Paul L. Caron
Dean





Saturday, November 26, 2022

Treasury Department Seeks To Hire Deputy Assistant Secretary ($135,468 - $203,700)

The U.S. Department of the Treasury is looking to hire a Deputy Assistant Secretary for Tax, Trade and Tariff Policy (application due November 30, 2022): 

Department of the treasurySummary
The Deputy Assistant Secretary reports to the Assistant Secretary for Tax Policy and is responsible for providing oversight, coordination and policy direction for the Tax and Trade Bureau (TTB).

Duties
As the Deputy Assistant Secretary Tax Trade and Tariff Policy, you will:

  • Supervise the TTB Administrator.
  • Provide policy direction to TTB based on input from Treasury leadership, US Government leaders, TTB leaders, federal advisory committees, and external groups.
  • Work with Department of Homeland Security (DHS) and Customs and Border Protection (CBP) leadership to develop customs policies; provide policy guidance to DHS on issues related to revenue and regulation of trade for economic purposes.

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November 26, 2022 in IRS News, Tax | Permalink

Monday, November 14, 2022

President Biden To Nominate Former OMB Controller Danny Werfel For IRS Commissioner

White House Statement, President Biden Announces Key Nominee:

Werfel 2Today, President Joe Biden announced his intent to nominate Danny Werfel [Wikipedia] to serve as Commissioner of the Internal Revenue Service.

Danny Werfel is a public and private sector leader who has served under both Democratic and Republican administrations. Across more than 15 years of government service, Werfel served President Barack Obama and President George W. Bush to lead some of the governments’ most complex management challenges as the Internal Revenue Service (IRS) Acting Commissioner and Office of Management and Budget (OMB) Controller. In the wake of an Inspector General report alleging various forms of mismanagement and bias in the determination of tax-exempt status for non-profit organizations, President Obama appointed Werfel to serve as Acting Commissioner of IRS in 2013. Werfel provided immediate stability to the IRS, effectively responding to numerous Congressional investigations, successfully launching the Affordable Care Act technology that IRS was responsible for, and navigated the IRS through a multi-week government shutdown.

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November 14, 2022 in IRS News, Tax, Tax News | Permalink

Thursday, November 3, 2022

WSJ: The IRS And The 8th Amendment

UpdateThe FBAR’s Muddy Morass

Wall Street Journal, The IRS and the Eighth Amendment:

IRS Logo 2Navigating the labyrinth that is the U.S. tax code can already feel like punishment for ordinary taxpayers. But the real punishment comes when Americans face oppressive penalties from the Internal Revenue Service for innocent filing mistakes. That may be about to change. The Supreme Court hear[d] oral arguments Wednesday in Bittner v. U.S., a case that could ease excessive punitive measures from the IRS.

Alexandru Bittner, a Romanian-American dual citizen, nonwillfully failed to file five foreign bank account reports, or FBARs, with the IRS while living in Romania between 2007 and 2011. Taxpayers fill out annual FBAR forms if they have “foreign financial accounts exceeding $10,000.” When Mr. Bittner moved back to the U.S., he discovered this responsibility and had his certified public accountant file these forms to the IRS. The IRS responded by imposing a $2.72 million penalty even though there were no allegations of tax fraud or any additional taxes owed.

In Bittner, the court will have to determine how much in penalties Mr. Bittner must pay.

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November 3, 2022 in IRS News, Tax, Tax News | Permalink

Monday, October 31, 2022

IRS Deputy Commissioner Douglas O’Donnell Named Acting IRS Commissioner

U.S. Treasury Department Press Release, IRS Deputy Commissioner Douglas O’Donnell Designated Acting IRS Commissioner:

Today, U.S. Secretary of the Treasury Janet L. Yellen designated Internal Revenue Service Deputy Commissioner Douglas O’Donnell as Acting IRS Commissioner. Deputy Commissioner O’Donnell will head the agency following the end of Commissioner Charles P. Rettig’s term which ends on November 12.

“I want to thank Commissioner Rettig for his tireless service to the American people across two administrations, and his leadership of the IRS during the difficult and unique challenges posed by COVID-19. I am grateful to him for his partnership and efforts to ensure taxpayers had the resources they needed to make it through the pandemic,” said Secretary Yellen. “Deputy Commissioner O’Donnell has dedicated his career to serving American taxpayers through every level of the agency. His commitment to improving the experience of the American taxpayer will guide his and the agency’s work as they continue their efforts to propel the IRS forward during a critical period of modernization. Now more than ever, the IRS has the momentum to transform with service, technology and workforce improvements that will make it a world-class agency to meet the needs of the American people.”

O’Donnell is a career IRS employee, having spent more than 36 years at the agency in a variety of roles. Prior to becoming Deputy Commissioner for Services and Enforcement, he served as the Commissioner of the IRS Large Business and International Division for nearly six years.

Charles Rettig (IRS Commissioner), Doug O’Donnell to Serve as Acting Commissioner:

As the end of my term approaches, I want to share with you that Doug O'Donnell, the IRS Deputy Commissioner for Services and Enforcement, has been selected to serve as acting IRS Commissioner. His selection, announced today by Treasury Secretary Yellen, will keep our important work for our nation moving forward until a new IRS commissioner is nominated by the Administration and confirmed by the Senate.

Doug has spent more than 36 years at the IRS in a variety of roles, and he has a strong set of skills and insight needed for this critical role. He will work closely with our agency's senior leaders and Deputy Commissioner for Operations Support Jeff Tribiano to continue work on the Inflation Reduction Act provisions, including efforts related to IRS transformation, implementation of green provisions and other new tax law. I've relied on Doug's insight and knowledge during my term as Commissioner, and he is the ideal person to lead the agency during this period.

Prior to becoming Deputy Commissioner for Services and Enforcement, Doug served as the Commissioner of the IRS Large Business and International (LB&I) Division for nearly six years. In that role, he led tax administration activities for corporations, subchapter S corporations, and partnerships with assets greater than $10 million, and he was responsible for administering the tax law that affects individuals with international activity. He served as the U.S. Competent Authority in administering the operating provisions of tax conventions and on sensitive and controversial issues related to treaty negotiations. Previously, Doug filled a variety of other roles including Deputy Commissioner (International) in LB&I as well as other executive positions including Assistant Deputy Commissioner, International; Director, Competent Authority & International Coordination; Director of International Compliance, Strategy & Policy; Deputy Director, Pre-Filing and Technical Guidance; and the Director of Field Operations, Heavy Manufacturing and Transportation Industry.

He began his career with IRS in 1986 as a revenue agent in Washington, DC, and he holds a Bachelor of Science degree in accounting from the University of Maryland, College Park.

Doug will begin serving as Acting Commissioner when my term formally ends on November 12.

Since joining the IRS in 2018, I've been amazed at the dedication and commitment that IRS employees bring to serve our nation. Doug shares that spirit, and I know the IRS will be well-positioned going forward with him as acting Commissioner.

October 31, 2022 in IRS News, Tax, Tax News | Permalink

Tuesday, October 11, 2022

ABA Hosts Free Webinar Today On Tax Traps And Opportunities In The Post-Dobbs Era

ABA

The ABA Tax Section hosts a free webinar today at 1:30 PM ET on Personhood, Reproductive Choice, and Family Formation: Tax Traps and Opportunities in the Post-Dobbs Era (register here):

The US Supreme Court's decision in Dobbs v. Jackson Women's Health Organization reversing the landmark case of Roe v. Wade has both opened tax traps and created tax opportunities that concern all Americans. To introduce these traps and opportunities to the general public, this panel will begin with a discussion of the fetal personhood movement and its potential tax ramifications.

Next, the panel will consider how Dobbs may have expanded (1) the tax definition of a "dependent" and (2) eligibility for tax benefits for reproductive "medical care" — including abortion, cryopreservation, in vitro fertilization, and surrogacy — for different-sex and same-sex couples and for individuals.

