Paul L. Caron
Dean


Tuesday, April 7, 2020

WSJ: The Tax Consequences Of Working From Home During COVID-19

Wall Street Journal Tax Report, Millions Are Suddenly Working From Home. Can They Claim a Tax Break?:

IRS CovidIf you’re one of millions of Americans who are now working from home instead of the office because of the coronavirus pandemic, count yourself lucky: you aren’t sick and you have a job.

Still, both you and your employer may be wondering whether your remote work qualifies for any tax breaks. Have you bought a desk, a better chair or new computer equipment? Can you take a tax deduction on those improvements, as well as the increased utility costs needed to power a new home-office set up?

The short answer is no, the employee can’t take these deductions—but the employer often can. As part of the 2017 tax overhaul, Congress nearly doubled the standard deduction and repealed some specific write-offs on Schedule A. One was a partial deduction for unreimbursed employee expenses such as a home office or union dues.

But employers can claim these deductions, based on reimbursements to the worker. The good news for workers is that the breaks can help employees with a range of pandemic expenses and the payments don’t count as compensation, either for income or FICA taxes. ...

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April 7, 2020 in IRS News, Tax, Tax News | Permalink | Comments (0)

Saturday, March 7, 2020

Analysis Of The Final Opportunity Zone Regulations

Jean Bertrand, David S. Miller, Sejin Park & Sean Webb (Proskauer), The Final Regulations on Opportunity Zones:

This paper discusses the final regulations on the opportunity zone program.

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March 7, 2020 in IRS News, Tax, Tax News | Permalink | Comments (0)

Saturday, February 29, 2020

IRS Quietly Deletes Guideline That Fortnite Virtual Currency Must Be Reported on Tax Returns

CNN Business, IRS Quietly Deletes Guideline That Fortnite Virtual Currency Must Be Reported on Tax Returns:

Fortnite 2For months leading up to this tax season, a section of the IRS's website advised players of Fortnite, the popular online video game, that their use of in-game virtual currency could be subject to federal taxes.

The little-noticed provision, which dated back at least to October according to the cached version of an IRS webpage on Archive.org, appeared to mark the first time the agency has ruled on video game currencies, including Fortnite's V-bucks, purchased with real dollars. By applying the same policy to in-game money that it enforces on bitcoin, ether and other cryptocurrencies, the IRS guide seemed poised to affect millions of gamers — or their parents.

But on Wednesday, the IRS scrubbed all mentions of the in-game currency from the webpage after questions from CNN and other outlets about the policy.

Despite the sudden deletion, experts believe that transactions involving video game currencies will still need to be reported under a new question the IRS is including this year on tax forms.

Schedule 1

Just because the IRS deleted the language, they said, does not resolve questions about how the IRS plans to treat video game currencies.

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February 29, 2020 in IRS News, Tax | Permalink | Comments (0)

Thursday, February 27, 2020

IRS Names New National Taxpayer Advocate

Treasury and IRS Announce National Taxpayer Advocate Appointment:

Erin CollinsToday, the U.S. Treasury Department and Internal Revenue Service (IRS) announced the appointment of Erin M. Collins to serve as the National Taxpayer Advocate (NTA).

“Erin Collins will be an outstanding voice for American taxpayers,” said Secretary Steven T. Mnuchin.  “She has a wealth of experience representing a broad range of taxpayers before the IRS.  She also developed valuable expertise during her years with the Office of Chief Counsel. Erin is the ideal candidate to help the IRS modernize and improve service for American families and businesses.”

“I am deeply honored to join the talented team at the IRS as the National Taxpayer Advocate and thank Secretary Mnuchin and Commissioner Rettig for the trust they have placed in me,” said Ms. Collins.  “I will work every day to be a strong and effective representative of American taxpayers.”

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February 27, 2020 in IRS News, Tax, Tax News | Permalink | Comments (0)

Thursday, February 13, 2020

IRS Whistleblower Awards Fall 61%

Budget Blues For Tax Administration

Robert A. Weinberger (TaxVox), Budget Blues For Tax Administration:

The fiscal 2020 budget signed into law December 20, 2019 is a big disappointment for tax administration, continuing the over 20-percent inflation-adjusted decline in IRS funding since 2010 that has eroded enforcement, reduced audits, and handicapped performance.

TPC

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February 13, 2020 in IRS News, Tax, Tax News | Permalink | Comments (1)

Wednesday, February 12, 2020

Inspector General: TurboTax, Other Companies Tricked 14 Million Taxpayers Eligible For Free-File Program Into Paying To E-File Their Returns

Following up on my previous posts (links below):  Treasury Inspector General for Tax Administration, Complexity and Insufficient Oversight of the Free File Program Result in Low Taxpayer Participation (2020-40-009) (Feb. 3, 2020): 

WHY TIGTA DID THE AUDIT
This audit was initiated in response to concerns raised by Congress and other stakeholders.  Their concerns relate to whether the Free File Program is operating as intended, and eligible taxpayers attempting to prepare and e-file their returns at no cost are diverted to tax return preparation services that are not free.  TIGTA’s objective was to assess the IRS’s oversight of the Free File Program.

WHAT TIGTA FOUND
The complexity, confusion, and lack of taxpayer awareness about the operation and requirements of the Free File Program are contributing reasons why many eligible taxpayers do not participate in the Program.  During Processing Year 2019, only 2.5 million (2.4 percent) of the 104 million eligible taxpayers obtained a free return filing through the Program.  In contrast, more than 34.5 million taxpayers, who met Free File Inc. members’ Free File Program criteria, used the members’ commercial software to file their tax return.

TIGTA called a statistically valid sample of 200 taxpayers who met the Free File Program criteria but used a Free File Inc. members’ commercial software and was informed by 87 (43 percent) taxpayers that they were charged a fee to prepare and e-file their Federal tax return.  Based on these results, TIGTA estimates that more than 14 million taxpayers met the Free File Program criteria and may have paid a fee to e-file their Federal tax return in the 2019 Filing Season.

TIGTA

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February 12, 2020 in IRS News, Tax, Tax News | Permalink | Comments (2)

Tuesday, February 4, 2020

President Trump Nominates Richard Zuckerman To Be Assistant Attorney General (Tax Division)

President Donald J. Trump Announces Intent to Nominate and Appoint Individuals to Key Administration Posts:

ZuckermanRichard E. Zuckerman of Michigan, to be an Assistant Attorney General (Tax Division).

Mr. Zuckerman currently serves as the Principal Deputy Assistant Attorney General for the Tax Division at the Department of Justice, where he also serves as the Division’s Deputy Assistant Attorney General for Criminal Matters. Mr. Zuckerman began his legal career as a trial lawyer with the Organized Crime and Racketeering Section assigned to the Detroit Strike Force at the Department of Justice, prosecuting complex organized crime cases as well as criminal tax cases relating to organized crime figures. Mr. Zuckerman was previously a partner at Honigman LLP in Detroit. Prior to his legal career, Mr. Zuckerman served 4 years as an officer in the United States Navy. Mr. Zuckerman received a B.A. in Political Science from the University of Michigan, a J.D. from Southwestern University, and has advanced education in taxation from Wayne State University School of Law.

