Paul L. Caron
Dean


Thursday, October 23, 2014

Whistleblowers: IRS Officials Behind ‘Fraudulent’ Multi-Billion Dollar Corporate Tax Giveaways

IRS Whistleblower (2014)Raw Story:  Whistleblowers: IRS Officials Behind ‘Fraudulent’ Multi-Billion Dollar Corporate Tax Giveaways:

A 10-year veteran IRS attorney has demanded a Congressional audit of the IRS to investigate the agency’s alleged role in allowing American corporations to illegally avoid paying billions of dollars in taxes at the same time the agency is cracking down on individuals and small businesses.

In a letter to Treasury Secretary Jacob Lew, IRS commissioner John A. Koskinen, and IRS chief counsel William Wilkins, Jane J. Kim, an attorney in the IRS Office of the Chief Counsel in New York, accused IRS executives of “deliberately” facilitating multi-billion dollar tax giveaways. The letter, dated October 19, will add further pressure on the agency, which is under fire for allegedly targeting conservative and Tea Party groups.

Kim, who has previously blown the whistle on “gross waste of government resources” in the IRS New York field offices [Senior IRS Lawyer Charges Chief Counsel's New York Office With Waste and Abuse], wrote in her new letter that senior IRS officials have “intentionally undermined the authority of the IRS Whistleblower Office” to avoid taking action “in cases involving billions in corporate taxes due.” The IRS also refuses to enforce laws for “large corporate taxpayers,” resulting in giveaways of further billions, despite applying the same laws with “draconian strictness to small business, the self-employed, and wage-earning individuals.”  ...

Following coverage of her earlier allegations by Pulitzer Prize winning tax journalist David Cay Johnston, Kim was approached by a private sector lawyer representing corporate whistleblowers to the IRS, who told her that numerous legitimate investigations into corporate tax fraud were being shut down. Her letter sent on Sunday to the US Treasury and IRS described three such cases. ...

The private sector lawyer, a former IRS attorney in the Office of the Chief Counsel for over 15 years, said on condition of anonymity that Kim’s allegations are not isolated, but represent a deep-rooted trend: “The problem is the IRS upper management don’t want a big case going forward. They are purposely not working big cases. Employees are quietly encouraged not to expedite them, and to settle or dismiss them. I’ve seen the IRS sit on straightforward billion-dollar cases for years, and then decide not to pursue.” ...

[T]he private sector lawyer and ex-IRS attorney explained that since 1998, IRS restructuring has focused on bringing in “outside people.” This led to the employment of an extra layer of executives who were previously “partners from big accounting firms.” Citing active IRS criminal agents, the ex-IRS attorney said: “Almost every large firm or corporation has a person inside the IRS. It’s a revolving door, with the top two or three management layers all from big accounting and law firms, and this is why they won’t work big billion-dollar cases criminally. Private bar attorneys are, in effect, controlling the IRS. It’s a type of corruption – that’s the word used by one IRS agent I’m in touch with whose case was shut down by higher ups without cause.”

The incumbent IRS chief counsel, William Wilkins, was previously a lobbyist at the WilmerHale firm where for 21 years he represented and lobbied on behalf of private sector clients including the Swiss Bankers Association. Swiss banks UBS and Credit Suisse have faced penalties, hearings and convictions for helping wealthy Americans illegally conceal billions of dollars of taxable income.

https://taxprof.typepad.com/taxprof_blog/2014/10/whistleblowers-irs-officials-behind.html

IRS News, Tax | Permalink

Comments

Very skeptical about this. And I bet most practicing lawyers are.

Posted by: Mike Petrik | Oct 23, 2014 12:59:02 PM

Anyone else smelling large donations to the Dem Party, in order to get these cases dropped?

Posted by: Jim,MtnViewCA,USA | Oct 23, 2014 9:53:19 PM

Nothing would surprise me any more. The Service sure doesn't think twice about going after the middle market taxpayer (relatively powerless), though!

Posted by: Transactional Prof | Oct 24, 2014 7:06:47 AM

I would suggest that readers be careful in giving too much credence to Professor Caron's daily postings on the supposed "IRS Scandal." The general public -- including tax practitioners -- in the U.S. does not think there is much of a scandal there. Hence, probably 95% of what is said about it appears in right wing sources such as Fox News, blogs, etc. and politicians trying to re-ignite the flame that has died. I do think that most of this is politically driven (not really believed but politicians can play to the conspiracy driven base).

So, just be careful about the daily blog on IRS scandal. It reports principally the right wing view which is, directly or indirectly, conspiracy driven by persons with more faith than facts.

Jack Townsend

Posted by: Anon | Oct 24, 2014 10:06:29 AM

The abuse of the IRS by this administration and the CRIMINAL conduct of Lois Lerner are real and unpunished. Commissioners under Obama are unqualified and not up to the job. IRS involvement in health care dooms us all.

Posted by: Diogenes | Oct 27, 2014 8:17:56 AM

Every word of this article is true and I would have gladly used my real name if I were not involved with a lawsuit regarding misconduct by the highest levels of management within the IRS, (mostly william wilkins) while handling my own IRS Whistle-Blower claim that was open and active for nearly 4 years before being denied without a single explanation. All I can say is that I am a personal eye witness to this kind of nefarious conduct that is currently taking place within the IRS and it's really much worse than any of you can imagine!

Posted by: Joe Concerned | Oct 29, 2014 12:26:04 AM

Having 25 years of experience dealing with the IRS, for which several years were working for the Office of Chief Counsel, my opinion is that Attorney Jane Kim is right on point. It appears that the dirty little secret is that the private tax bar is now running the IRS...and Congress is well aware of it and its implications. These are the wealthiest and most influential business people in charge of the IRS.

It all began with the RRA 98 in which Congress encouraged the IRS to bring in outsiders to obtain new thoughts in managing and operating the IRS. However, since that time, the executives within the IRS simply go through a revolving door. They leave their big law/accounting firm position to spend a few years with the IRS. In that time, they learn the people and procedures, and meanwhile protect large taxpayers from the IRS. In time, they go back to their old jobs with more pay and better experience and count on the new IRS executives to protect their clients. It is clearly the scratch my back and I will scratch your mentality.

It is easy for the IRS not to do its job....budgetary reasons, lack of resources, little time on the statute of limitations, this is not the best case to take forward, litigation hazards (yes, the IRS, instead of doing its job with "fairness and equity" to all taxpayers, can think of legal weaknesses in their own position and then justify not going forward. The IRS executives will do this rather than put the tax issue in front of a tax court judge.) In addition, it is easy and better for all (at least Congress and the American public want to believe it) that the IRS did its job and examined a large taxpayer and came away without any adjustment in tax...giving the implications that the large taxpayer is complying with the law. The IRS is set up to go after the small taxpayer...not the big taxpayer.

Posted by: Anonymous | Oct 29, 2014 1:57:32 PM