Finally, the panel will conclude with a discussion of the post-Dobbs tax aspects of employer-provided travel and lodging benefits associated with medical care, with a particular focus on the need to address concerns regarding the potential use of the tax system to surveil and criminally punish reproductive choices.

Speakers:

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October 11, 2022 in ABA Tax Section, IRS News, Legal Education, Tax | Permalink

Wednesday, October 5, 2022

Treasury Department Appoints Inaugural Members Of Advisory Committee On Racial Equity

U.S. Treasury Department, Treasury Department Announces Inaugural Members of Formal Advisory Committee on Racial Equity:

Treasury Department (2019)In conjunction with today’s annual Freedman’s Bank Forum, U.S. Secretary of the Treasury Janet L. Yellen announced the inaugural members of the Treasury Advisory Committee on Racial Equity. The first-of-its-kind committee will provide advice and recommendations to Secretary Yellen and Deputy Secretary Wally Adeyemo on efforts to advance racial equity in the economy and address acute disparities for communities of color.

Toward that end, the Committee will identify, monitor, and review aspects of the domestic economy that have directly and indirectly resulted in unfavorable conditions for communities of color. The Committee plans to address topics including but not limited to: financial inclusion, access to capital, housing stability, federal supplier diversity, and economic development.

“A critical piece of executing on our racial equity goals is bringing a wide set of outside perspectives and lived experiences to the decision-making table,” said Secretary of the Treasury Janet L. Yellen. “The Treasury Advisory Committee on Racial Equity, made up of members with wide-ranging backgrounds and expertise, will provide important insight and advice to leadership across the department to bolster and inform our equity efforts.”

The 25 inaugural members of the Committee come from a wide range of backgrounds including academia, advocacy, financial services, and local government.  Members share a common experience with and working knowledge of the implications of economic policy decisions on communities of color, as well as a deep commitment to advancing racial equity.

Michael Nutter, the David N. Dinkins Professor of Professional Practice in Urban and Public Affairs at Columbia University and the former Mayor of Philadelphia, will serve as chair of the Committee and Felicia Wong, the President and CEO of the Roosevelt Institute, will serve as vice-chair.

Dorothy Brown (Martin D. Ginsburg Chair in Taxation and Professor of Law, Georgetown University) and Darrick Hamilton (University Professor and Henry Cohen Professor of Economics and Urban Policy, The New School) are members of the committee. The full list of the 25 members is below the fold:

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October 5, 2022 in IRS News, Legal Ed News, Legal Education, Tax, Tax News | Permalink

Thursday, September 29, 2022

Inspector General: The IRS Uses Cloud Computing Services Without Adequate Security Controls, Putting Taxpayer Data At Risk

Treasury Inspector General for Tax Administration, Cloud Services Were Implemented Without Key Security Controls, Placing Taxpayer Data at Risk (No. 2022-20-052) (Sept. 27, 2022):

TIGTATo facilitate and guide its cloud security implementation efforts, the IRS developed its Cloud Security Reference Architecture in September 2019 and the Cybersecurity Cloud Operations Framework in November 2019. The IRS issued its updated Cloud Strategy and Cloud Security Internal Revenue Manual in March 2021 and September 2021, respectively.

By the end of Calendar Year 2020, the IRS had fully implemented 56 cloud services, 12 of which contained taxpayer data. The IRS deployed these cloud services without fully implemented security controls for protecting the data. ... [T]he IRS continued to accelerate cloud adoption without ensuring that important security controls designed to protect taxpayer data were in place in the cloud environment. ...

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September 29, 2022 in Advice for Erwin Chemerinsky, IRS News, Tax, Tax News | Permalink

Tuesday, August 30, 2022

Free Webinar Today On Federal Tax Careers

Free webinar today on Federal Tax Careers at 1:00 p.m. ET (register here): 

Are you interested in tax law? Even if you haven’t thought about a career in tax, maybe you want to be in a courtroom litigating or at a table strategizing business deals? Have you dreamed about working in criminal law or being a federal prosecutor? Are you interested in legislation and policy? Do you want a work/life balance after you graduate? 

Consider a career with the federal government! A position on the Hill, with the U.S. Tax Court, the Department of Justice Tax Division, or IRS Office of Chief Counsel might be the right place for you. Working for the federal government, you can gain valuable experience right from the start of your career that might take years to get in private sector jobs, if ever! Join us to learn more about our programs and the application process. Our panelists will be speaking about their experiences and careers and will be available for questions.

Panelists:

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August 30, 2022 in IRS News, Legal Education, Tax | Permalink

Friday, August 5, 2022

WSJ: The IRS Is About To Go Beast Mode

Wall Street Journal Editorial, The IRS Is About to Go Beast Mode:

IRS Logo 2Progressives want Joe Biden to unleash what they call “beast mode” executive power, and the Schumer-Manchin tax bill supplies the cash to turn the Internal Revenue Service into Wolverine.

The pact between Sen. Joe Manchin and Majority Leader Chuck Schumer includes $80 billion in new funding for the tax man. Democrats claim this “investment” will yield more than $200 billion in revenue. That estimate is highly speculative, but if it’s anywhere close to right IRS auditors will soon be coming after tens of millions of Americans.

The $80 billion is more than six times the current annual IRS budget of $12.6 billion. The money will be ladled out over nine years and comes with few strings attached. The main Democratic command is for the tax agency to bring the hammer down on taxpayers. ...

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August 5, 2022 in IRS News, Tax | Permalink

Wednesday, August 3, 2022

Federalist Society: Are IRS Defenses Crumbling?

Federalist Society, Are IRS Defenses Crumbling?:

The continuous stream of regulations and other guidance the Internal Revenue Service (IRS) must publish to inform the public how it is going to implement, administer, and enforce the frequent, numerous, and complicated changes to the tax laws, along with the high dollar stakes involved, create constant opportunities and incentives to challenge the IRS.

Some contend that the IRS’s ability to defend itself against these challenges seems to be vanishing as one after another of their recent court cases have been unsuccessful.

Our speakers discussed this in more detail, along with what they might portend for how the Internal Revenue Service and the Treasury Department issue future guidance. Another direction to watch is at the other end of Pennsylvania Avenue: will Congress begin to do a better job drafting laws and providing instructions and guidance about how they are to be implemented, administered, and enforced?

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August 3, 2022 in IRS News, Tax | Permalink

Thursday, July 28, 2022

IRS: No Political Influence In Comey|McCabe Audits

Following up on my previous posts:

Bloomberg, IRS Tells Senators No Political Influence in Comey Audit:

IRS officials at a closed-door meeting on Tuesday expressed confidence that audits of two former FBI leaders were not politically motivated, senators said.

IRS Commissioner Chuck Rettig “was pretty clear that there was no political interference,” Sen. Ben Cardin (D-Md.) said following the meeting between the Senate Finance Committee and IRS officials. ...

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July 28, 2022 in IRS News, Tax, Tax News | Permalink

Thursday, July 21, 2022

Indictment Charges Michigan Tax Attorney (Former KPMG Senior Manager) With Embezzling $6.5 Million From Client Who Hired Him To Settle IRS Debt

ABA Journal, Indictment Alleges Tax Lawyer Kept $6.5M in Client Funds After Claiming He Used It to Pay IRS Debt:

A lawyer in Oakland County, Michigan, has been charged with tax evasion for alleging wiring $6.5 million in client money to his Swiss bank account without paying taxes on the embezzled funds.

Tax lawyer, Jeffrey Freeman of Birmingham, Michigan, was charged in a July 7 indictment.