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February 4, 2020 in IRS News, Tax, Tax News | Permalink | Comments (0)

Tuesday, January 28, 2020

Who’s Afraid Of The IRS? Not Facebook.

ProPublica, Who’s Afraid of the IRS? Not Facebook.:

Facebook IRSThe social media behemoth is about to face off with the tax agency in a rare trial to capture billions that the IRS thinks Facebook owes. But onerous budget cuts have hamstrung the agency’s ability to bring the case.

In March 2008, as Facebook was speeding toward 100 million users and emerging as the next big tech company, it announced an important hire. Sheryl Sandberg was leaving Google to become Facebook’s chief operating officer. CEO Mark Zuckerberg, then 23 years old, told The New York Times that Sandberg would take the young company “to the next level.”

Based on her time at Google, Sandberg soon decided that one area where Facebook was behind its peers was in its tax dodging. “My experience is that by not having a European center and running everything through the US, it is very costly in terms of taxes,” she wrote other executives in an April 2008 email, which hasn’t been previously reported. Facebook’s head of tax agreed, replying that the company needed to find “a low taxed jurisdiction to park profits.”

Later that year, Facebook named Dublin as its international headquarters, just as Google had done when Sandberg was there. And just like Google, Facebook concocted an intra-company deal to “park profits” in Ireland, where it would pay a tax rate near zero.

Like its Big Tech peers, Facebook wasn’t much afraid of the IRS. But, as it happened, the same year that Facebook started moving profits to Ireland, the IRS launched a team to crack down on deals like that. The effort started aggressively. As we recently reported, the IRS threw everything it had at Microsoft in the largest audit in the agency’s history.

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January 28, 2020 in IRS News, Tax, Tax News | Permalink | Comments (0)

Saturday, January 18, 2020

The IRS Tried To Crack Down On Rich People Using An 'Abusive' Tax Deduction. It Hasn’t Gone So Well.

ProPublica, The IRS Tried to Crack Down on Rich People Using an “Abusive” Tax Deduction. It Hasn’t Gone So Well.:

Pro PublicaIn March 2019, the IRS added a scheme to its annual “Dirty Dozen” list of “the worst of the worst tax scams.” That same scheme was targeted, just weeks earlier, when the U.S. Department of Justice filed a fraud lawsuit against a handful of promoters allegedly responsible for generating more than $2 billion in improper tax write-offs. And the Senate Finance Committee has been investigating that very same racket, recently demanding thousands of pages of documents from six promoters. Lawmakers from both parties have introduced legislation to halt the same practice.

The scheme they’re all trying to kill is what’s called a “syndicated conservation easement,” which the IRS calls “abusive” and says has resulted in bogus deductions for the rich that have cost the U.S. Treasury billions in revenues.

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January 18, 2020 in IRS News, Tax, Tax News | Permalink | Comments (2)

Sunday, January 12, 2020

Nina Olson: We Need A Permanent National Taxpayer Advocate, Now.

Nina Olson (Former National Taxpayer Advocate), We need a permanent National Taxpayer Advocate, now.:

Taxpayer AdvocateThis week, the acting National Taxpayer Advocate released the 2019 Annual Report to Congress, on the heels of the IRS’s release of its own “annual report” about its performance. Reading the two documents together, one wonders whether they are reporting on the same agency. The NTA’s report focuses on the challenges the agency faces and makes concrete recommendations about how to address them; the IRS’s report celebrates the agency’s performance over the last year and how it is on track to fulfill the goals of its 2018 to 2022 strategic plan. One report is forward looking; the other is a status update.

I’ll be scouring the contents of both reports over the next month or so, but their arrival reminds me of the important and unique role the National Taxpayer Advocate (NTA) plays in U.S. tax administration today. The NTA is the protector of taxpayer rights and, according to the National Commission on Restructuring the IRS, serves as the “voice of the taxpayer” inside the agency. Each of the Most Serious Problems, Most Litigated Issues, and Legislative Recommendations in the NTA’s 2019 Annual Report to Congress is prefaced with the relevant rights enunciated in the Taxpayer Bill of Rights; they form the framework for analysis. On the other hand, the IRS annual report doesn’t get around to mentioning “taxpayer rights” until page 12. Tellingly, the words “taxpayer rights” do not appear in any of the strategic goals listed in the annual report, nor are they listed among the “core values” of the agency.

This contrast highlights why it is so important to have a permanent National Taxpayer Advocate in place, to hold the IRS’s feet to the fire about promotion and protection of taxpayer rights, especially as it hires more audit and collection employees and launches new compliance and enforcement initiatives.

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January 12, 2020 in IRS News, Tax, Tax News | Permalink | Comments (3)

Saturday, January 4, 2020

IRS Reforms Free File Program, Drops Agreement Not To Compete With TurboTax

Following up on my previous posts (links below):  ProPublica, IRS Reforms Free File Program, Drops Agreement Not to Compete With TurboTax:

Free FileFinding free online tax filing should be easier this year for millions of Americans.

The IRS announced significant changes Monday to its deal with the tax prep software industry. Now companies are barred from hiding their free products from search engines such as Google, and a years-old prohibition on the IRS creating its own online filing system has been scrapped.

The addendum to the deal, known as Free File, comes after ProPublica’s reporting this year on how the industry, led by TurboTax maker Intuit, has long misled taxpayers who are eligible to file for free into paying.

Under the nearly two-decade-old Free File deal, the industry agreed to make free versions of tax filing software available to lower- and middle-income Americans. In exchange, the IRS promised not to compete with the industry by creating its own online filing system. Many developed countries have such systems, allowing most citizens to file their taxes for free. The prohibition on the IRS creating its own system was the focus of years of lobbying by Intuit. The industry has seen such a system as an existential threat. Now, with the changes to the deal, the prohibition has been dropped.

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January 4, 2020 in IRS News, Tax, Tax News | Permalink | Comments (2)

Sunday, December 29, 2019

Tax Profs Say IRS Is Unlikely To Pursue Whistleblower's Claim That Mormon Church Stockpiled $100 Billion In Charitable Donations And Dodged Taxes

Washington Post, Mormon Church Has Misled Members on $100 Billion Tax-Exempt Investment Fund, Whistleblower Alleges:

A former investment manager alleges in a whistleblower complaint to the Internal Revenue Service that the Church of Jesus Christ of Latter-day Saints has amassed about $100 billion in accounts intended for charitable purposes, according to a copy of the complaint obtained by The Washington Post.

The confidential document, received by the IRS on Nov. 21, accuses church leaders of misleading members — and possibly breaching federal tax rules — by stockpiling their surplus donations instead of using them for charitable works. It also accuses church leaders of using the tax-exempt donations to prop up a pair of businesses. ...

