal erupted on his watch — IRS, the failed ObamaCare website, the VA scandal, Fast and Furious — but never before had he shoved a scandal down the memory hole so quickly.

And how could Obama know there wasn’t a smidgen of corruption before the investigation was even over? Perhaps because the administration knew that any proof of that was gone with deleted e-mails and destroyed hard drives?

The Wall Street Journal Report:

Paul Gigot: New developments in the ongoing investigation into the targeting of conservatives groups by the IRS, with the tax agency revealing last week that it lost the emails of five more employees, including a senior aide to Lois Lerner, the former official at the center of the scandal. That news comes amid fresh claims by House Oversight Committee chair, Darrell Issa, that Eric Holder's Justice Department is improperly collaborating with congressional Democrats in its own IRS probe. And this time, he says he has a phone call to prove it. ...

Kim Strassel: I think what you're seeing over the past week, and especially because of the latest revelation about the Justice Department--remember, the Justice Department is supposed to be investigating this IRS scandal. And instead, what we've got as an accumulation over the last few weeks is a bunch of evidence that suggests the IRS and Justice Department and other departments of the Obama administration instead appear to have been spending the past year doing everything they possibly can to impede congressional investigators in getting to the bottom of this affair.

So not just coordinating with Democrats. We now have news about Lois Lerner's BlackBerry being wiped. This happening after Congress had already starting investigating, after the Treasury inspector general had begun his investigation. You have the emails of other critical people in this scandal gone as well, at least five of them.

You have redactions in documents that are being sent so the investigators can't actually see the core conversations. And by the way, I should also note, the only reason we even know any of this is because of outside litigation, which has enlisted the help of the judicial branch, and judicial branch has been forcing the IRS and others to come clean with some stuff. That's why we're finding out they haven't been clean with congressional investigators.

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September 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, September 14, 2014

The IRS Scandal, Day 493

IRS Logo 2The Blaze:  Lois Lerner Fallout: GOP Looks to Stop IRS Workers From Using Personal Email at Work:

The Republican House next week plans to take up three IRS-related bills, including one that would prevent all IRS officials from using their personal email while at work.

The issue has come up in the GOP investigation of former IRS employee Lois Lerner and her role in the IRS targeting scandal. Not only has the IRS said it lost more than two years’ worth of Lerner’s emails, but it has become clear that Lerner used her personal email for work purposes.

The legislation from Rep. Charles Boustany (R-La.) is just one simple line prohibiting this practice: “No officer or employee of the Internal Revenue Service may use a personal email account to conduct any official business of the government,” the bill reads.

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September 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, September 13, 2014

The IRS Scandal, Day 492

Friday, September 12, 2014

Columbia Law Prof Is Victim of a 'Practice Audit'

Philip Hamburger (Columbia), Victim of a Practice Audit:

Audit 3Over at Instapundit, I read yesterday that the IRS defended its Breitbart audit with this statement: “The IRS stresses that audits are based on the information related to tax returns and the underlying tax law — nothing else.”

Glenn aptly writes “And who could hear this without laughing?” Actually, I know from personal experience it is false, because a while back I was subject to a “practice audit.”

It began with a notice that I was being audited for my charitable contributions. This was puzzling as my contributions were entirely in cash. To be sure, I was ashamed that they were pitifully low that year, but this made the audit all the more curious. Dutifully, I trekked up from the South Side to the federal building in downtown Chicago, and my accountant came in from out of state! ...

[The IRS man] asked some perfunctory questions and then turned to my charitable contributions. He looked at my embarrassingly low contributions, he examined my proof of having made them, and then seemed to weigh some profound question of tax law. The moment of truth had arrived.

At this point, however, I could not help myself. Being a former tax lawyer, but now being merely a client, I foolishly asked the idiotically simple question that had been bugging me all along: “Why am I being audited for cash contributions?”

The IRS man looked at us. Then, calmly and without discomfort, said, “It is a practice audit.”

Instinctively, I leaned forward and exclaimed, “WH . . . .” I never finished. My accountant, a well-built guy, was a step ahead of me. I felt his left arm pushing me back into my seat, while he said, “Thank you for sharing that. I assume then that this matter is closed.” The IRS man promptly agreed and that was that. ...