Detroit.com, Oakland County Attorney Took $6.5M From Client, Told Her He Used It to Settle IRS Issue, Feds Say:

A tax attorney from Oakland County was hired by a business owner to help her settle an IRS investigation, but he convinced her she owed $6.5 million more than she actually did so he could put that money in his own Swiss bank account, federal officials said. ...

Freeman filed a 1040 U.S. joint tax return for the year 2013 on May 7, 2015, according to the indictment. On that return, he didn’t report any of the $6.5 million he had embezzled from his client, according to authorities. By underreporting that income, Freeman avoided paying about $2,781,882 in taxes, officials said.

July 21, 2022 in IRS News, Tax | Permalink

Friday, July 8, 2022

WSJ: Comey|McCabe IRS Audits AND ProPublica Tax Leak Should Be Investigated

Comey

New York Times, I.R.S. Asks Inspector General to Review Audits of Comey and McCabe:

The agency said its commissioner asked the Treasury Department’s inspector general for tax administration to look into the audits after The Times raised questions about them.

Wall Street Journal, Comey, McCabe and IRS Audits:

The press corps is aflutter at the New York Times report this week that former FBI officials James Comey and Andrew McCabe faced burdensome tax audits under a Trump appointee. We’re glad to see the new attention to the Internal Revenue Service, and welcome to the cause if you mean it.

Messrs. Comey and McCabe were rotten public servants, but any abuse of the IRS for political purposes has to be punished and deterred.

But some Democrats aren’t waiting to jump to Trumpian conclusions. “Trump has no respect for the rule of law,” said Senate Finance Chairman Ron Wyden in a statement. “If he tried to subject his political enemies to additional IRS scrutiny that would surprise no one.” Mr. Trump says he knew nothing about the audits.

Too bad Mr. Wyden has shown little interest in the rule of law concerning other IRS abuses. One example is last year’s leak of tax records to the progressive website ProPublica. The site published the detailed records of such billionaires as Warren Buffett and Jeff Bezos in June 2021, the same time Democrats were making the case for a wealth tax. The leak was a federal crime, and ProPublica hasn’t disclosed its source or how the files were obtained.

A year later the IRS still hasn’t offered information about the leak to Congress. Not that Mr. Wyden’s committee or Democrats on House Ways and Means seem eager to know.

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July 8, 2022 in IRS News, Tax, Tax News | Permalink

Thursday, July 7, 2022

NY Times: Comey And McCabe, Who Infuriated Trump, Both Faced Intensive IRS Audits

Comey

New York Times, Comey and McCabe, Who Infuriated Trump, Both Faced Intensive I.R.S. Audits:

The former F.B.I. director and his deputy, both of whom former President Donald J. Trump wanted prosecuted, were selected for a rare audit program that the tax agency says is random.

Among tax lawyers, the most invasive type of random audit carried out by the I.R.S. is known, only partly jokingly, as “an autopsy without the benefit of death.”

The odds of being selected for that audit in any given year are tiny — out of nearly 153 million individual returns filed for 2017, for example, the I.R.S. targeted about 5,000, or roughly one out of 30,600.

One of the few who received a bureaucratic letter with the news that his 2017 return would be under intensive scrutiny was James B. Comey, who had been fired as F.B.I. director that year by President Donald J. Trump. Furious over what he saw as Mr. Comey’s lack of loyalty and his pursuit of the Russia investigation, Mr. Trump had continued to rail against him even after his dismissal, accusing him of treason, calling for his prosecution and publicly complaining about the money Mr. Comey received for a book after his dismissal.

Mr. Comey was informed of the audit in 2019. Two years later, the I.R.S., still under the leadership of a Trump appointee after President Biden took office, picked about 8,000 returns for the same type of audit Mr. Comey had undergone from the 154 million individual returns filed in 2019, or about one in 19,250.

Among those who were chosen to have their 2019 returns scrutinized was the man who had been Mr. Comey’s deputy at the bureau: Andrew G. McCabe, who served several months as acting F.B.I. director after Mr. Comey’s firing. ...

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July 7, 2022 in IRS News, Tax | Permalink

Monday, July 4, 2022

NY Times: The IRS Is The Gatekeeper For Charities, But Approves 99.96% Of All Applications; Form 1023EZ = EZ Fraud

Form 1023-EZ

New York Times, 76 Fake Charities Shared a Mailbox. The I.R.S. Kept Approving More.:

The tax agency is the gatekeeper for America’s charity system, but reduced vetting has opened the door to scams.

The “American Cancer Society of Michigan,” state authorities say, was a fake charity. And not even a good fake.

It was not in Michigan, for one thing. When the group applied to the Internal Revenue Service to become a tax-exempt nonprofit in 2020, it listed its address as a rented mailbox on Staten Island. It was not the American Cancer Society, either: In fact, the real American Cancer Society had already warned the I.R.S. that the leader of the sound-alike group, Ian Hosang, was running a fraud.

The I.R.S. approved the group anyway. Soon after, it also approved another operation run by Mr. Hosang: “the United Way of Ohio,” which was also registered to the Staten Island address.

Mr. Hosang, 63, is now accused by prosecutors in New York of operating a long-running charity fraud that has astounded nonprofit regulators and watchdogs — and raised concerns about the I.R.S.’s ability to serve as gatekeeper for the American charity system.

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July 4, 2022 in IRS News, Tax | Permalink

Tuesday, June 28, 2022

Job Opportunities In The U.S. Treasury Department's Office Of Tax Policy ($126,233 - $176,300)

Following up on last week's post: Job Opportunities in the Office of Tax Policy:

Treasury Department (2019)The Office of Tax Policy is looking to hire attorney-advisors in the Office of Tax Legislative Counsel (TLC), the Office of International Tax Counsel (ITC), and the Office of Benefits Tax Counsel (BTC), as well as a Deputy International Tax Counsel for Treaty Affairs.  Our offices place a high value on diversity of experiences and perspectives and encourages applications from individuals from all ethnic and racial backgrounds, veterans, LGBTQ+ individuals, and persons with disabilities.

TLC is staffed by fewer than 20 lawyers and other advisors with specific subject matter expertise covering the spectrum of the U.S. domestic tax system, other than employee benefits and employment tax related tax matters.  Attorney-advisors in the office shape policy and legal interpretations of the tax law through their work on regulatory and other administrative guidance projects and by providing technical assistance to congressional staff in drafting tax legislation.  TLC is seeking attorneys with at least seven years of legal experience and significant experience in one of the following subject matter areas: taxation of individuals, estates, and trusts under federal income and transfer tax rules; rules related to charities and other exempt organizations, as well as state, local, or Indian tribal governments; taxation of partnerships, S corporations, or other pass-through business entities and their owners; and/or energy tax rules, especially with respect to renewable energy incentives.

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June 28, 2022 in IRS News, Legal Education, Tax | Permalink

Thursday, June 23, 2022

Watchdog Says IRS Backlog Of Tax Returns Is Growing, Contradicting Biden Administration’s Repeated Claims Of Significant Progress

New York Times, Millions of Tax Returns Have Not Been Processed as the I.R.S. Tries to Clear Its Backlog:

Millions of 2021 taxpayer returns filed with the Internal Revenue Service have yet to be completed, and the agency is facing a larger-than-normal backlog at this point in the tax season, the Treasury Department said on Tuesday [IR-2022-128, IRS Continues Work on Inventory of Tax Returns; Original Tax Returns Filed in 2021 to be Completed This Week (June 21, 2022)].

More than twice as many tax returns await processing “compared to historical norms at this point in the calendar year,” according to a letter sent to lawmakers by top Treasury and I.R.S. officials [I.R.S. and Treasury Letter to Lawmakers (June 21, 2022)].

Wall Street Journal, IRS Is Falling Further Behind on Tax-Return Backlog, Watchdog Says:

The Internal Revenue Service faces daunting mathematical and logistical challenges in its attempt to largely eliminate its tax-return backlog by the end of 2022, an agency watchdog said Wednesday.

