IRS Consultant Charged With Disclosing Tax Return Information To New York Times (Trump) And ProPublica (Thousands Of Wealthy Americans)

U.S. Department of Justice Press Release, IRS Consultant Charged with Disclosing Tax Return Information to News Organizations (indictment):

An Internal Revenue Service (IRS) consultant was charged today with disclosing tax return information without authorization.

According to court documents, Charles Littlejohn, 38, of Washington, D.C., while working at the IRS as a government contractor, stole tax return information associated with a high-ranking government official (Public Official A) and disclosed it to a news organization (News Organization 1). Littlejohn also stole tax return information for thousands of the nation’s wealthiest individuals, and disclosed this tax return information to another news organization (News Organization 2).

Littlejohn is charged with one count of unauthorized disclosure of tax returns and return information. If convicted, he faces a maximum penalty of five years in prison.

Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division and Deputy Inspector General for Investigations Trevor Nelson of the Treasury Inspector General for Tax Administration (TIGTA) made the announcement.

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WSJ: Taylor Swift And Lionel Messi Fans Face Tax Scrutiny From Democrats’ American Rescue Plan

Wall Street Journal, The IRS Is Going to Know if You Sold Taylor Swift ‘Eras’ Tickets:

If you cashed in this summer by reselling tickets to Taylor Swift’s “Eras Tour” or Lionel Messi’s first games in a bubblegum-pink jersey, brace yourself to pay taxes.

A new law requires ticketing platforms like Ticketmaster and StubHub to give the Internal Revenue Service information on users who sold more than $600 worth of tickets this year.

The new requirements are taking hold amid a banner year for live events in which Swifties, soccer buffs and members of Beyoncé’s BeyHive paid sky-high prices for a chance to see their favorite stars in the flesh. That drove huge markups in the secondary ticket market—and delivered hefty profits to anyone hawking hot tickets.

The average price for Taylor Swift tickets sold in the U.S. on StubHub was $1,095, with the best seats going for thousands of dollars, according to the company, which operates an online market for people to resell and buy tickets. Averages for Beyoncé and Harry Styles clocked in at $380 and $400, respectively. After Lionel Messi joined Major League Soccer, the price of tickets to Inter Miami CF matches shot up to $255 apiece, from $30.

There was an unusually high number of fan ticket resellers this year, StubHub said. Fan sellers, as opposed to professional ticket brokers, have accounted for about 70% of U.S. “Eras Tour” ticket orders—double the proportion of what the company normally sees.

Some savvy or lucky fans resold their tickets to make a profit. Others reluctantly parted ways with tickets because their circumstances changed. ...

In the past, ticket-selling platforms were required to send 1099-K forms if a user received more than $20,000 in revenue and had more than 200 transactions. The new law, part of Democrats’ American Rescue Plan Act coronavirus relief package in early 2021, lowers the threshold to $600, irrespective of the number of transactions. The IRS reporting requirement is triggered by the sale price, not the seller’s profit. ...

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NY Times: IRS To Reduce Audits Of Refundable Credits Like EITC To Ameliorate Racial Disparities

New York Times, I.R.S. Changes Audit Practice That Discriminated Against Black Taxpayers:

The Internal Revenue Service is overhauling how it scrutinizes the tax returns of lower-income Americans as part of an effort to reduce enforcement disparities that have made Black taxpayers far more likely than anyone else to be audited.

At the center of this effort is a major change to how the I.R.S. conducts audits of recipients of the earned-income tax credit, a special tax refund that was created to help low-income workers.

Tax returns that claim the E.I.T.C. have historically been more likely to be selected for audits, even if those investigations tend to yield little in taxes that are owed. Research has shown that audit rates for Black Americans are three to five times higher than for other taxpayers, with audits focused on the tax credit being a major driver of the disparity.

The I.R.S. has pledged to use the $80 billion that it received through the Inflation Reduction Act of 2022 to target wealthy taxpayers and make the tax system more equitable by ensuring that taxpayers are not disproportionately scrutinized because of their race.

“We are making broad efforts to overhaul compliance efforts in a manner that robustly advances our commitment to fair, equitable, and effective tax administration,” Daniel Werfel, the I.R.S. commissioner, wrote in a letter to Senator Ron Wyden of Oregon, the Democratic chairman of the Senate Finance Committee, on Monday.