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September 12, 2014 in IRS News, Tax | Permalink | Comments (4)

The IRS Scandal, Day 491

Thursday, September 11, 2014

The IRS Scandal, Day 490

IRS Logo 2Commentary:  Is Eric Holder Trying to Protect the IRS?:

[I]t looks like Holder’s Department of Justice is seeking to help the IRS and the Democrats protecting the IRS. And the only reason the public knows about it is that Holder’s office accidentally called the wrong phone. Oops.

The left’s response to the IRS targeting scandal has morphed over time as more information has come to light. Mostly gone are the truthers who think nothing unethical happened or that this is an aimless witch hunt. It’s now clear to any sentient person that the IRS was indeed engaged in this targeting scheme ahead of a presidential election. Additionally, as I wrote last week, it’s since been revealed that the IRS began destroying evidence once the investigation into the targeting began.

That particular destruction of evidence concerned Lois Lerner, the former official at the center of the scandal, in order to get rid of her email correspondence. The media yawned at the revelation of the destruction of evidence, apparently tiring of this story. So the same day of Fallon’s phone call to Issa’s staff, the IRS admitted it lost the email of “five more workers who figure in the investigation into the alleged targeting of conservative nonprofit groups,” as the Wall Street Journal reported.

The Democratic response to the investigation has thus gone from the eminently silly denial that anything untoward took place to actively trying to thwart the investigation and run interference for the IRS–which, in its targeting scheme, was only following the pronouncements of high-level congressional Democrats, after all. And those Democrats have gotten quite uncomfortable with the investigation. Democratic Sen. Carl Levin has put together a report attacking the inspector general conducting the investigation.

Such interference and/or stonewalling wouldn’t be out of character for this DOJ. As the Washington Examiner reported yesterday, according to the department’s inspector general “Department of Justice senior officials have barred or delayed the inspector general there from gaining access to documents crucial to high-visibility investigations.”

The “nothing to see here” brigade has lost any semblance of credibility. In response, they’d like to make sure there’s actually nothing to see by the time investigators come looking for it.

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September 11, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, September 10, 2014

The IRS Scandal, Day 489

IRS Logo 2Washington Post:  IRS Chief’s Legal Adviser Spread Word of Missing E-mails to Treasury Lawyer:

Internal Revenue Service Commissioner John Koskinen testified this summer that he played no part in spreading word of the agency’s controversial missing e-mails to the Treasury Department or the White House. But one of his closest advisers apparently did.

Transcripts of closed-door testimony with the House Oversight and Government Reform Committee show that IRS attorney Catherine Duval acknowledged telling Treasury legal counsel Hannah Stott-Bumsted about the matter. A Fox News affiliate first revealed the testimony in a report Monday.

Washington Post:  Issa Accuses Holder Spokesman of Attempting to ‘Conspire’ With Democrats on IRS Documents:

Attorney General Eric Holder’s communications director is being accused of calling the House Oversight Committee Republican staff and asking for help spinning a story. The twist? The GOP staff alleges that Holder’s spokesman thought he was talking to the Democrats.

Oversight Committee Chairman Darrell Issa (R-Calif.) sent a letter to Holder on Monday about the incident, saying he was “extremely troubled” that the Justice Department may have been trying to coordinate with the minority staff on the release of documents to the committee regarding the Internal Revenue Service targeting certain political groups.

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September 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, September 9, 2014

CPAs File Class Action Against IRS Seeking Recovery of $150 Million in Fees Paid by Tax Practitioners

Press Release, CPAs File Class Action Seeking Recovery of More Than $150 Million in Fees Collected by IRS From Tax Practitioners:

RTRPTwo certified public accountants (CPAs) filed a class action complaint in the United States District Court for the District of Columbia earlier today challenging Internal Revenue Service (IRS) regulations requiring tax practitioners to annually register and pay a fee to the agency to obtain and maintain a preparer tax identification number (“PTIN”).  The class action involves more than 700,000 individual practitioners.  It seeks an injunction barring collection of the fee and recovery of the more than $150 million in fees the IRS has collected since 2010.

The challenged regulations were issued several years ago as part of a broad IRS initiative to radically expand its oversight of attorneys, accountants, and other tax return preparers who prepare tax returns for compensation.  Earlier this year, the D.C. Circuit Court ruled that large portions of the regulations issued by the IRS were invalid because the IRS lacked statutory authority to issue the regulations. Loving v. United States, 742 F.3d 1014 (D.C. Cir. 2014). 