The backlog of unprocessed paper tax returns was 21.3 million at the end of May, up 1.3 million from a year earlier, according to Erin Collins, the national taxpayer advocate, who runs an independent taxpayer-service operation within the IRS. Agency officials have said they aimed to return the backlog to a “healthy” level in the next six months.

“Unfortunately, at this point the backlog is still crushing the IRS, its employees, and most importantly, taxpayers,” Ms. Collins wrote in a report to Congress [National Taxpayer Advocate Objectives Report To Congress Fiscal Year 2023; IR-2022-129, National Taxpayer Advocate Issues Midyear Report to Congress; Expresses Concern About Continued Refund Delays and Poor Taxpayer Service (June 22, 2022)].

Politico, Backlog of Unprocessed Tax Returns Is Growing, Watchdog Says:

The report contradicts the Biden administration’s repeated claims that it is making significant progress in catching up on the filings.

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June 23, 2022 in IRS News, Tax | Permalink

Wednesday, June 22, 2022

Free Webinar Today On Job Opportunities In The Office Of Tax Policy (U.S. Treasury Department)

The ABA Tax Section is hosting a free webinar today at 1:00 PM ET on Opportunities to Influence Change: Legal Jobs in the Office of Tax Policy (register here):

ABA Tax SectionThe Office of Tax Policy at the Treasury Department is responsible for developing and implementing the tax policies and programs of the United States, drafting tax regulations, negotiating tax treaties, and providing legal analysis of tax policy decisions. But what does all of that really mean? Please join members of the Office of Tax Policy to learn about the day-to-day experience of working as an attorney-advisor, and to discover potential career opportunities that let you be on the forefront of developments in tax law, all while serving the public interest.

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June 22, 2022 in ABA Tax Section, IRS News, Legal Education, Tax | Permalink

Saturday, June 11, 2022

For 1st Time Since 2011, IRS Makes Mid-Year Adjustment In Standard Mileage Rate Due To Spike In Gas Prices; 62.5¢/Mile Is Up 11.6% From 2021

IR-2022-124, IRS Increases Mileage Rate For Remainder of 2022:

The Internal Revenue Service today announced an increase in the optional standard mileage rate for the final 6 months of 2022. Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes.

For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022. The IRS provided legal guidance on the new rates in Announcement 2022-13, issued today.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. For travel from Jan. 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03.

IRS Mileage

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June 11, 2022 in IRS News, Tax, Tax News | Permalink

Saturday, June 4, 2022

IRS Dangles Telework To Lure Workers To Beleaguered Agency

Bloomberg, IRS Dangles Telework to Lure New Recruits to Beleaguered Agency:

IRS Logo 2The IRS is in the midst of a return-to-office effort that will offer many employees the option to telework some or most of the time, something agency officials and union leaders view as an asset in recruiting.

The Covid-19 pandemic forced the agency to close its offices for several months in 2020. While employees tasked with processing paper tax returns and other documents have been working in-person for the last two years, many other employees have continued to work remotely.

The IRS is taking a phased approach to bringing everyone back to the office, which started in late April with members of leadership coming in at least once per pay period. As of May 8, employees without formal telework agreements were required to return to the office, and other employees could do so voluntarily.

“We’re starting to see increased foot traffic in our buildings again,” Geralda Larkins, project director of return to office at the IRS, said in an interview.

Normal operations are scheduled to begin on June 25, when employees will need to follow the specific rules of their telework agreements, including whether they need to be in-office a certain number of days each pay period or need to telework within a certain distance of their office.

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June 4, 2022 in IRS News, Tax | Permalink

Tuesday, May 31, 2022

IRS Releases 2021 Data Book: Audit Rates Plummet For The Rich

Following up on my previous post, GAO: IRS Audit Rates Plummet For The Rich:  IR-2022-111, IRS Releases Fiscal Year 2021 Data Book Describing Agency’s Activities (May 26, 2022):

2021 IRS Data BookThe Internal Revenue Service today issued the Data Book detailing the agency's activities during fiscal year 2021 (October 1, 2020 – September 30, 2021). ...

In addition to describing work performed during the pandemic, the IRS Data Book for fiscal year 2021 comprises 33 tables describing a wide variety of IRS activities from returns processed, revenue collected, and refunds issued to the number of examinations conducted and the amount of additional tax recommended, as well as budget and personnel information. The Data Book provides point-in-time estimates of IRS activities as of September 2021. A lengthier discussion of recent data was also released today.

IRS Table 2

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May 31, 2022 in IRS News, Tax | Permalink

Monday, May 23, 2022

GAO: Lack Of Data Limits Research On Tax Equity

GAO, Tax Equity: Lack of Data Limits Ability to Analyze Effects of Tax Policies on Households by Demographic Characteristics:

GAO (2022)The U.S. has a large and increasing gap in income and wealth by race, ethnicity, and sex. However, little is known about the effects of tax policies across demographic characteristics. The tax code does not tax individuals differentially based on certain demographics. However, some researchers have noted how it could result in potential unintended disparate tax outcomes. 

The CARES Act includes a provision for GAO to report on its ongoing COVID-19 monitoring and oversight efforts. GAO was also asked to review how selected tax policies affected households by race, ethnicity, and sex as part of this oversight.

This report (1) examines approaches for analyzing the effect of tax policies, including some in the CARES Act and related legislation, on households by race, ethnicity, and sex, and (2) estimates how households use selected tax provisions by race, ethnicity, and sex. 

May 23, 2022 in Gov't Reports, IRS News, Tax | Permalink

Tuesday, May 3, 2022

WSJ: To Get Your Tax Records From The IRS, Taxpayers Still Have To Turn Over Sensitive Personal Info To Outside Vendor

Following up on my previous posts (linked below):  Wall Street Journal Tax Report, They’re Your IRS Records. Getting Them Means Giving Up Privacy.:

IRS Logo 2Tax Day 2022 has come and gone, but this year’s filing season brought an unpleasant surprise for many Americans that’s still here: People who want online access to their tax records at the Internal Revenue Service have to turn over sensitive personal information to an outside company to get them. ...

Over the last decade, the IRS has had severe problems with its own systems that limited access for many taxpayers, so last year it turned to an outside vendor, ID.me, to verify identities. ID.me, which originated to help military families access benefits, is based in McLean, Va. It now provides online ID verification services to 10 federal agencies and 30 states. Its contract with the IRS is for up to $86.8 million.

Now, taxpayers who want to view their IRS records online must submit copies of driver’s licenses, Social Security cards and other documents to ID.me as proof of identity.

ID.me says that due to federal requirements, applicants must also provide a certain type of facial “selfie” or else have an online video interview with a representative for comparison with photo IDs.

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May 3, 2022 in IRS News, Tax, Tax News | Permalink

Thursday, April 28, 2022

WSJ Op-Ed: Biden's Tax Proposal Would Help Nobody But Tax Lawyers

Wall Street Journal Op-Ed:  A Biden Tax Proposal Would Help Nobody but Tax Lawyers, by Travis Nix (J.D. 2023, Georgetown):

IRS Logo 2Buried on page 82 of the Biden administration budget’s proposed tax changes for 2023 is a section that would give the Internal Revenue Service more time to audit individuals and large companies. Current law limits the IRS to three years to assess a tax deficiency, except if a taxpayer appears to have failed to report at least 25% of income, in which case the agency gets six years. There’s no time limit if the suspected omissions are deliberate. The Biden proposal would change this standard by also allowing six years if the IRS believes the taxpayer has unintentionally omitted more than $100 million from a return.

On the surface, this may appear a reasonable measure. It’s appropriate for the IRS to audit corporations that fail to report income, and $100 million sure seems like a lot of money. But it’s complicated.