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NY Times: IRS Deploys Artificial Intelligence To Target The Rich

IR-2023-166, IRS Announces Sweeping Effort to Restore Fairness to Tax System With Inflation Reduction Act Funding; New Compliance Efforts Focused on Increasing Scrutiny on High-Income, Partnerships, Corporations and Promoters Abusing Tax Rules on the Books:

Agency focus will shift attention to wealthy from working-class taxpayers; key changes coming to reduce burden on average taxpayers while using Artificial Intelligence and improved technology to identify sophisticated schemes to avoid taxes

New York Times, I.R.S. Deploys Artificial Intelligence to Catch Tax Evasion:

The Internal Revenue Service has started using artificial intelligence to investigate tax evasion at multibillion-dollar partnerships as it looks for ways to better police hedge funds, private equity groups, real estate investors and large law firms.

The announcement on Friday was intended to show how a more muscular I.R.S. is using some of the $80 billion allocated through last year’s Inflation Reduction Act to target the wealthiest Americans and tackle the kinds of cases that had become too complex and cumbersome for the beleaguered agency to handle.

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

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

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

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

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

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

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

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

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Treasury Department Office Of Tax Legislative Counsel Seeks To Hire Attorneys

Office of Tax Legislative Counsel Attorney-Advisor Positions:

Priority application deadline is July 31, 2023, though we evaluate candidates year-round.

Job Description: The Office of Tax Legislative Counsel (TLC) is part of the Department of the Treasury's Office of Tax Policy responsible for advising the Assistant Secretary for Tax Policy and senior Treasury officials in connection with the formulation of legislative and administrative proposals that further domestic tax policies. TLC consists of over 20 lawyers and tax policy advisors who share a commitment to serve the nation by advising on and reviewing domestic tax policy and legal matters. Attorney-advisors work in the Main Treasury Building located at 1500 Pennsylvania, Avenue, NW, Washington, DC. Partial telework is permitted; some travel may be required.

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IRS Chief Counsel Seeks To Hire 2L, 3L, And Tax LL.M. Students, And Graduates With 1+ Year(s) Experience

Office of Chief Counsel Summer and Honors Jobs: 

IRS, Office of Chief Counsel Summer and Honors job announcements are now open! There are also open job announcements for lateral hires – those attorneys with a year or more of experience.

We are having a virtual event on Tuesday, August 1st at 12:00 pm Eastern to discuss working at the IRS, Office of Chief Counsel and the application process. The announcements for both the honors and summers programs close September 8th. ...

Have 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 hiring 2Ls, 3Ls, and Tax LLM students! Don’t miss this unique opportunity to learn about the Office of Chief Counsel and get some of your questions answered.

We continue to hire for our experienced attorney positions as well. To see experienced positions openings, click here.

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The 40 Americans Wrongfully Detained Around The World Face An Additional Challenge At Home: The IRS

Wall Street Journal, ‘Why Do I Have to Pay Taxes on That?’ Wrongfully Detained Americans Face Bills, Fines and Fraud Back Home:

When Washington Post correspondent Jason Rezaian was released from Iran after 544 days of imprisonment, he said his welcome home came with bills of $20,000 for unpaid taxes, late payment penalties and interest.

Rezaian had given his brother power of attorney to manage his affairs while he was abroad—but that power didn’t allow his brother to submit tax returns on his behalf. “There was no pause button for wrongful detention,” Rezaian said. “I was a hostage…Why do I have to pay taxes on that?”

Families of wrongfully detained U.S. citizens struggle to maintain detainees’ financial lives in their absence, even as they also wage daily battles to secure their loved one’s freedom. Their bureaucratic battles have spurred government officials, advocacy groups and lawmakers to search for ways to help them cut through the red tape.

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Today's 13th Annual IRS/TPC Joint Research Conference On Tax Administration

13th Annual IRS/TPC Joint Research Conference on Tax Administration:

The Internal Revenue Service (IRS) and the Urban-Brookings Tax Policy Center invite you to attend virtually or in-person the only annual conference focused exclusively on tax administration research. Researchers from the IRS, other government agencies, academia, and private organizations will discuss some of the latest analyses seeking to make tax administration as effective as possible.

• Agenda
• Abstracts of Papers

Opening

• Wendy Edelberg (Director, Hamilton Project, Brookings Institution)
• Eric Toder (Institute Fellow, Tax Policy Center)
• Barry Johnson (Deputy Chief Data and Analytics Officer, Research, Applied Analytics and Statistics, IRS)

Session 1: Service is Our Surname

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How Much Did Congress Lose By Defunding The IRS? Way More Than We Thought.