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December 29, 2019 in IRS News, Tax | Permalink | Comments (0)

Saturday, December 21, 2019

IRS Releases 2019 Criminal Investigation Annual Report

IR-2019-199, IRS Criminal Investigation Releases Fiscal Year 2019 Annual Report; Celebrates 100 Years:

IRS Criminal Cover PageThe Internal Revenue Service today released the Criminal Investigation Division's (CI) annual report, highlighting significant successes and criminal enforcement actions taken in fiscal year 2019. The report also commemorates CI's 100th year anniversary as a law enforcement agency.

"CI is critical to the overall enforcement efforts of the IRS in pursuing its Mission in a fair, impartial, diligent and, where appropriate, tenacious manner." said IRS Commissioner Chuck Rettig. "The Fiscal Year 2019 Annual Report summarizes various CI activities throughout the year but vastly understates the importance of CI to the overall IRS mission. CI supports the efforts of compliant taxpayers by visibly demonstrating the risks of noncompliance thereby helping otherwise honest taxpayers stay honest and compliant."

Key focuses of CI in fiscal year 2019 included cybercrimes, with an emphasis on virtual and crypto currencies, traditional tax investigations, international tax enforcement, employment tax, refund fraud and tax-related identity theft. Other areas of emphasis included public corruption, corporate fraud and money laundering.

"We are working smarter using data analytics to augment good old-fashioned police work and find those cases that have the biggest impact on tax administration," said Don Fort, Chief of CI. "We are leading the world in our ability to trace virtual currency in financial investigations while still working our bread and butter tax enforcement mission areas."

IRS Criminal Chart 1CI initiated 2,485 cases in fiscal year 2019, applying approximately 75 percent of its time to tax related investigations. The number of CI special agents dropped to 2,009 by the end of fiscal year 2019, which is the lowest level since the early 1970's. Consequently, CI has increased its usage of data analytics and strengthened its international partnerships to assist in finding the most-impactful cases.

CI is the only federal law enforcement agency with jurisdiction over federal tax crimes. CI achieved a conviction rate of 91.2 percent in fiscal year 2019, which is among the highest of all federal law enforcement agencies. The high conviction rate reflects the thoroughness of CI investigations and the high caliber of CI agents. CI is routinely called upon by prosecutors across the country to lead financial investigations on a wide variety of financial crimes.

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December 21, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Tuesday, December 17, 2019

Trial Begins For IRS Agent Accused Of Raping College Intern

Boston Globe, Trial Begins For IRS Agent Accused of Raping College Intern:

IRS Logo 2Weeks after a college intern in the Internal Revenue Service’s Boston office turned 21, an agent twice her age invited her for drinks at a nearby pub, where she got drunk and he showed off his gun to a woman hosting trivia night, a prosecutor told a Suffolk County jury Thursday.

The agent, James Clarke, offered the woman a ride to South Station after several hours of drinking at the Kinsale on July 26, 2017, then handcuffed her once they were inside his government-issued car with tinted windows, Suffolk Assistant District Attorney Ian Polumbaum said in his opening statement at Clarke’s trial. Clarke then shoved his gun in her mouth and raped her, he said. ...

Clarke, 45, is charged with aggravated rape, assault and battery with a dangerous weapon, and indecent assault and battery. ...

Clarke’s lawyer, Robert Sheketoff, dismissed Polumbaum’s opening statement as “a very interesting speech from someone who wasn’t there” and told jurors that the encounter between Clarke and the woman was consensual. ... “The defense is not that they didn’t have sexual relations of some sort in that car,” Sheketoff told jurors. “The defense is that it was consensual.”

Boston Globe, Woman Who Was Raped, Allegedly By IRS Agent, Gives Dramatic, Tearful Testimony:

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December 17, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Monday, December 16, 2019

NY Times: The IRS Sent A Letter To 3.9 Million People. It Saved 700 Lives.

New York Times, The I.R.S. Sent a Letter to 3.9 Million People. It Saved Some of Their Lives.:

Three years ago, 3.9 million Americans received a plain-looking envelope from the Internal Revenue Service. Inside was a letter stating that they had recently paid a fine for not carrying health insurance and suggesting possible ways to enroll in coverage.

New research concludes that the bureaucratic mailing saved lives.

Three Treasury Department economists have published a working paper finding that these notices increased health insurance sign-ups [Jacob Goldin (Stanford), Ithai Z. Lurie (U.S. Treasury Department,  Office of Tax Analysis) & Janet McCubbin (U.S. Treasury Department,  Office of Tax Analysis), Health Insurance and Mortality: Experimental Evidence From Taxpayer Outreach]. Obtaining insurance, they say, reduced premature deaths by an amount that exceeded any of their expectations. Americans between 45 and 64 benefited the most: For every 1,648 who received a letter, one fewer death occurred than among those who hadn’t received a letter.

In all, the researchers estimated that the letters may have wound up saving 700 lives.

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December 16, 2019 in IRS News, Tax, Tax News | Permalink | Comments (2)

Tuesday, December 10, 2019

Tax Prof Sharyn Fisk Named Director Of IRS Office Of Professional Responsibility

IR-2019-202, IRS Selects Longtime Tax Professional, Sharyn Fisk, to Lead the Office of Professional Responsibility (Dec. 9, 2019):

FiskThe Internal Revenue Service today announced the selection of Sharyn M. Fisk to lead the agency’s Office of Professional Responsibility (OPR).

Fisk has most recently been a professor of tax at the College of Business Administration at Cal Poly Pomona and active in the nation’s tax community in a variety of roles. She will assume leadership of OPR in early 2020.

“This is a critical position for the nation’s tax community. Sharyn Fisk is extremely well respected both internally at the IRS and throughout the tax professional communities. She has a strong set of skills and experience in many different settings that will serve the IRS well in this role,” said IRS Commissioner Chuck Rettig. “Taxpayers, the IRS and the tax community rely on this office to help uphold strong professional standards among tax professionals. We look forward to Ms. Fisk providing meaningful, fair and equitable guidance while also strengthening the oversight of tax professionals.”

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December 10, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Tuesday, December 3, 2019

Treasury Eases Minimum-Tax Burdens On U.S. Multinationals

IR-2019-194, Treasury, IRS Issue Final Regulations on New International Provision, the Base Erosion and Anti-Abuse Tax (Dec. 2, 2019)

IR-2019-193, Treasury, IRS Issue Final Regulations on the Foreign Tax Credit (Dec. 2, 2019)

Wall Street Journal, Treasury Eases Minimum-Tax Burdens on U.S. Multinationals:

U.S.-based multinationals will be less exposed to certain U.S. taxes after the Treasury Department issued new rules implementing two major pieces of the 2017 tax law.

The regulations, unveiled on Monday, will help ease the burden of two separate minimum taxes that were designed to put a floor under corporate tax collections. ...