While $100 million is an enormous sum for an individual, it’s beans for large corporations with billions in revenue. It could represent a relatively minor transaction—such as a small acquisition that a corporation thought was tax-free, but the IRS decides to dispute.

There’s a big difference between willful tax evasion and an honest mistake stemming from an ambiguous tax code. Since the IRS already has unlimited time to audit the returns of companies that seem to have deliberately omitted income they knew was taxable, the new regulation would largely target unknowing omissions that result from unclear regulations. ...

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April 28, 2022 in IRS News, Tax | Permalink

Tuesday, April 5, 2022

WSJ Op-Ed: When Judge Jackson Sided With A Pro-Israel Nonprofit In Tax Exemption Battle Against The IRS

Wall Street Journal Op-Ed:  When Judge Jackson Ruled Against the IRS, by Leslie Lenkowsky (Indiana):

JacksonIt’s safe to assume that Judge Ketanji Brown Jackson—who was appointed to the federal bench by President Obama and has been lauded by progressives—wasn’t personally a fan of the tea-party movement. But while on the bench, she defended a pro-Israel group that was seeking tax exemption against the sort of extra scrutiny the Internal Revenue Service brought to bear on many organizations associated with the tea party during the Obama administration.

The case involved Z Street, which provides information to the public on issues related to Zionism, Israel and the Middle East. At the end of 2009, it applied for tax exemption as a public charity under Section 501(c)(3) of the tax code. Six months later, an IRS representative allegedly told Z Street a decision would be delayed because the agency had a special unit to examine requests from groups dealing with Israel to determine whether their views contradicted the Obama administration’s policies.

Z Street sued, and the case was assigned to Judge Jackson. In a 2014 ruling, Judge Jackson dismissed the IRS’s argument that its judgments about tax exemptions had immunity from judicial review. She accused the IRS of using procedural claims to block litigation of a constitutional issue.

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April 5, 2022 in IRS News, Legal Education, Tax | Permalink

Tuesday, March 29, 2022

NY Times: IRS Seeks $5 Billion To Fund 40% Increase In Criminal Investigations Unit To Target Russian Oligarchs

New York Times, Amid Invasion of Ukraine, I.R.S. Aims to Police Oligarch Sanctions:

RussiaThe Internal Revenue Service is pressing Congress to devote more resources to the agency as it takes an increasingly central role in the Biden administration’s efforts to prevent Russia and its oligarchs from evading the punishing sanctions that the United States has imposed.

Aides to Charles P. Rettig, the I.R.S. commissioner, told congressional staff on Wednesday afternoon that the agency’s criminal investigations unit, which has 3,000 employees, needs to grow about 40 percent over the next five years. It wants a net gain of about 1,300 after attrition. That could require Congress to invest more than $5 billion in the agency, which is trying to oversee a sprawling sanctions program and coping with evasion tactics that have become more sophisticated as a result of the proliferation of digital assets.

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March 29, 2022 in IRS News, Tax | Permalink

Thursday, March 10, 2022

IRS Audits Of Poorest Families Soar While Millionaire Audits Continue To Languish

The Transactional Records Access Clearinghouse at Syracuse University has released a new report, IRS Audits Poorest Families at Five Times the Rate for Everyone Else:

A large increase in federal income tax audits targeting the poorest wage earners allowed the Internal Revenue Service to keep overall audit numbers from further declines for Americans as a whole during FY 2021. That resulted in these low-income wage earners with less than $25,000 in total gross receipts being audited at a rate five times higher than for everyone else.

TRAC-IRS 1

To its credit last year, the IRS did manage to slightly raise the audits of millionaires. During FY 2021 IRS revenue agents and tax examiners audited 13,725 of taxpayers reporting $1 million dollars or more in positive income. This was up from the abysmally small numbers audited during FY 2020 (11,331), but still slightly below how many millionaire returns were audited during FY 2019 (13,970).

TRAC-IRS 2

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March 10, 2022 in IRS News, Tax, Think Tank Reports | Permalink

Tuesday, March 8, 2022

WSJ: IRS Is Audited Over Its Safeguards Against Favored Treatment Of Big Business

Following up on my previous posts:

Wall Street Journal, IRS Is Audited Over Its Safeguards Against Favored Treatment of Big Business:

The Internal Revenue Service’s watchdog is examining how the agency guards against favoring large businesses and global companies in compliance matters as part of a broad audit.

The U.S. Treasury Inspector General for Tax Administration, or Tigta, has reached out to people inside and outside the IRS for information since starting work on the audit late last year, according to a person familiar with the inquiry. Among the lines of inquiry is how the IRS handles conflicts of interest and the revolving door between the accounting industry and IRS, the person said.

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March 8, 2022 in IRS News, Tax, Tax News | Permalink

Monday, March 7, 2022

NY Times: Decades Of Neglect Leave IRS In Tax Season ‘Chaos’

New York Times, Decades of Neglect Leave I.R.S. in Tax Season ‘Chaos’:

IRS Logo 2At the Internal Revenue Service’s sprawling Kansas City, Mo., processing center, teams of clerks earning $15 per hour work through the night, trying to help the agency clear a backlog of more than 20 million tax returns that are a year overdue.

The conditions are subpar: Scanners sputter, forcing workers to enter data by hand, staplers are scarce and piles of tax documents overflow from carts.

“The general theme for the time I’ve been there has been chaos,” said Shawn Gunn, a clerk in the receipt and operations group at the I.R.S. who started working at the facility in Kansas City last June and is transitioning to become a tax examiner.

What’s happening in Kansas City provides a window into the problems plaguing the I.R.S., which is mired in a political and logistical mess that has frustrated taxpayers, angered lawmakers and put a key source of funding for President Biden’s economic agenda in jeopardy.

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March 7, 2022 in IRS News, Tax, Tax News | Permalink

Thursday, March 3, 2022

Bogdanski: The IRS Will Move Faster! No, Not For You.

Jack Bogdanski (Lewis & Clark), The IRS Will Move Faster! No, Not For You.:

IRS Logo 2I've been digging through the tax news of the last few weeks. It's my job. And one of the items that caught my eye was an announcement by the IRS that it's setting up a new "fast track" private letter ruling system for corporate transactions. Private letter rulings are where people with a lot of money go to get the IRS's blessing on their deals before they enter into them.

The timing couldn't be worse for the IRS to be speeding up the process for the well-heeled. The agency is currently sitting on literally tens of millions of tax returns, filed on paper, that it still hasn't gotten to from last year. I think there may be some unprocessed returns lying around from the year before that as well.

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March 3, 2022 in IRS News, Tax | Permalink

Monday, February 28, 2022

NY Times: Treasury Is Asked To Investigate Its Hiring Of Tax Lawyers From Big Accounting Firms

Following up on my previous post, NY Times: Tax Lawyers At Top Accounting Firms Cycle In And Out Of Top Treasury Posts And Reap Huge Reward For Their Clients And Themselves:  New York Times, Treasury Is Asked to Investigate Its Hiring of Lawyers From Big Accounting Firms:

Big 5A pair of Democratic lawmakers asked the Treasury Department’s inspector general on Tuesday to investigate the revolving door between the country’s biggest accounting firms and key policy positions at the Treasury.

Senator Elizabeth Warren of Massachusetts and Representative Pramila Jayapal of Washington were prompted by an investigation published by The New York Times in September detailing how giant accounting firms embed top lawyers inside the government to draft tax rules that benefit their clients.

The Times found at least 35 examples in which lawyers at the country’s biggest accounting firms left to join the government, largely in the Treasury’s tax policy office, and then returned to their old firm.

The Times found that while in the government, many of those lawyers granted tax breaks to their former firms’ clients, softened efforts to clamp down on tax shelters and approved loopholes used by their former firms. In nearly half the examples, the officials were promoted to partner upon rejoining their old firm.