Washington Post Op-Ed:  How Much Did Congress Lose By Defunding the IRS? Way More Than We Thought., by Catherine Rampell:

The White House and Congress recently agreed to claw back more than $20 billion earmarked for the Internal Revenue Service. This deal was, ostensibly, part of a grand bargain to reduce budget deficits.

Unfortunately, it’s likely to have the opposite effect. Every dollar available for auditing taxpayers generates many times that amount for government coffers — and the rate of return is especially astonishing for audits of the wealthiest Americans, according to new research shared exclusively with The Post.

A team of researchers at Harvard University, the University of Sydney and the Treasury Department examined internal IRS data for approximately 710,000 in-person audits from 2010 to 2014 [William C. Boning (Treasury Department), Nathaniel Hendren (Harvard), Ben Sprung-Keyser (Harvard) & Ellen Stuart (University of Sydney), A Welfare Analysis of Tax Audits Across the Income Distribution]. Here’s what they found: ...

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IRS: Contributions To Nonprofit 'Name, Image And Likeness' Collectives Are Not Deductible Charitable Gifts

The IRS Office of Chief Counsel last week released a memorandum (AM 2023-004) concluding that contributions to nonprofit “name, image and likeness” collectives paid to college athletes generally are not deductible charitable gifts:

[I]t is the view of this Office that many organizations that develop paid NIL opportunities for student-athletes are not tax exempt and described in section 501(c)(3) because the private benefits they provide to student-athletes are not incidental both qualitatively and quantitatively to any exempt purpose furthered by that activity.

Wall Street Journal, IRS Nixes Tax Edge for College-Sports Booster Groups Paying Athletes:

The memo is a sign that the IRS will deny many collectives’ applications for charitable status and will begin revoking some prior rulings through audits. It creates significant uncertainty for athletic departments and the collectives that have sprung up since 2021, when the NCAA changed the rules in the wake of a flurry of states changing their laws to allow for athlete endorsements and the Supreme Court decision in NCAA v. Alston. ...

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WSJ: IRS Weighs Creating A Government-Run Tax-Prep Option; Americans Don't Want It

Update: 

• IR-2023-103, IRS Submits Direct File Report to Congress; Treasury Department Directs Pilot to Evaluate Key Issues (May 16, 2023)
• IRS Report to Congress, Inflation Reduction Act §10301(1)(B): IRS-run Direct e-File Tax Return System (May 16, 2023)

Wall Street Journal, IRS Weighs Creating a Government-Run Tax-Prep Option:

The Biden administration is considering creating a government-run alternative to TurboTax and H&R Block, drawing resistance from Republicans and companies fearing a loss of business.

Democrats and consumer advocates have been pushing for the Internal Revenue Service to offer free online tax filing on its website, particularly for people with straightforward returns. Their core argument: Tax-preparation companies charge middle-income Americans for what advocates think should be a free public service.

The companies, meanwhile, are boosting lobbying spending and leaning on lawmakers to fight a change that could shrink their revenue, and they are emphasizing free options already available for taxpayers. They see the changes under consideration as a first step toward an even bigger threat in which the IRS could use information it gets from employers and other sources to prepare a first draft of taxpayers’ returns for them.

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NY Times: IRS Admits Black Americans Face More Audit Scrutiny

New York Times, I.R.S. Acknowledges Black Americans Face More Audit Scrutiny:

The Internal Revenue Service said on Monday that Black taxpayers have been far more likely to be audited than others and that it is considering changes to its case selection process to address discrimination in how the tax code is enforced.

The acknowledgment came after the publication of research this year showing that Black taxpayers were disproportionately audited, prompting calls from members of Congress for a review into the methodology and algorithms that help determine who is selected. The tax collection agency, which received an $80 billion infusion in funding last year as part of the Inflation Reduction Act, has said it would work to make the system more equitable.

“While there is a need for further research, our initial findings support the conclusion that Black taxpayers may be audited at higher rates than would be expected given their share of the population,” Daniel Werfel, the I.R.S. commissioner, wrote in a letter to Senator Ron Wyden of Oregon, the Democratic chairman of the Senate Finance Committee.