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December 3, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Sunday, December 1, 2019

How IRS Investigators Busted A Huge Online Child-Porn Site — And Why The IRS?

Wall Street Journal, How Investigators Busted a Huge Online Child-Porn Site:

Welcome to VideoThe call came in while two criminal investigators for the Internal Revenue Service sat at a Bangkok airport gate in July 2017, waiting for a flight.

A confidential source they knew from past investigations was offering a tip that a new website was selling child pornography in exchange for bitcoin. The website, the source said, appeared to have popped up in the wake of shutdowns of other dark-web marketplaces for illicit goods.

Investigator Chris Janczewski and his colleague, Tigran Gambaryan, who had been involved in previous probes involving bitcoin transactions, decided to dig in to the possible financial ramifications of the matter despite the fact that child pornography was outside the IRS’s usual bailiwick. But they quickly hit a logistical roadblock: Their office, like many others, blocked access to pornographic websites.

“This is uncharted territory for the IRS,” Mr. Janczewski said in an interview. “What do I do? Is there a special room that I am supposed to go into if I want to look at the website?” They turned for help to Department of Homeland Security investigators, since the agency had a history of dealing with child exploitation.

Within eight months the duo, along with the DHS agents and counterparts in the U.K. and South Korea, had traced the financial trail of the largest online marketplace for child pornography they had ever encountered, comprising some 250,000 different videos.

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December 1, 2019 in IRS News, Tax, Tax News | Permalink | Comments (2)

Wednesday, October 16, 2019

IRS-Commissioned Study Defends Benefits Of Free-File Program In Face Of Criticism

Wall Street Journal, IRS Tax-Prep Alliance With Private Firms Gets Fresh Scrutiny: Study Defends Free File’s Benefits as Substantial:

Free FileThe Internal Revenue Service’s partnership with private firms to provide free tax preparation to millions of filers has serious flaws but also appears to provide substantial benefits, according to an outside review commissioned by the IRS [Independent Assessment of the Free File Program (Oct. 3, 2019)]

The study, reviewed by The Wall Street Journal, responded to intense criticism of the public-private partnership, called the Free File Alliance. In theory the alliance is designed to provide free online tax-prep by a dozen companies to about 100 million filers who currently earn about $66,000 or less. Members include industry leaders such as H&R Block and Intuit, the maker of TurboTax.

But in recent years, Free File has been used by fewer than 3 million filers annually. Both the National Taxpayer Advocate and members of Congress have charged that the low usage rates signal that the program isn’t working well. Stories last spring by the nonprofit news site ProPublica drew more attention to the program’s workings. ...

Others say that commercial tax-prep companies in the alliance steer taxpayers away from Free File and into their paid commercial services. The study, conducted by the Mitre Corporation, a consulting firm that operates as an IRS research center, found that five of the 12 Free File members used coding that in effect hid their Free File landing pages from many online searches. ...

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October 16, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Tuesday, October 15, 2019

IRS Software Developer Stole Identities Of Three Taxpayers To Open Credit Cards In Their Names And Spend $70,000 Was Apprehended After Using IRS Email And Home Addresses

Quartz, An IRS Employee Stole Identities and Went on a 2-Year Spending Spree:

IRS Logo 2An IRS employee stole multiple people’s identities, and used them to open illicit credit cards to fund vacations and shop for shoes and other goods, according to a complaint unsealed last week in federal court.

The complaint accuses the 35-year-old federal worker of racking up almost $70,000 in charges over the course of two years, illegally using “the true names, addresses, dates of birth, and Social Security numbers” of at least three people. ...

The IRS employee’s alleged scheme took place between January 2016 and February 2018, according to court filings. Investigators say he used a fraudulently obtained American Express card to fly to Sacramento and Miami Beach. He also used the card for some 37 Uber rides, nine payments on his father’s Amazon account totaling $1,200, various purchases at Lowe’s, the Designer Shoe Warehouse, BJ’s Wholesale Club, and a flooring outlet, as well as a $7,400 payment to a business he owned.

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October 15, 2019 in IRS News, Tax, Tax News | Permalink | Comments (1)

Saturday, October 12, 2019

IRS Issues Cryptocurrency Tax And Reporting Guidance

Bloomberg Tax, IRS Adds Virtual Currency Question to Draft Income-Reporting Form:

Schedule 1

Rev. Rul. 2019-24:

  1. A taxpayer does not have gross income under § 61 as a result of a hard fork of a cryptocurrency the taxpayer owns if the taxpayer does not receive units of a new cryptocurrency.
  2. A taxpayer has gross income, ordinary in character, under § 61 as a result of an airdrop of a new cryptocurrency following a hard fork if the taxpayer receives units of new cryptocurrency.

[43] Frequently Asked Questions on Virtual Currency Transactions:

In 2014, the IRS issued Notice 2014-21, 2014-16 I.R.B. 938 (PDF), explaining that virtual currency is treated as property for Federal income tax purposes and providing examples of how longstanding tax principles applicable to transactions involving property apply to virtual currency.  The frequently asked questions (“FAQs”) below expand upon the examples provided in Notice 2014-21 and apply those same longstanding tax principles to additional situations.

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October 12, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Monday, October 7, 2019

House GOP Pushes Back Against Renewed Dem Efforts To Diminish Obama’s IRS Targeting Scandal

Conservative Review, House Republicans Push Back Against Renewed Dem Efforts to Diminish Obama’s IRS Targeting Scandal:

IRS Logo 2It appears that the House Oversight Committee may soon find itself in a renewed fight over the Obama-era IRS targeting scandal, according to a letter from a key House Republican.

In a Tuesday letter sent to U.S. Treasury Inspector General for Tax Administration (TIGTA), obtained by Blaze Media, House Oversight Committee ranking member Jim Jordan, R-Ohio, criticized a pair of House Democrats for renewing a years-old effort to second-guess findings of wrongdoing in the scandal. ...

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October 7, 2019 in IRS News, IRS Scandal, Tax, Tax News | Permalink | Comments (3)

Friday, October 4, 2019

U.S. Tax Gap Holds Flat At 14%

Tax Gap

Wall Street Journal, U.S. Tax Compliance Holds Flat at 86%:

Americans pay about 86% of their federal taxes, leaving a $381 billion annual gap between taxes owed and taxes collected, according to an Internal Revenue Service study released Thursday.

The government’s first report on the “tax gap” since 2016 shows tax compliance holding steady as the IRS shrinks. However, the study covers tax years 2011 through 2013, and the IRS has reduced audits and staffing considerably since then.

In those years, taxpayers paid 83.6% of the taxes they owed voluntarily and a total of 85.8% after IRS enforcement efforts. Those are about equal to the previous study, which covered tax years 2008 through 2010 and was updated with the same methodology used for the new analysis.