The pattern has been repeated in both Democratic and Republican administrations, including those of Donald J. Trump, Barack Obama, George W. Bush and Bill Clinton.

Since October, the two lawmakers collected information from five accounting firms — PwC, EY, Deloitte, RSM and KPMG — detailing the phenomenon. ...

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February 28, 2022 in IRS News, Tax, Tax News | Permalink

Saturday, February 19, 2022

WaPo Op-Ed: Taxpayers Will Pay An Enormous Price For The IRS Not Using Facial Recognition

Following up on my previous posts:

Washington Post op-ed:  Taxpayers Will Pay an Enormous Price for the IRS Not Using Facial Recognition, by Stewart Baker (Steptoe & Johnson, Washington, D.C.):

The Internal Revenue Service’s use of face recognition technology has unleashed a storm of congressional criticism from both Democrats and Republicans. This rare moment of bipartisanship would deserve recognition — if the critics were right.

But they’re not.

The background is familiar to anyone who pays federal taxes. The IRS and millions of taxpayers have been plagued by identity fraud for years. Impostors have claimed other people’s tax refunds before the real returns were even filed. They have collected billions in covid-19 relief benefits using stolen identities. To stem the bleeding, the IRS contracted with ID.me, a private identity verification firm. That firm uses, among other things, face recognition technology to match applicants’ video photos to the pictures on their driver’s license or passport. ...

Cowed by the accusations of bias and privacy, the IRS announced that it will “transition away” from face recognition. But both accusations are false, and the price that you and I will pay for this panicky retreat is enormous. ...

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February 19, 2022 in IRS News, Tax | Permalink

Thursday, February 10, 2022

IRS Office of Chief Counsel Hosts Navigating Careers In IRS' Office Of Chief Counsel

IRS Office of Chief Counsel hosts Navigating Careers in IRS' Office of Chief Counsel today at 12:30 PM EST (register here). 

Office-of-chief-counselHave you ever wondered about working for the IRS, Office of Chief Counsel? Are you interested in tax or cutting edge issues? Do you like Litigation or Transactional Law? Have you considered a career with the federal government? IRS' Office of Chief Counsel might be the place for you! Come join us to learn about our programs, how to apply, and ask questions about the application process.

We are currently hiring LLM students, recent grads and experienced attorneys.  Don’t miss this unique opportunity to learn about the Office of Chief Counsel and get some of your questions answered.

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February 10, 2022 in IRS News, Legal Education, Tax | Permalink

Wednesday, February 9, 2022

IRS Chief Counsel Honors Attorney Program (Class of 2022)

USA Jobs, Honors Attorney Program (Class of 2022):

IRS Office of Chief Counsel Logo (2015)Summary
Office of Chief Counsel, IRS, is looking for enthusiastic individuals to join our team and gain valuable experience in a legal environment. Our mission is to serve America's taxpayers fairly and with integrity by providing correct and impartial interpretation of the internal revenue laws and the highest quality legal advice and representation for the IRS. It is a great place to work with an excellent benefits package and family-friendly atmosphere.

Duties
The IRS Office of Chief Counsel's Honors Program is a highly competitive program available to primarily third-year law students, graduating Tax LL.M. students and judicial clerks. The program offers entry level positions that provide the opportunity to acquire significant training and experience in tax law. The positions are open to individuals each year who have superior academic qualifications or relevant experience to the work of the Office of Chief Counsel.

  • Appointments will be made to a Law Clerk at the GS-12 (with LL.M.) for 14-months, pending bar association admission.
  • Participants may be converted to an entry-level attorney position after admittance to a State Bar and demonstration of satisfactory employment during the interim period.
  • If admitted to a State Bar before the Final Job Offer, appointments will be made to a General Attorney (Tax) GS-12/13/14.

As an attorney with the Office of Chief Counsel you will work for one of several major Counsel organizations, based on your particular interest, qualifications, and the staffing needs of the Office. Whether you are in a field office or National Office position, you will receive substantial training and responsibility. The following link describes our legal divisions Legal Divisions | IRS Careers

We are recruiting for both our National Office and our Field Office Divisions throughout the country.

National Office
We are recruiting for our National Office Divisions located in Washington, D.C.

Field Office Divisions
We are recruiting for various divisions in the following locations: Seattle, Los Angeles, San Francisco, Washington D.C., Dallas, Denver, Chicago, Manhattan, Jacksonville, and Houston.

To qualify for this position of Law Clerk you must meet the qualification requirements listed below:

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February 9, 2022 in IRS News, Legal Education, Tax | Permalink

Tuesday, February 8, 2022

IRS Abandons Plan To Require Taxpayers To Scan Their Face To See Their Tax Returns After Firestorm Of Criticism

Following up on last week's post, The IRS Wants To Scan Your Face:  IR-2022-27 (Feb. 7, 2022), IRS Announces Transition Away From Use of Third-Party Verification Involving Facial Recognition:  

IRS Logo 2The IRS announced it will transition away from using a third-party service for facial recognition to help authenticate people creating new online accounts. The transition will occur over the coming weeks in order to prevent larger disruptions to taxpayers during filing season.

During the transition, the IRS will quickly develop and bring online an additional authentication process that does not involve facial recognition. The IRS will also continue to work with its cross-government partners to develop authentication methods that protect taxpayer data and ensure broad access to online tools.

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February 8, 2022 in IRS News, Tax, Tax News | Permalink

Saturday, February 5, 2022

IRS Offers To Settle Cryptocurrency Case, But Taxpayer Wants Precedent That Mining/Staking Is Not A Realization Event

Press Release, Taxpayer Lawsuit Demands Confirmation of Tax Treatment of Staking Rewards:

Today, the Proof of Stake Alliance (POSA), a leading blockchain industry association, celebrated important news: as part of ongoing federal litigation (Jarrett v. United States, No. 3:21-cv-00419 (M.D. Tenn.)), the government has offered to refund plaintiff Joshua Jarrett for the taxes he paid when he created new property through staking, a sign that the IRS may no longer attempt to tax tokens created through staking moving forward. Despite this initial victory, Jarrett is refusing the refund and continuing with his case, as without such a ruling there will be nothing to prevent the IRS from challenging him again on this issue.

Jarrett paid income tax for 2019 on new tokens he created through staking. Contending that property that is created—like bread baked by a baker or a novel written by an author—is only taxed when it is sold, Jarrett filed for a refund in August 2020. The IRS ignored Jarrett's refund claim, forcing him to pursue the matter in federal court. Today, court filings reveal that the government has offered to grant this refund, an early sign suggesting that the IRS will not tax property created through staking until it is sold.

POSA, and the broad coalition it represents, applauds Jarrett's decision to continue his lawsuit. He has rejected the IRS's offer of a refund, opening up the possibility of a court ruling that will give him, and millions of other taxpayers in the same position, the ability to confidently plan for the future. The importance of this issue has been raised by many, including Coin Center, the Blockchain Association, and several Members of Congress. ...

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February 5, 2022 in IRS News, New Cases, Tax, Tax News | Permalink

Saturday, January 29, 2022

The IRS Wants To Scan Your Face

Washington Post, IRS Wants to Scan Your Face:

IRS Logo 2Millions of Americans will soon have to scan their faces to access their Internal Revenue Service tax accounts, one of the government’s biggest expansions yet of facial recognition software into people’s everyday lives.

Taxpayers will still be able to file their returns the old-fashioned way; the IRS began accepting returns for 2021 earnings on Monday, encouraging electronic filing. But by this summer, anyone wanting to access their records — including details about child tax credits, payment plans or tax transcripts — on the IRS website will be required to record a video of their face with their computer or smartphone and send it to the private contractor ID.me to confirm their identity.