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

The IRS Scandal, Day 488

IRS Logo 2New York Observer: Will Orange Be the New Black for IRS Chief Lois Lerner?, by Sidney Powell:

With five more Computer Crashes, a “pattern of racketeering activity” may be emerging.

Late last Friday afternoon, in a blatant “late news dump” to avoid making headlines about the Internal Revenue’s witch hunt against conservative non-profits, the IRS disclosed to Congress that five more of the IRS computers containing relevant records had mysteriously crashed. Those computers belonged to colleagues of Lois Lerner, whose conduct is at the center of the investigation.

Perhaps there is some strange computer virus that selectively trashes records inconvenient to incumbents, like the “glitch” that erased part of Nixon’s tapes. How else to explain the fact that this is the fourth announcement of an ever-expanding computer calamity connected to Lois Lerner to emerge from the IRS? First it was just Lerner’s computer that was affected, then those of her closest co-conspirators, then “no more than twenty” computers, and now an ever larger batch of burned out workstations.

Even more interesting, the IRS has apparently not yet shared this newest tidbit with Judge Emmet G. Sullivan, the distinguished and courageous jurist presiding over Judicial Watch’s Freedom of Information Act lawsuit. Judge Sullivan has made the most progress so far in uncovering the conspiracy among Lerner and friends to target, harass and illegally obtain information from conservative non-profit organizations to benefit Mr. Obama’s reelection campaign—for which the law firm of Ms. Lerner’s husband, Michael Miles, also hosted a voter registration event. ...

While the agency continues to blame “computer crashes” for the now more than 20 people whose emails are “missing,” no IRS official has yet to identify when or how each computer crashed—much less why. We know Lois Lerner’s hard drive, which was “scratched” only a matter of days after receiving a letter from Congress requesting her emails. The IRS then destroyed it. The IRS followed a year later with the destruction of her unimpaired Blackberry containing emails for the same period. As we reported first, it made no effort whatsoever to obtain information from the Blackberry—despite being well into the Congressional inquiry. That is obstruction of justice and destruction of evidence—worse than the conduct for which Leslie Caldwell, now head of the Criminal Division of the Department of Justice, destroyed Arthur Andersen LLP and its 85,000 jobs.

Any number of federal criminal statutes might apply to these facts, including Title 18 of the United States Code, Section 1343—Wire Fraud; Section 1503—Influencing officer generally; 1505—Obstruction of proceedings before department, agencies and committees; and Section 1519—Destruction, alteration, or falsification of records in federal investigations. Sections 1343 and 1503 are also predicate offenses for the federal Racketeering Statute, Section 1961, which provides that a “pattern of racketeering activity” can be proved by committing two predicate acts. These statutes are punishable by terms of imprisonment varying from five to twenty years. ...

So yet again, the IRS simply creates more questions and at least five more reasons for Judge Sullivan to name a special prosecutor. When did each of the now more than 20 computer crashes occur—by date and time? How could that possibly happen? Why did the IRS prematurely cancel its longstanding contract for backup? Why did it take this long to find out that 5 more had “crashed?” Where is the Blackberry or other device for each of the persons whose computer crashed? What servers are implicated? Whose resignations are forthcoming? Why is Koskinen still there? Who is on Emmet Sullivan’s short list to be the special prosecutor?

Evidence is mounting by the day that Lois Lerner and her co-conspirators abused the power of the sovereign, violated the trust of the people, lied to Congress, destroyed documents and evidence of their wrongdoing, and violated multiple criminal statutes.

With the revelations of this last week, Lois Lerner and the IRS might as well be sitting on a ticking bomb . . . and it’s about to explode.

Forbes:  IRS Loses Emails Of 5 More Key Employees, Including Lois Lerner's Aide, by Robert W. Wood:

The IRS announced that it lost emails from five more IRS workers relevant to the ongoing investigation into whether the IRS targeted conservative groups. It’s a new black eye for an agency that has had many. It was only a few months ago that the IRS revealed that Lois Lerner’s emails were gone.

Lerner remains the key figure at the heart of the controversy. Now, in another belated announcement, the “we lost five more too” raises new questions why no one seems to know very much. Or maybe they won’t say. When the whole mess came to light, Mr. Lerner refused to testify and was held in contempt of Congress. She could be prosecuted and face jail, though that’s unlikely.

