Paul L. Caron

Friday, August 25, 2023

IRS Backdating Of Documents Highlights Festering Cultural Rot: ‘If The IRS Doesn't Play By The Rules, They're The Mob’

Bloomberg, IRS Backdating Court Order Spotlights Culture, Attorneys Say:

IRS Logo (2023)An unusual Tax Court order requiring the IRS to report what it knew and when about misstatements in a conservation easement case, as well as mounting claims of backdating forms at the agency, are highlighting what some tax attorneys said are festering IRS cultural problems, years in the making.

The Tax Court this week ordered the IRS to identify when agency personnel found out about misstatements to the court about the date that a $15.2 million penalty against conservation easement donor LakePoint was approved. ...

Rod Rosenstein, former deputy attorney general under President Donald Trump, is representing LakePoint in a FOIA lawsuit against the IRS and told Bloomberg Tax he’s reached out to the Treasury Inspector General for Tax Administration.

He plans to refer to the watchdog claims made by three other partnerships—Arden Row Assets LLC, Basswood Aggregates LLC, and Delwood Resources LLC—who are asking the IRS to admit its staff backdated penalty approval forms in their cases as well.

“The question is whether we’re seeing one isolated case or whether were seeing evidence of a pattern of misconduct in IRS,” Rosenstein said. “I think if you’ve looked at these other three cases, it does suggest that there is a pattern.” ...

Tax attorneys say it’s the latest chapter highlighting festering issues of IRS culture being taken over by adversarial us-versus-them attitudes at the agency. Conservation easement cases have been especially contentious [Michelle Abroms Levin, a former Justice Department Tax Division attorney,] said.

“What they have now is a win-at-all-costs culture, and I hope we can shift back to a ‘Let’s find a right answer. Let’s find the correct amount,’” she said.

[Frank Agostino, a former IRS lawyer and Department of Justice criminal prosecutor] ... said this attitude is eroding much-needed trust in the institution and fueling attitudes among taxpayers that the agency is breaking the rules to extract as much money from them as it can.

“We’re not the mob, but that’s the worry,” he said of the agency. “The IRS, if they don’t play by the rules, gets the perception of being the mob.”

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