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October 4, 2019 in IRS News, Tax, Tax News | Permalink | Comments (2)

Monday, September 9, 2019

IRS Releases New Online Tax Calculator For Gig Economy Workers

IR-2019-149, Freelancers, Others With Side Jobs in the Gig Economy May Benefit From New Online Tool:

IRS Logo 2The Internal Revenue Service said today that the new Tax Withholding Estimator tool includes a feature designed to make it easier for employees who also receive self-employment income to accurately estimate the right amount of tax to have taken out of their pay.

The estimator is an expanded, mobile-friendly online tool that replaced the Withholding Calculator, which since 2001 had offered workers an online method for checking their withholding. The old calculator lacked features geared to self-employed individuals; the new estimator made changes to address this important group.

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September 9, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Thursday, August 22, 2019

Analyst In IRS Criminal Investigation Division Pleads Guilty To Leaking Michael Cohen's Confidential Financial Information To Michael Avenatti, Stormy Daniels' Ex-Lawyer

NBC News, IRS Staffer Pleads Guilty to Giving Michael Cohen Data to Stormy Daniels' Lawyer:

IRS Logo 2An IRS staffer who leaked confidential details about former Trump lawyer Michael Cohen's finances to Michael Avenatti, ex-lawyer for adult film star Stormy Daniels, pleaded guilty Wednesday to illegally accessing and distributing that information.

John C. Fry was an investigative analyst with the IRS Criminal Investigation Division, the law enforcement arm of the agency, in May 2018 when he twice logged on to the Financial Crimes Enforcement Network (FinCEN) database and downloaded five Suspicious Activity Reports (SARs) — reports filed by banks when they note potentially suspicious transactions — related to Cohen and his company Essential Consultants.

In court Wednesday, Fry admitted giving Avenatti the information via cellphone and emailing him screenshots of the SARs. He pleaded guilty to one county of unauthorized disclosure of SARs. ...

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August 22, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Tuesday, August 20, 2019

WSJ: The IRS Is Coming For Your Bitcoin

Wall Street Journal Tax Report, The IRS Is Coming For Your Bitcoin:

Bitcoin IRSThe Internal Revenue Service is on the war path against Americans who haven’t reported income from cryptocurrencies like bitcoin.

In late July, the IRS said it had started to send warning letters to more than 10,000 people who may not have complied with tax rules on virtual currencies. Agency officials have said criminal tax indictments involving cryptocurrencies are expected soon, and other enforcement letters are going out.

Tax specialists are urging crypto users who aren’t in compliance to act quickly. While coming clean involves a maze of tricky decisions, ignoring the agency could cost a crypto holder dearly. ...

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August 20, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Monday, August 5, 2019

Lesson From The Tax Court: Appeals Is Still Part Of The IRS, Really!

Tax Court (2017)I find it useful to think of tax administration as comprising two overarching functions: (1) determining tax liabilities and (2) collecting tax liabilities.  The IRS Office of Appeals (“Appeals”) supports both functions by mediating disputes between taxpayers and either the IRS exam function or collection function.  In Aldo Fonticiella v. Commissioner, T.C. Memo. 2019-74 (June 13, 2019), Judge Gerber teaches us that even though Appeals has a different (and wider) set of powers that often allow it to settle disputes without litigation, it still functions as an integral part of the IRS, no matter how many times Congress puts “Independent” in its title.

Taxpayers unhappy with Appeals look for creative ways to avoid its decisions.  In 2011, one such taxpayer argued that all Appeals work product violated the U.S. Constitution.  His theory was that Appeals Officers were “Officers of The United States” within the meaning of the U.S. Constitution.  That meant they had to be appointed by the President with the consent of the Senate.  Because they were not, they could not wield any power over taxpayers.  That made all their work illegal and without effect.  In Tucker v. Commissioner both the Tax Court (135 T.C. 114, 2010) and the D.C. Circuit (676 F.3d 1129, 2012) rejected the argument.  Not a single judge agreed with the taxpayer.

Creativity begets creativity.  In Fonticiella, Judge Gerber considers and rejects a companion argument, that Appeals is a “de facto independent agency” whose very existence is an affront to the U.S. Constitution.  While that is a loser argument today, it may become a winner eventually as Congress keeps trying to transform Appeals into a mini-me Tax Court.  The recently enacted Taxpayer First Act, P.L. 116-25, moves in that direction, although not far enough, IMHO, to affect the rationale for Judge Gerber’s decision.  You can read more about it below the fold.

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August 5, 2019 in Bryan Camp, IRS News, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Thursday, August 1, 2019

Federal Judge Overturns IRS Rule To Shield Political Donor Identities

Bloomberg, Judge Overturns IRS Rule to Shield Political Donor Identities

A federal judge in Montana overturned an Internal Revenue Service rule that would allow many political non-profit groups to keep their donor lists private [Bullock v. Rettig, No. CV-18-103-GF-BMM (D. MT July 30, 2019).

The ruling upends a change the IRS made last year that permitted so-called Section 501(c)4 groups, known as “social-welfare” organizations, to keep their donor lists private. A federal judge said the IRS didn’t follow proper procedure in writing the rule and needs to allow the public to weigh in on the change before altering the tax code.

“Then, and only then, may the IRS act on a fully informed basis when making potentially significant changes to federal tax law,” U.S. federal Judge Brian Morris said in the opinion published Tuesday evening. ...

The ruling is a blow to Treasury Secretary Steven Mnuchin who touted the rule, saying it protected donor privacy because the IRS didn’t need the information to enforce tax laws. Democrats had criticized the agency’s move, saying it opened up the possibility for foreign interests to influence elections.

Update:  Bloomberg Tax, IRS Could Face More Court Battles After Nonprofit Donor Ruling:

The IRS may be vulnerable to more court challenges after a federal judge struck down agency guidance that rolled back nonprofit donor disclosure requirements, according to tax professionals.

The ruling upends a position that the Internal Revenue Service and Treasury Department have taken for a long time that guidance falling short of a regulation doesn’t have to go through a full notice-and-comment period, said Kristin Hickman. ...

“The fact that the judge declared a revenue procedure to be a legislative rule is a big deal,” said Hickman, a professor at the University of Minnesota Law School who specializes in tax administration and administrative law.

The decision could subject other revenue procedures—or revenue rulings—to challenges from taxpayers if Morris’s ruling stands, said Lloyd Hitoshi Mayer, a professor at University of Notre Dame Law School. This, however, may not work in every case. The fact that the donor disclosure change amended a nearly 50-year-old rule seemed to play a large role in the judge’s decision, Mayer said.

For background of the case, see:

August 1, 2019 in IRS News, New Cases, Tax, Tax News | Permalink | Comments (3)

Wednesday, July 31, 2019

Nina Olson Retires Today After 18 Years As National Taxpayer Advocate (Update From Nina)

Bloomberg Tax, ‘Advocate Zealously’ for Taxpayers, IRS's Olson Urges Successor:

Olson (2018)“Not a team player.” “A thorn in the government’s side.” “The voice of the taxpayer.”