The five employees include a senior aide to Ms. Lerner. Two of the latest 5 IRS employees with “computer crashes” worked in the Cincinnati IRS office processing applications for tax-exempt status. The Cincinnati office, it’s worth remembering, was where those “rogue” employees of the IRS were off supposedly doing their own thing without the say-so of their bosses at the headquarters of the IRS in DC.

(Image credit: grassfire.com)

(Demand an IRS Independent Prosecutor Petition available at http://grassfire.com/2014/06/irs-independent-prosecutor/. Image credit: grassfire.com)

Again blaming computer crashes, the IRS said it found no evidence that anyone deliberately destroyed evidence. But Rep. Darrell Issa (R., Calif.), chairs the House Oversight and Government Reform Committee, and he isn’t so sure.

“First it was only Lois Lerner,” Rep. Issa said. “Now we learn there are 5 others, several months after the administration supposedly came clean about email losses. To the contrary.… each of the five hard drive issues resulting in a probable loss of emails substantially predates the onset of the investigations in 2013.”

The IRS had a backup tape system, but officials have said the agency routinely recycled the tapes. Besides, some of the real juice may be in text or instant messages. In 2013 when the IRS targeting scandal was already brewing, Ms. Lerner asked an IRS IT specialist if the IRS saved texts. No, they are not automatically saved, came back the response. The IT person went on to say that saving them was possible, though, so be careful.

“Perfect,” came Ms. Lerner’s reply. Congressional investigators, Judicial Watch and others doubtless want emails and texts, especially since it now appears that there was a little more off-the-grid mentality when it came to texts. Many Republicans think former IRS official Lois Lerner knows a lot.

USA Today:  E-mails Show IRS Attempts at Damage Control:

Lerner has emerged as the central figure in the IRS' handling of tax-exemption applications by conservative groups before the 2012 election. The Exempt Organizations office she headed subjected groups with names such as "Tea Party" and "Patriots" to more scrutiny and longer wait times than similar liberal advocacy groups, according to congressional Republicans.

The Democratic-controlled Senate Permanent Subcommittee on Investigations released the documents Friday along with a report finding that mismanagement, and not political bias, was responsible for the targeting.

The documents show Lerner's efforts to persuade Treasury auditors that there was no institutional bias at the IRS, the agency's attempts to head off a damaging investigation with a pre-emptive apology, and Lerner's pep talk to her staff after the apology.

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September 9, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, September 8, 2014

The IRS Scandal, Day 487

IRS Logo 2Washington Post:  Why Did the IRS Clean Out Lois Lerner’s Blackberry as Probes Began?:

Congress had little opportunity to debate the Internal Revenue Service’s missing-e-mail controversy while on break during the past month, but lawmakers will have plenty to talk about when they return next week.

One question likely to come up is why the IRS wiped out Lois Lerner’s Blackberry shortly after congressional staffers interviewed the then-IRS official about suspected targeting of conservative groups.

So far, the IRS has provided no answer. ...

IRS attorney Thomas J. Kane said in a separate declaration that the agency “removed or wiped clean” information from the Blackberry in June 2012, shortly after congressional staffers questioned Lerner about the targeting allegations and in the same month that the IRS inspector general began examining the issue.

Kane offered no explanation for why the IRS “removed or wiped clean” the data, and the IRS did not respond to the same question when asked by The Washington Post on Wednesday.

Taxable Talk:  IRS Won’t Say Why It Erased Lois Lerner’s Blackberry, by Russ Fox:

Let’s assume you’re under a court order to find some emails. Your hard drive crashed, but you think that some of them are saved on your Blackberry. Would you:

(a) Try to find them on the Blackberry,
(b) Do nothing, or
(c) Erase the Blackberry.

If you’re the IRS, the answer is (c). After the IRS was on notice about the missing Lois Lerner emails the IRS then wiped clean Ms. Lerner’s Blackberry. ...

As Reason.com stated,

There may be a reasonable explanation for all this. But if there is, the IRS has yet to provide it, and in fact has refused when asked to do so. Combined with all the other suspicious and convenient omissions, lapses, and losses related to this case, it does make one wonder if perhaps there isn’t a reasonable explanation to be offered.

There’s nothing to add to Reason’s conclusion.