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January 29, 2022 in IRS News, Tax, Tax News | Permalink

Monday, January 24, 2022

IRS Chief Counsel Seeks To Hire 200 Experienced Attorneys (Salary: $79,363 - $176,300)

IR-2022-17, IRS Chief Counsel Looking For 200 Experienced Attorneys to Focus on Abusive Tax Deals; Job Openings Posted:

IRS Office of Chief Counsel Logo (2015)The Internal Revenue Service's Office of Chief Counsel today announced plans to hire up to 200 additional attorneys to help the agency combat syndicated conservation easements, abusive micro-captive insurance arrangements and other tax schemes.

"Combating abusive tax transactions that threaten to undermine our tax system remains a top priority for our enforcement efforts," said IRS Commissioner Chuck Rettig. "It's critical we work to ensure a fair tax system and adding these new attorneys will help us in on our ongoing efforts in this arena."

These positions will be available around the country, and the IRS encourages qualified candidates to apply. The first announcements for these positions have already been posted on USAJOBS. Interested persons should apply today or as soon as possible via the following announcements:

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January 24, 2022 in IRS News, Legal Education, Tax | Permalink

Monday, January 17, 2022

National Taxpayer Advocate Delivers 2021 Annual Report To Congress

NTA

IR-2022-11 (Jan. 12, 2022), National Taxpayer Advocate Delivers Annual Report to Congress; Focuses on Taxpayer Impact of Processing and Refund Delays:

National Taxpayer Advocate Erin M. Collins today released her 2021 Annual Report to Congress, calling calendar year 2021 "the most challenging year taxpayers and tax professionals have ever experienced." The report says tens of millions of taxpayers experienced delays in the processing of their returns, and with 77 percent of individual taxpayers receiving refunds, "processing delays translated directly into refund delays."

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January 17, 2022 in IRS News, Tax | Permalink

Thursday, January 13, 2022

NY Times: The IRS Is Warning Of A Messy Tax Season

New York Times, The I.R.S. Is Warning of a Messy Tax Season:

IRS Logo 2The federal tax filing season will run from Jan. 24 to April 18 this year, the Internal Revenue Service said on Monday, warning in its announcement that staffing shortages and paperwork backlogs could make for a messy and frustrating experience for taxpayers.

In a briefing on Monday, Treasury Department officials said that the I.R.S. would struggle to promptly answer telephone calls from taxpayers with questions and that a lower level of service should be expected. They blamed Republican legislators, who have blocked efforts to increase funding at the agency, for the lack of resources.

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January 13, 2022 in IRS News, Tax, Tax News | Permalink

Wednesday, January 5, 2022

Customer Service At The IRS Is So Bad, Even Tax Pros Are Fed Up

Bloomberg Businessweek, Customer Service at the IRS Is So Bad, Even Tax Pros Are Fed Up:

IRS Logo 2As tax season approaches, the agency is short-staffed, underfunded, and so overwhelmed with calls that even a phone number for VIPs is a bust.

Reaching the IRS has always been an exercise in patience. But years of budget cuts have pushed the agency to the limit. Its customer service workforce has shrunk more than 40% since 2010, according to the most recent data, and the agency is struggling to fill vacancies amid a labor shortage—handcuffed by a federal pay scale that starts college graduates at little more than fast-food wages.

IRS representatives answered fewer than 1 in 10 phone calls during the 2021 tax-filing season, according to National Taxpayer Advocate Erin Collins, who heads an independent arm of the agency designed to help taxpayers resolve problems. Even in off-peak periods the agency is answering only about 4 in 10. ...

Last season’s call volume was almost four times what it was during the 2018 filing season. During one spike in March 2021, the agency says, it received as many as 1,500 calls per second. The prospects for this filing season don’t look much better. ...

The phone issues are such that some tax professionals are paying for robots to hold their place in line. A startup called EnQ Inc. offers a service, starting at about $100 a month, that makes robocalls to the agency’s special practitioner line (i.e., the bat phone), waits on hold, and then, when it makes a connection, puts the client through to an IRS agent. ...

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January 5, 2022 in IRS News, Tax | Permalink

Monday, January 3, 2022

Can The IRS Be Trusted With Your Data?

Bloomberg Opinion:  Can the IRS Be Trusted With Your Data?, by Stephen L. Carter (Yale):

IRS Logo 2Like many Americans, I tend to feel generous this time of year — not only because it’s the season for giving, but also for the tax implications. This year, however, my usual concerns about how many deductions I can claim on next year’s return have given way to worries about privacy.

In fiscal 2021, the Internal Revenue Service processed 269 million tax forms, each one rich with information that scammers and thieves would love to have. A scathing new report from the U.S. Treasury Department’s Inspector General for Tax Administration calls into question the ability of the IRS to protect this mass of data. ...

Remember the leak of confidential taxpayer information to ProPublica earlier this year?  Whatever one’s politics, it’s easy to see it as a reason to worry, given that the IRS evidently either (1) has no way to track down who handled the data in question, or (2) allows access to private data to so many people that it’s impossible to tell who downloaded it. (And if it was an outside hack, well, that’s more worrisome still.) [See also Wall Street Journal editorial, The Internal Revenue Leak Service]

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January 3, 2022 in IRS News, Tax | Permalink

Wednesday, December 15, 2021

WSJ: The Internal Revenue Leak Service

Wall Street Journal editorial, The Internal Revenue Leak Service:

IRS ProPublicaDemocrats want to give $80 billion to the Internal Revenue Service to audit millions of Americans each year. Yet six months after the progressive website ProPublica first published the secret tax information of rich Americans, the tax agency still can’t explain what happened. Senate Republicans led by Iowa’s Chuck Grassley are demanding answers.

In a Dec. 1 letter to IRS Commissioner Charles Rettig, all 14 GOP Members of the Senate Finance Committee express frustration at how little the agency has discovered or reported on the ProPublica leak. Mr. Rettig promised when the leak occurred in June to find out what happened, but in September he told Senators, “We do not yet have any information concerning the source.” Since then it’s been crickets.

The scale alone should make investigating the breach a priority for the IRS. ProPublica claims to have thousands of individuals’ tax information, and it has continued publishing confidential details since its first report. Neither the publication nor federal authorities have said they know who leaked the records. No one seems to know, or least admit, how it was done, or how many more taxpayer files might have been stolen.

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December 15, 2021 in Congressional News, IRS News, Tax, Tax News | Permalink

Treasury Department Plans First Analysis of U.S. Tax Benefits By Race

Bloomberg, Treasury Plans First Analysis of U.S. Tax Benefits by Race:

Treasury Department (2019)The U.S. Treasury is launching an effort to examine the distribution of federal benefits and taxation by race, starting with a look at the pandemic relief payments that were due to most American households.

Deputy Treasury Secretary Wally Adeyemo, along with Lily Batchelder, the Treasury’s assistant secretary for tax policy, wrote in a blog post Tuesday that the analysis of racial data will allow policy makers to “more easily analyze the demographic and equity effects of a variety of tax provisions, shedding sunlight on policy choices and trade-offs.” ...

The push to analyze tax statistics by race has been championed by Dorothy Brown, an Emory University tax law professor and author of “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans — And How We Can Fix It.”

“Obtaining this information would counter the fallacy that our tax system affects everyone equally, regardless of race, or that only white Americans pay taxes,” Brown wrote, arguing that the data could also help design policies that narrow the U.S.’s persistent racial wealth gap.

Wally Adeyemo (Deputy Secretary of the Treasury) & Lily Batchelder (Assistant Secretary for Tax Policy), Advancing Equity Analysis in Tax Policy:

President Biden promised to build the country back better and to do so equitably. For far too long, the economy has left behind people of color and other disadvantaged communities because of structural barriers to opportunities, a dynamic which the pandemic exacerbated. Taking steps to reduce those barriers must flow through every part of the government. Recognizing that such inequity has both moral and economic components, Secretary Yellen is committed to helping unlock the potential of disadvantaged communities. Doing so will not only make our economy fairer, but also stronger, more competitive, and more resilient.