Outgoing National Taxpayer Advocate Nina E. Olson has been called many things, and she bears those titles—both the good and the bad—proudly.

Olson, who retires as head of the Taxpayer Advocate Service July 31 after 18 years, is no stranger to controversy. Her role—part of an independent arm of the Internal Revenue Service where taxpayers can turn for help if they have a dispute with the agency—has naturally pitted her against senior IRS leadership occasionally.

But looking back at her time in the government, Olson wouldn’t change her approach. And Congress, which created the role to act as an independent voice for the American taxpayer, might have something to say about it if her successor feels otherwise.

“The next person may have a different style,” she told Bloomberg Tax in a sitdown interview. “But they will still need to advocate zealously.”

Olson spoke about the sometimes-contentious relationship in her last public speaking engagement as the national advocate. ...

Olson said her biggest regret as advocate is that she didn’t notice the IRS’s targeting of certain political groups sooner.

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July 31, 2019 in IRS News, Tax, Tax News | Permalink | Comments (1)

Saturday, July 27, 2019

IRS Cracks Down On 10,000 Cryptocurrency Owners

Wall Street Journal, IRS Sending Warning Letters to More Than 10,000 Cryptocurrency Holders:

Bitcoin IRSThe Internal Revenue Service has begun sending letters to more than 10,000 cryptocurrency holders, warning they may have broken federal tax laws.

The agency wasn’t specific about the possible violations it was reviewing, but those who hold digital currencies could be subject to a variety of taxes, especially on capital gains.

“Taxpayers should take these letters very seriously. The IRS is expanding efforts involving virtual currency,” IRS Commissioner Chuck Rettig said. ...

The IRS letters come as bitcoin, the world’s most popular cryptocurrency, has ridden a new wave of optimism in recent months. In mid-July, bitcoin topped $12,000, more than three times its value at the end of 2018. Investors, speculators and Facebook have extolled the potential of digital currencies.

At the same time, use by drug dealers and other nefarious actors has marred its reputation. The IRS has expressed worries about the ability of digital currencies to promote tax evasion. ...

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July 27, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Tuesday, July 23, 2019

WSJ: IRS Greenlights Tax Breaks For Buyers Of 23andMe Genetic Tests — Are Smartwatches Next?

Wall Street Journal, IRS Greenlights Tax Breaks for Buyers of 23andMe Genetic Tests:

23andmeBuyers of 23andMe Inc.’s genetic-testing kits will now have an easier time paying for the service with tax-advantaged health accounts after a favorable IRS ruling.

The decision offers more clarity to consumers and reduces the cost of the company’s service. It also highlights differences between the tax law’s permissive definition of medical care and health regulators’ more restrictive approach to direct-to-consumer testing products.

The Internal Revenue Service made the ruling in May and will release a redacted version next month. The Wall Street Journal reviewed the document before 23andMe disclosed it Monday.

The company sells genetic tests that provide consumers with information about a variety of things, including ancestry, wellness and traits such as food-taste preferences. The health reports provide information on whether individuals have gene variants that increase their risk for developing certain diseases.

That health portion of 23andMe’s test is medical care for tax purposes, the IRS determined. It made no ruling on ancestry testing from the same saliva sample and said taxpayers can use reasonable methods to separate the tax-advantaged piece from the bundled product.

23andMe says the decision means consumers can claim up to $117.74 of the $199 cost of a health-and-ancestry kit as medical care for tax purposes and is offering a calculator to handle taxes, shipping and discounts. Jacquie Haggarty, the company’s deputy general counsel, said any 2019 purchases should be eligible expenses.

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July 23, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Monday, July 22, 2019

Shobe Presents The Substance Over Form Doctrine And The Up-C At The IRS

Gladriel Shobe (BYU) presented The Substance Over Form Doctrine and the Up-C, 38 Va. Tax Rev. 249 (2018), to the Passthrough and Special Industries Group in the IRS Chief Counsel's Office on Friday in Washington, D.C.:

Shobe (2018)The Up-C is an increasingly popular form of IPO that generates significant tax benefits as compared to a traditional IPO. These tax benefits, which are the driving force behind the Up-C, have generally gone uncontested and are achieved by taking a form over substance approach to the Up-C for tax purposes. Governmental officials had never directly addressed the Up-C until recently when the SEC issued an interpretive letter (the Up-C Letter) condoning a substance over form approach to the Up-C for purposes of SEC Rule 144. As a result of the Up-C Letter, owners in an Up-C get the best of both worlds by inconsistently taking a form over substance approach for tax purposes and a substance over form approach for securities law purposes.

This Article analyzes whether this disparate treatment of the Up-C is justified from either a technical or policy perspective.

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July 22, 2019 in Colloquia, IRS News, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Friday, July 19, 2019

Ex-Wife, Business Partner Denied Refund Beats IRS At Eleventh Circuit

Daily Business Review, Ex-Wife, Business Partner Denied Refund Beats IRS at Eleventh Circuit:

A woman denied a tax refund on $300,000 in income from a family business she paid back to her ex-husband, rather than paying back the federal government directly, has won a ruling from the U.S. Court of Appeals for the Eleventh Circuit in her case against the IRS [Mihelick v. United States, No. 17-14975 (11th Cir. June 29, 20190}.

“Inscribed above the main entrance of the Internal Revenue Service office in Washington, D.C., is a quotation from Supreme Court Justice Oliver Wendell Holmes Jr.: ‘Taxes are what we pay for a civilized society,’ ” Circuit Judge Robin Rosenbaum wrote. “An admirable outlook, yet even Justice Holmes would likely agree that it is uncivilized to impose taxes on citizens for income they did not ultimately receive. But that is precisely the result the government asks us to uphold today.” ...

Rosenbaum cut through layers of tax law and marital property nuances in the 24-page opinion, neatly simplifying a complex dispute.

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July 19, 2019 in IRS News, New Cases, Tax, Tax News | Permalink | Comments (0)

Wednesday, July 17, 2019

Death Of Former IRS Commissioner Mortimer Caplin At Age 103

Bloomberg Law, Mortimer Caplin Leaves Legacy at IRS, Top D.C. Law Firm:

CaplinMortimer Caplin, who helped shape the IRS and a major Washington, D.C. law firm, died July 15 at the age of 103.

Caplin was IRS commissioner under former President John F. Kennedy and later co-founded Caplin & Drysdale. As IRS chief, he worked to make the agency kinder and friendlier, according to an obituary from his alma mater, the University of Virginia.

Scott Michel, a member at Caplin & Drysdale who has been at the firm for nearly four decades, said that Caplin played a key role in the firm’s culture.

“Those of us who are old-timers around here frequently comment that the tone and culture and the level of excellence that we aspire to, you can trace right back to the tone and culture and level of excellence that Mort Caplin conveyed,” Michel said.