Washington Examiner:  We Still Don't Know Why Lois Lerner's Blackberry Was Wiped Clean

Glenn Reynolds (Tennessee):  Well, I Can Certainly Guess:  "At this point, I don’t think even the most credulous can really regard all this data destruction as anything other than a criminal conspiracy to cover up evidence of wrongdoing."

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September 8, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, September 7, 2014

The IRS Scandal, Day 486

IRS Logo 2Sharyl Attkisson, IRS Says It Has Lost Emails From 5 More Employees:

The Internal Revenue Service has lost emails from five more employees who are part of congressional probes into the treatment of conservative groups that applied for tax-exempt status, the tax service disclosed Friday.

The IRS said in June that it could not locate an untold number of emails to and from Lois Lerner, who headed the IRS division that processes applications for tax-exempt status. The revelation set off a new round of investigations and congressional hearings.

On Friday, the IRS issued a report to Congress saying the agency also lost emails from five other employees related to the probe, including two agents who worked in a Cincinnati office processing applications for tax-exempt status. ...

The IRS blamed computer crashes for all the lost emails. In a statement, the IRS said all the crashes happened well before Congress launched its investigations.

The IRS first told Congress in June that other employees involved in the probe also had computer problems. At the time, IRS Commissioner John Koskinen promised lawmakers a report on whether any had lost emails. The report was issued Friday.

"Throughout this review, the IRS has found no evidence that any IRS personnel deliberately destroyed any evidence," said the IRS statement. "To the contrary, the computer issues identified appear to be the same sorts of issues routinely experienced by employees within the IRS, in other government agencies and in the private sector."

When Congress started investigating the IRS last year, the agency identified 82 employees who might have documents related to the inquiries. The IRS said 18 of those people had computer problems between September 2009 and February 2014. Of those employees, five probably lost emails - in addition to Lerner - the agency said Friday.

Lerner, who was placed on leave and has since retired, has emerged as a central figure in congressional investigations. The other five employees appear to be more junior than she. In addition to the Cincinnati workers, they include a technical adviser to Lerner, a tax law specialist and a group manager in the tax-exempt division.

In general, the IRS said the workers archived emails on their computer hard drives when their email accounts became too full. When those computers crashed, the emails were lost. "By all accounts, in each instance the user contacted IT staff and attempted to recover his or her data," said the IRS statement. The IRS has said it stored emails on backup tapes but those tapes were re-used every six months. The inspector general's office is reviewing those tapes to see if any old emails can be retrieved..

"The IRS has lost thousands of emails, but worse yet, completely lost the American people's trust," said Sarah Swinehart, a spokeswoman for House Ways and Means Republicans. "The DOJ must appoint a special prosecutor so the full truth can come out."

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September 7, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, September 6, 2014

The IRS Scandal, Day 485

IRS Logo 2Senate Permanent Committee on Investigations Majority Report, IRS and TIGTA Management Failures Related to 501(c)(4) Applicants Engaged in Campaign Activities:

The primary conclusion of the Majority staff report is that, contrary to common understanding and widespread reporting, the IRS actually exhibited no bias in its review of conservative groups. The Majority staff report claims that the IRS targeted liberal and conservative groups equally and that a Treasury Inspector General for Tax Administration (TIGTA) report on the targeting of conservative groups was fundamentally flawed.

Senate Permanent Committee on Investigations Minority Report,  IRS Targeting Tea Party Groups

The Subcommittee Minority staff sharply disagrees with the conclusions reached by the Majority staff report. While some liberal groups were examined by the IRS from May 2010 to May 2012, there were far fewer such groups, they were systematically separate from the review of conservative groups, their questioning was far less intrusive, and, in some cases, the liberal groups were affiliates of specific organizations like ACORN that had behaved illegally in the past and could reasonably expect additional scrutiny. The inclusion of a scant few liberal groups by the IRS does not bear comparison to the targeting of conservative groups.