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WSJ Op-Ed: Congress Gave $80 Billion To A Lawless IRS

Wall Street Journal Op-Ed:  Congress Gave $80 Billion to a Lawless IRS, by Travis Nix (J.D. 2023, Georgetown):

After nearly eight months of deliberation, the Internal Revenue Service has finally released a lightly detailed plan for how to spend the additional $80 billion Congress allotted in 2022. Taxpayers should be dubious of IRS promises to use this funding to ensure fairer and more lawful tax-code enforcement. The few details in the report’s vague language indicate that the IRS wants to use its newfound money to enforce sections of the tax code that courts struck down twice as unlawful last year. Congress should stop funding the illegal purposes at the IRS.

One of the few definite action items the IRS included in its 150-page report was an enforcement objective to levy tax penalties against taxpayers engaging in “listed transactions”: practices the service has labeled as prone to tax abuse. These currently consist of a series of 36 transactions that the IRS has simply published on its website and in taxpayer notices over the last two decades. The IRS enforces and cites these notices as having the force of law even though taxpayers had no opportunity to voice concerns about these rules. Because the notices didn’t undergo the proper review process to become regulations, they can’t legally be enforced and should be nonbinding. ...

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Inside The IRS’s Shrinking Band Of Wealth Hunters

Bloomberg Businessweek, Inside the IRS’s Shrinking Band of Wealth Hunters:

Former auditors dish on truant taxpayers, decrepit tech and why $80 billion might not be enough to fix everything that’s wrong.

If you ever meet an off-duty Internal Revenue Service auditor, they probably won’t admit where they work. “What do you do?” is “always a party killer,” says former agent Elyse Katz. Best to keep it vague, she says, and hope that “accountant” is boring enough to move the conversation along to another topic.

Few things make Americans more anxious than an IRS agent in their midst, even when the occasion is social rather than, say, an audit. It’s the audit that inspires many people’s fear of the agency, helping it poll as the least trusted of major federal departments. Last year, when President Joe Biden and congressional Democrats secured almost $80 billion in extra IRS funding across the next decade under the Inflation Reduction Act, it didn’t take long for the agency’s critics to raise the prospect of rampant nosiness, with Republican politicians claiming that an army of 87,000 armed agents would soon be poking through Americans’ finances.

The notion was absurd, to say the least, and not only because almost no IRS agents carry guns. Across the past few decades, the agency has been decimated by cuts, to the point that by most measures it’s the worst-funded major federal department. It’s down to 84,000 (almost all unarmed) workers, a loss of 10,000 employees since 2010 and about the same as in 1974, when the US had 120 million fewer people and an economy a quarter of its current size. The IRS’s most experienced revenue agents have departed at an even higher rate than other employees, leaving 99.9% of the most complex and opaque type of business returns unexamined and millionaires’ and billionaires’ audit rates tumbling by 80% to 90%.

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IRS: Forced Sterilization Payments Are Excludible From Income Under § 104(a)(2)

IR 2023-81 (Apr. 14, 2023), IRS Issues Frequently Asked Questions on Compensation Payments Made by States for Forced Sterilization:

The Internal Revenue Service today issued frequently asked questions (FAQs) to provide guidance for victims who have received state compensation payments for forced, involuntary, or coerced sterilization, in Fact Sheet FS-2023-11.

Some states have enacted legislation to compensate victims of forced sterilization under state programs. These states have made payments to those victims pursuant to the legislation. The FAQs address the federal income tax consequences of these payments.

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IRS Releases 2022 Data Book: Audit Rates Fell, But $80 Billion New Funding Will Reverse Trend With 7,000 More Tax Accountants, Attorneys, And Agents To Target The Rich

IR-2023-82, IRS Releases Fiscal Year 2022 Data Book Describing Agency’s Activities:

The Internal Revenue Service today issued its annual Data Book detailing the agency's activities during fiscal year 2022 (Oct. 1, 2021 – Sept. 30, 2022), including revenue collected and tax returns processed.

In many areas, the statistics in the 2022 Data Book reflect the impact that past resource constraints had on the agency's ability to provide adequate taxpayer service and address compliance issues, including audits of higher income taxpayers, partnerships, and large corporations. ...