IRS Commissioner Charles Rettig said in a statement that Caplin had a powerful personal story and career of public service, highlighting his time at the IRS and as a beachmaster at Omaha Beach during the Normandy Invasion in World War II.

“Indeed, throughout Mort’s incredible life, his service and dedication personally embodied what it takes to preserve America and its way of life. He will be missed,” Rettig said.

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July 17, 2019 in IRS News, Obituaries, Tax, Tax News | Permalink | Comments (0)

Monday, July 15, 2019

IRS Releases Draft 2019 Tax Forms

Friday, July 12, 2019

National Taxpayer Advocate Publishes 'Subway Map' Of Taxpayer’s Journey Through The Tax System

Subway

IR-2019-123 (July 10, 2019), National Taxpayer Advocate Nina Olson Releases Comprehensive Report Intended to Improve EITC Administration; Publishes "Subway Map" of Taxpayer’s Journey Through the Tax System:

National Taxpayer Advocate Nina E. Olson today released a special report on the Earned Income Tax Credit (EITC), which makes recommendations designed to increase the participation rate of eligible taxpayers and reduce overclaims by ineligible taxpayers. Also today, the Taxpayer Advocate Service (TAS) published a subway map that depicts a taxpayer’s “journey” through the tax system to help taxpayers and policymakers better understand the tax administration process.

Special report on Earned Income Tax Credit

The EITC report, Earned Income Tax Credit: Making the EITC Work for Taxpayers and the Government, presents a detailed examination of the strengths and weaknesses of the EITC as currently structured and administered, and makes legislative and administrative recommendations to improve it. The report runs more than 100 pages – roughly half text and half appendices consisting of EITC data tables (page 49) (PDF) and a comprehensive literature review (page 82) (PDF).

“But this report is not just a research document,” Olson wrote in her preface. “It is a call to action. As we show throughout this report, the way the EITC is structured and the way the IRS is administering it often harms the very taxpayers it is intended to serve. We have made specific, common sense recommendations to mitigate that harm and reform the administration of the EITC. All our recommendations are actionable and supported by data and research.”

The report makes both general, conceptual recommendations and specific recommendations. Among the general recommendations:

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July 12, 2019 in IRS News, Tax, Tax News | Permalink | Comments (3)

Tuesday, July 2, 2019

President Trump Signs The Taxpayer First Act Of 2019

Monday, July 1, 2019

IRS Issues Guidance On New 1.4% Tax On Net Investment Income Of 40 Wealthy Colleges And Universities

IR-2019-120, IRS Issues Guidance on the Tax on the Net Investment Income of Certain Private Colleges and Universities (June 28, 2019):

IRS Logo 2The Internal Revenue Service today issued proposed regulations for the new 1.4 percent excise tax on the net investment income of certain private colleges and universities.

The proposed regulations define several of the terms necessary for educational institutions to determine whether the section 4968 excise tax applies to them.

The tax applies to any private college or university that has at least 500 full-time tuition-paying students (more than half of whom are located in the U.S.) and that has assets other than those used in its charitable activities worth at least $500,000 per student. An estimated 40 or fewer institutions are affected.

For affected institutions, the guidance clarifies how to determine net investment income, including how to include the net investment income of related organizations and how to determine an institution’s basis in property.

These proposed regulations incorporate the interim guidance provided in Notice 2018-55, that for property held by an institution at the end of 2017, generally allows the educational institution to use the property’s fair market value at the end of 2017 as its basis for figuring the tax on any resulting gain.

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July 1, 2019 in IRS News, Tax | Permalink | Comments (1)

Tuesday, June 25, 2019

Outgoing Taxpayer Advocate Nina Olson Forms Nonprofit Center for Taxpayer Rights

Olson 2Bloomberg Law, Olson, Outgoing Taxpayer Advocate, Forms Advocacy Nonprofit:

The outgoing leader of the National Taxpayer Advocate Service has formed a nonprofit to fight outside of the government for taxpayers’ rights, even as she promotes steps the advocate service is taking to broaden its own reach.

The nonprofit organization is called the Center for Taxpayer Rights, said Nina Olson, who will retire from the Taxpayer Advocate Service at the end of July after 18 years as its chief. 

Accounting Today, Taxpayer Advocate Olson: 'My Role Is Not To Be a Shill For the IRS':

National Taxpayer Advocate Nina Olson delivered what is likely to be her final public speech Friday before retiring at the end of July from nearly 19 years of running the Taxpayer Advocate Service at the IRS, announcing plans to start a nonprofit to continue her work advocating for taxpayer rights, while promising future battles against the entrenched tax bureaucracy, perhaps in front of the Supreme Court.

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June 25, 2019 in IRS News, Tax | Permalink | Comments (0)

Saturday, June 22, 2019

Congress Enacts Robust Protections For Tax Whistleblowers

IRS Whistleblower (2014)Jason Zuckerman & Matthew Stock, Congress Enacts Robust Protections For Tax Whistleblowers:

Although plagued by delays and other challenges, the IRS Whistleblower Reward Program has achieved some success in encouraging insiders with information about significant tax underpayments to come forward.  Since Congress established the IRS Whistleblower Program in 2006, whistleblower disclosures to the IRS have enabled the IRS to recover $5 billion, and the Whistleblower Office has awarded whistleblowers approximately $811 million.

But many whistleblowers are reluctant to come forward because there is no federal law protecting tax whistleblowers against retaliation.  For several years, the IRS Office of the Whistleblower has called on Congress to enact statutory protections from retaliation.  In its FY 2018 annual report to Congress, the IRS Whistleblower Office notes that  “[p]roviding whistleblowers with a zone of protection from economic or physical harm is imperative to the success of any whistleblower program as Congress has recognized in other whistleblower statutes . . . The need for greater protection of whistleblowers is amplified as sophisticated taxpayers are increasingly attempting to learn the existence or identity of a whistleblower.”

This week, Congress heeded that request by enacting robust whistleblower protections for tax whistleblowers, modeled on the whistleblower protection provisions of the Sarbanes-Oxley Act and False Claims Act

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June 22, 2019 in IRS News, Tax | Permalink | Comments (0)

Friday, June 21, 2019

National Taxpayer Advocate Nina Olson Delivers Her Final Report To Congress

NTAIR-2019-119, National Taxpayer Advocate Nina Olson Delivers Her Final Report to Congress:

National Taxpayer Advocate Nina E. Olson today released her 37th and final report to Congress in advance of her previously announced retirement on July 31. In the preface, Olson reflects on her 18 years in the job and provides her assessment of the key challenges facing the IRS and the Taxpayer Advocate Service (TAS) in the coming years. The report also presents a review of the 2019 filling season.

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June 21, 2019 in IRS News, Tax | Permalink | Comments (0)

Tuesday, June 18, 2019

Papers From The 2018 IRS-TPC Research Conference On Tax Administration

Saturday, June 15, 2019

WSJ: IRS Tax Crime Enforcement Unit Relying More On Analytics

IRS Logo 2Wall Street Journal, Tax Crime Enforcement Unit Relying More on Analytics to Spot Crime:

Regulators are also increasingly focused on unreported capital gains related to cryptocurrencies.