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

Friday, September 5, 2014

The IRS Scandal, Day 484

IRS Logo 2Judicial Watch Press Release:  New IRS Documents Show Lerner Did Not Need Conservative Group Donor Lists – Emails Mention “Secret Research Project” by Top IRS Official:

Judicial Watch today released a new batch of Internal Revenue Service (IRS) email documents revealing that under former IRS official Lois Lerner, the agency seems to acknowledge having needlessly solicited donor lists from non-profit political groups. According to a May 21, 2012, memo from the IRS Deputy Associate Chief Counsel: “such information was not needed across-the-board and not used in making the agency’s determination on exempt status.” Later, in her May 10, 2013, remarks in which Lerner first revealed in response to question she planted about the IRS targeting of conservative groups, she conceded that the requests for donor names was “not appropriate, not usual.” The new documents obtained by Judicial Watch also reveal that 75% of the groups from whom the lists were solicited were apparently conservative, with only 5% being liberal.

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September 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, September 4, 2014

IRS Releases EITC Overpayment Data

IRS, Compliance Estimates for the Earned Income Tax Credit Claimed on 2006-2008 Returns:

EITC Logo (2014)This report presents information about the nature of errors taxpayers made when claiming the Earned Income Tax Credit (EITC) in Tax Years 2006 through 2008. This is the latest of several analyses of EITC compliance undertaken by the IRS over the years to help understand behavior and develop strategies for improving the administration of the credit. Prior to this report, the most recent analysis was conducted for Tax Year (TY) 1999 in a report commonly called the 1999 Compliance Study. 

As with the earlier studies of compliance, the analysis in this report relies on audit data; in this case, the audits were conducted by IRS’ National Research Program (NRP). NRP audits are like other IRS audits but provide the added benefit that they can be used for population estimates of taxpayer reporting compliance. One challenge with using audit data is that taxpayers do not always respond to or participate in the audit as required. In particular, 15 percent of EITC filers selected for an NRP audit of a TY 2006-2008 return did not participate in the audit, compared to 6 percent selected for an audit for a TY 1999 return. When this happens, the audit outcomes may not reflect their “true” eligibility for the credit.1 To address this uncertainty, two sets of estimates are presented throughout this paper, reflecting different assumptions about the true compliance behavior of these taxpayers: the “higher” estimate assumes that audit nonparticipants are generally noncompliant and the “lower” estimate assumes that the true compliance of audit non-participants is the same as the compliance of otherwise similar audit participants.

We find no discernible change in the overall tendency for noncompliance between 1999 and 2006-2008. This is based on a comparison of “dollar overclaim percentages,” defined as total dollars overclaimed as a percent of total dollars initially claimed for EITC (before considering IRS corrections or enforcement). In TY 2006-2008, the estimates of the overclaim percentage are 28.5 percent (lower estimate) and 39.1 percent (higher estimate).

Table 2b

Comparable figures from the 1999 Compliance Study are 30.9 percent and 35.5 percent. ...

While the overall tendency for noncompliance is little changed, the growth in the EITC program has led to an increase in total dollars of claims and overclaims since 1999. Averaging over returns filed for TY 2006-2008, an estimated 23.7 million taxpayers claimed an annual total of $49.3 billion in EITC, compared with 18.8 million taxpayers claiming a total of $31.3 billion in EITC in TY 1999. Total overclaims for TY 2006-2008 are estimated to be $14.0 billion (lower estimate) or $19.3 billion (higher estimate). Similar figures from the 1999 Compliance Study are $12.3 and $14.0 billion, after adjusting for inflation ($9.7 and $11.1 billion in current dollars).

(Hat Tip: Leslie Book.)

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

The IRS Scandal, Day 483

IRS Logo 2Wall Street Journal editorial:  Tax Collectors in the Cafeteria: The IRS Doesn't Like the Way Silicon Valley Does Lunch:

Having harassed the Tea Party for years, the Internal Revenue Service is now targeting Silicon Valley. The tax collectors are offended by the practice, common in the technology industry, of providing meals to employees without counting the food as taxable compensation. ...

[L]ast week the Treasury published the annual list of IRS priorities and ominously included a plan for new guidance "regarding employer-provided meals." As a large bureaucracy, the IRS has no fewer than 317 such projects on its priority list. In this case they seem to mean it. The Journal reports that IRS auditors are now flagging the issue and demanding back taxes from companies amounting to 30% of the meals' fair-market value, according to lawyers for the firms.

You don't have to be a software programmer to think that the IRS ought to focus on other priorities. For example, not one of the 317 projects is devoted to accurate and complete disclosure of the agency's role in targeting the President's philosophical opponents.

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

Wednesday, September 3, 2014

The IRS Scandal, Day 482

Tuesday, September 2, 2014

The IRS Scandal, Day 481