Under his first executive order, President Biden directed agencies to examine their policies and programs to identify whether and how they perpetuate barriers to equal opportunity. Having the right data to measure and advance equity is essential to completing this task. Challenges abound in doing so, however, since many federal datasets do not include race, ethnicity, or other key demographic variables. In a first of its kind interagency working group, Treasury has begun work to change this by examining the tax system through a racial equity lens. This interagency work is part of the Equitable Data Working Group, created by the executive order to organize work addressing key equity data challenges. As part of today’s Freedman’s Bank Forum, we are providing an update on these efforts.

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December 15, 2021 in IRS News, Legal Ed News, Legal Education, Tax, Tax News | Permalink

Wednesday, November 17, 2021

Soled: Congress Should Codify The IRS’s Voluntary Disclosure Program

Jay A. Soled (Rutgers; Google Scholar), The IRS’s Voluntary Disclosure Program: Need for Codification, 37 Ga. St. U. L. Rev. 957 (2021):

For more than a century, the Internal Revenue Service (IRS) has had a voluntary disclosure program in place. Its purpose is to coax into tax compliance those wayward taxpayers who have committed criminal acts or have been remiss in fulfilling their civic tax-filing obligations. Historically, the voluntary disclosure program has had to strike a difficult balance between being attractive enough to entice tax scofflaws to participate and not being too attractive lest ordinary taxpayers feel that their compliance efforts were for naught.

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November 17, 2021 in IRS News, Scholarship, Tax, Tax Scholarship | Permalink

Thursday, September 30, 2021

Schedule VR: The IRS Can Register Voters Just As Well As The DMV

New York Times op-ed:  The I.R.S. Can Register Voters Just as Well as the D.M.V. Maybe Better., Jeremy Bearer-Friend (George Washington) &

Income tax forms are notoriously complicated, but there is one simple question that is missing: “Would you like to register to vote in your home state?” With over 150 million American households filing federal income tax returns each year, our annual ritual of tax filing is a missed opportunity for voter registration.

While Americans are filling out their 1040s and Schedule Cs, they should also be asked if they would like to complete a voter registration form. The form, let’s call it a Schedule VR, would be separate from tax information, and would be available to all citizens, regardless of the amount of taxes paid or refunded. A Schedule VR would be the simplest way to create a national and nearly universal registration system.

There is good evidence that tax-time voter registration would work.

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September 30, 2021 in IRS News, Tax, Tax News | Permalink

Thursday, September 23, 2021

Treasury To Eye ‘Clawback’ Of Estate And Gift Taxes From Trusts Used By The Wealthy

Lynnley Browning (Financial Planning), Treasury to Eye ‘Clawback’ of Estate and Gift Taxes From Trusts Used by the Wealthy:

Financial advisors know by now that Democrats’ proposed tax increases would prevent affluent investors from using trusts to pass on major wealth to their heirs.

What most advisors and even estate planners don’t know: There’s a separate existential threat to investors who use trusts to move assets out of their estate free of estate and gift taxes.

The threat doesn’t come from Congressional tax writers, who are fighting over how to raise taxes to pay for the Biden administration’s $3.5 trillion spending plan. Instead, it comes via a nearly unnoticed sentence in an obscure Treasury Department document released by the agency earlier this month.

Treasury is looking at whether the IRS could “claw back” taxes on gifts that investors have made under the higher estate and gift tax exemption levels in place since 2018, according to a little-noticed remark in the agency's priority guidance plan released on Sept. 9. The recapture would come once those higher thresholds expire come 2026.

The agency’s flagging of the issue “has the potential to claw back into a taxable estate transfers into trusts that were made when exemptions were higher,” said Michael Repak, a vice president and senior estate planner at wealth management firm Janney Montgomery Scott in Philadelphia.

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September 23, 2021 in IRS News, Tax, Tax News | Permalink

Thursday, September 9, 2021

Sarin: The Top 1% Are Responsible For 28% ($163 Billion) Of All Unpaid Taxes Each Year

Natasha Sarin (Deputy Assistant Secretary for Economic Policy, U.S. Treasury Department), The Case for a Robust Attack on the Tax Gap:

A well-functioning tax system requires that everyone pays the taxes they owe. Today, the “tax gap”—the difference between taxes that are owed and collected—totals around $600 billion annually and will mean approximately $7 trillion of lost tax revenue over the next decade. The sheer magnitude of lost revenue is striking: it is equal to 3 percent of GDP, or all the income taxes paid by the lowest earning 90 percent of taxpayers.

The tax gap can be a major source of inequity. Today’s tax code contains two sets of rules: one for regular wage and salary workers who report virtually all the income they earn; and another for wealthy taxpayers, who are often able to avoid a large share of the taxes they owe. As Table 1 demonstrates, estimates from academic researchers suggest that more than $160 billion lost annually is from taxes that top 1 percent choose not to pay.

Table 2

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September 9, 2021 in IRS News, Tax | Permalink

Tuesday, September 7, 2021

Two-Thirds Of Americans Support Biden's Plan To Beef Up IRS Enforcement

University of Maryland Program for Public Consultation, Two-Thirds Favor Bolstering IRS Tax Enforcement as Proposed for Reconciliation Budget Plan:

MarylandMore than two-thirds of American voters favor increasing the IRS Budget by $8 billion a year to fund increased tax enforcement, a proposal being considered to help fund the reconciliation budget plan.

In the innovative survey of 2,613 registered voters by the Program for Public Consultation (PPC) at the School of Public Policy at the University of Maryland, respondents were given briefings on the proposal, and evaluated arguments for and against. The content was reviewed in advance by experts for accuracy and balance and to ensure the best arguments were being presented on both sides.

The proposal presented, based on one in the American Families Plan, calls for an increase in the IRS budget by $8 billion a year to:

  • ​​increase tax enforcement on very high-income individuals (income over $400,000);
  • update the technology used to detect tax evasion; and
  • require banks and other financial companies to provide information to the IRS.

In conclusion, a majority of 68% favor the plan including 88% of Democrats, 65% of independents, and 46% of Republicans.

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September 7, 2021 in IRS News, Tax, Tax News | Permalink

Saturday, September 4, 2021

RenTec Hedge Fund Executives Agree To Pay $7 Billion To Settle IRS Tax Dispute Over Characterization Of Basket Option Income

Following up on my previous posts (links below):  New York Times, Hedge Fund’s Insiders Agree to Pay as Much as $7 Billion to I.R.S.:

RenaissanceA yearslong dispute between a pioneering hedge fund and the Internal Revenue Service ended Thursday with an enormous bill for taxes and penalties: as much as $7 billion.

James Simons, a mathematician whose algorithmic approach has been adopted by many other investment funds, and some of his former colleagues at Renaissance Technologies have settled a decade-long dispute with the government over the tax treatment of some of their investments, the firm said in a letter to investors.

The settlement, which involves 10 years’ worth of trades made by the hedge fund, could be worth as much as $7 billion, according to a person with knowledge of the agreement. It is one of the largest federal tax disputes in history.

The deal ends a standoff that led to a congressional investigation and involved two politically connected financiers: Mr. Simons, a longtime patron of Democratic candidates with an estimated net worth of $25 billion, and Robert Mercer, a former Renaissance executive whose advocacy for conservative causes included helping to found Cambridge Analytica. After Donald J. Trump won the 2016 presidential election, the now-defunct political consulting firm became embroiled in a scandal for harvesting Facebook data without users’ consent to assist his campaign.

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September 4, 2021 in IRS News, Tax, Tax News | Permalink