The top financial crime enforcement official at the Internal Revenue Service is placing a higher priority on data analytics in the investigation of potential wrongdoers.

Don Fort, the chief of the agency’s criminal investigations division, said his office is relying more on advanced data analytics to spot suspicious behavior. One area where the unit is using data is in investigating noncompliance with payroll tax laws, he said Tuesday during a discussion at The Wall Street Journal’s CFO Network Annual Meeting. ...

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June 15, 2019 in IRS News, Tax | Permalink | Comments (0)

Wednesday, June 12, 2019

Treasury's Final Regs Block State & Local Tax Cap Workarounds In High-Tax Blue States

Treasury Department (2019)U.S. Treasury Department, Treasury Issues Final Regulations on Charitable Contributions and State and Local Tax Credits:

The U.S. Department of the Treasury today issued final rules and additional guidance on the federal income tax treatment of payments made under state and local tax credit programs. The regulations prevent charitable contributions made in exchange for state tax credits from circumventing the new limitation on state and local tax deductions.

The Tax Cuts and Jobs Act of 2017 (TCJA) limits the amount of state and local taxes (SALT) an individual can deduct to $10,000 a year. Without the regulations taxpayers would be able to use state tax credit programs to circumvent the TCJA limit.

The regulation [RIN 1545-BO89, 74 pages] is based on a longstanding principle of tax law: When a taxpayer receives a valuable benefit in return for a donation to charity, the taxpayer can deduct only the net value of the donation as a charitable contribution. The rule applies that principle, known as the quid pro quo principle, to state tax benefits provided to a donor in return for contributions.

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June 12, 2019 in IRS News, Tax | Permalink | Comments (0)

Sunday, June 2, 2019

The IRS Audits Poor Americans At The Same Rate As The Top 1%

ProPublica, It’s Getting Worse: The IRS Now Audits Poor Americans at About the Same Rate as the Top 1%:

ProPublica 1Every year, the IRS, starved of funds after years of budget cuts, loses hundreds more agents to retirement. And every year, the news gets better for the rich — especially those prone to go bold on their taxes. According to data released by the IRS last week, millionaires in 2018 were about 80% less likely to be audited than they were in 2011.

But poor taxpayers continue to bear the brunt of the IRS’ remaining force. As we reported last year, Americans who receive the earned income tax credit, one of the country’s largest anti-poverty programs, are audited at a higher rate than all but the richest taxpayers. The new data shows that the trend has only grown stronger.

Audits of the rich continue to plunge while those of the poor hold steady, and the two audit rates are converging. Last year, the top 1% of taxpayers by income were audited at a rate of 1.56%. EITC recipients, who typically have annual income under $20,000, were audited at 1.41%. ...

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June 2, 2019 in IRS News, Tax | Permalink | Comments (5)

Saturday, June 1, 2019

Senior IRS Leaders Launch Review Of Agency’s Partnership With TurboTax, H&R Block

TurboTaxHRBlockProPublica, Senior IRS Leaders Launch Review of Agency’s Partnership With TurboTax and H&R Block:

Amid calls for investigations from members of Congress, the IRS announced late Friday that it has convened a team of senior leaders to review concerns raised about its Free File public-private partnership with the tax software industry, following a series of ProPublica stories.

“The IRS is reviewing the concerns raised about the Free File program. We take these issues seriously, and a senior leadership team was assembled to review the current Free File program,” according to a statement. It added: “The IRS team will take fast action to ensure the integrity of the program.”

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June 1, 2019 in IRS News, Tax | Permalink | Comments (0)

Thursday, May 23, 2019

IRS Releases 2018 Data Book

218 Data BookIR-2019-96, IRS Releases Data Book for 2018 (May 20, 2019):

The Internal Revenue Service today released the 2018 IRS Data Book, a snapshot of agency activities for the fiscal year.

The 2018 IRS Data Book describes activities conducted by the IRS from Oct. 1, 2017, to Sept. 30, 2018, and includes information about tax returns, refunds, examinations and appeals. The annual publication is illustrated with charts showing changes in IRS enforcement activities, taxpayer assistance levels, tax-exempt activities, legal support workload and IRS budget and workforce levels when compared to fiscal year 2017 and prior years. Included this year is a section on taxpayer attitudes from a long-running opinion survey.

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May 23, 2019 in IRS News, Tax | Permalink | Comments (0)

Wednesday, May 22, 2019

IRS Office Of Chief Counsel Seeks To Hire JDs/Tax LLMs For Summer Honors And Legal Programs

IRS Office of Chief Counsel Logo (2015)Michael J. Desmond (IRS Chief Counsel), IRS Office of Chief Counsel Summer Honors Program and Summer Legal Programs:

After many years of attrition, the IRS Office of Chief Counsel is turning a corner this year and looking to recruit law students and lawyers from a diverse group of well qualified candidates. The Office of Chief Counsel has always offered unparalleled opportunities for professional advancement. With implementation of the most comprehensive tax reform law in a generation under way, working with the Chief Counsel’ Office is a truly unique opportunity to participate in the development of entirely new provisions of tax law, both in technical positions drafting guidance and providing advice and in trial attorney positions handling cases in Tax Court.

We generally accepts applications as early as summer 2019 for Honors Program positions beginning fall 2020 and Summer Legal Program positions for summer 2020. This year, applicants can begin applying to our Honors Program beginning May 20, 2019, and have until September 30, 2019, to submit application materials. Although the final deadline to apply is September 30th, both the Honors Program and Summer Legal Program announcements have two earlier application cutoff dates, July 31st and September 3rd. Applicants who apply by the earlier deadlines will be considered and likely receive offers before the final deadline, so please encourage interested applicants to apply as soon as possible.

Here is some key information about the Honors Program and Summer Legal Program, along with application links that law students and recent graduates can use to apply. The application links provide job descriptions, cities where we’re hiring, and eligibility and hiring criteria information.

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May 22, 2019 in IRS News, Tax | Permalink | Comments (0)

Wednesday, May 15, 2019

IRS Seeks Grant Applications For Funding Low Income Taxpayer Clinics

LITC

The IRS has announced (IR-2019-83) that it is accepting grant applications through June 17 for Low Income Taxpayer Clinics for the 2020 grant cycle (Jan. 1 - Dec. 31, 2020):

The LITC Program is a federal grant program administered by the Office of the Taxpayer Advocate at the IRS, led by the National Taxpayer Advocate, Nina E. Olson. Under Internal Revenue Code (IRC) Section 7526, the IRS awards matching grants of up to $100,000 per year to qualifying organizations to develop, expand or maintain an LITC.  An LITC must provide services for free or for no more than a nominal fee.

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May 15, 2019 in IRS News, Tax | Permalink | Comments (0)