For the past decade, the IRS has seen an increase in the number of returns filed paired with a decrease in resources available for examinations particularly for the most complex tax returns of high-income and high-wealth individuals, large corporations, and complex partnerships. Going forward, as the IRS moves to implement the Strategic Operating Plan released earlier this month, the agency is focused on pursuing high-income and high-wealth individuals, complex partnerships and large corporations that are not paying the taxes they owe. As a result, the IRS has no plans to increase the audit rate for households making less than $400,000.

The 2018 information is the most recent year we have final audit rate data because it is the most recent tax year for which the statutory period has closed, meaning in most cases no new audits will be started and the audit coverage rates should be final.

Typically, audit rates for higher-income categories increase over time as new audits are opened during the statutory period. This means the audit numbers for higher-income taxpayers listed in the 2022 Data Book Table 17 will increase over time for tax years within the statutory period; the final exam rates for these taxpayers will be significantly higher in future years.

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WSJ: The Problem With The IRS Pledge Not To Audit More Earners Under $400,000

Wall Street Journal, The Problem With the IRS Pledge Not to Audit More Earners Under $400,000:

What are your odds of being audited? ...

The audit rate sounds straightforward: the share of taxpayers with a given level of reported income who are audited. In fact, a look at how that number is calculated reveals some important challenges for U.S. tax collection.

The audit rate has newfound relevance because of the IRS’s new $80 billion in funding. Treasury Secretary Janet Yellen had directed that “any additional resources—including any new personnel or auditors that are hired—shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels.” ...

At all income levels, the audit rate has plunged over the past decade amid declining IRS resources and head count, as a Government Accountability Office report released last year shows. 

$400,000 is a fairly high threshold—fewer than 2% of tax returns have adjusted gross income above that, according to IRS data. But why pursue those families when there might be multimillionaires and billionaires dodging millions of dollars in taxes?

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WSJ: The IRS Makes A Strange House Call On Journalist Matt Taibbi

Wall Street Journal Editorial, The IRS Makes a Strange House Call on Matt Taibbi:

Democrats are denouncing the House GOP investigation into the weaponization of government, but maybe that’s because Republicans are getting somewhere. That includes new evidence that the Internal Revenue Service may be targeting a journalist who testified before the weaponization committee.

House Judiciary Chairman Jim Jordan sent a letter Monday to IRS Commissioner Daniel Werfel and Treasury Secretary Janet Yellen seeking an explanation for why journalist Matt Taibbi received an unannounced home visit from an IRS agent. We’ve seen the letter, and both the circumstances and timing of the IRS focus on this journalist raise serious questions.

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NY Times: IRS Decision Not To Tax State Stimulus Payments Carries Fiscal Cost

New York Times, I.R.S. Decision Not to Tax Certain Payments Carries Fiscal Cost:

More than 20 state governments, flush with cash from federal stimulus funds and a rebounding economy, shared their windfalls last year by sending residents one-time payments.

This year, the Biden administration added a sweetener, telling tens of millions taxpayers that they do not need to pay federal taxes on those payments.

That decision by the Internal Revenue Service, while applauded by some tax experts and lawmakers, could cost the federal government as much $4 billion in revenue when Washington is struggling with a ballooning federal deficit and entering a protracted fight over the nation’s debt limit.

The I.R.S. ruling, after bipartisan pressure from lawmakers, was the latest move by the agency to forgo revenue this tax season.

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IRS Chief Counsel Is Seeking To Hire Over a Dozen Tax Attorneys (Annual Salary Range: $82,830 - $183,500)

IR-2023-21, IRS Chief Counsel Is Hiring Attorneys; Multiple Job Openings Posted to Help Enhance the Taxpayer Experience and Address High-End Noncompliance:

The Internal Revenue Service's Office of Chief Counsel today announced plans to hire additional attorneys to assist the agency in enhancing the taxpayer experience and addressing high-end, complex noncompliance.

"We're immediately seeking motivated attorneys to accomplish this highly challenging work," said William Paul, Principal Deputy Chief Counsel/Deputy Chief Counsel (Technical). "We invite you to consider joining our team if you're an attorney who's interested in litigation, giving legal advice on complex tax matters or working on published tax guidance to assist the public in understanding the tax laws." ...

Attorney positions are available in dozens of cities around the country. The full list of job openings is always easily accessible by searching for IRS Chief Counsel on USAJOBS.gov. The first announcements are already posted and can be viewed at the links below:

• Large Business & International Positions
• Small Business/Self Employed Positions
• Technical Positions

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U.S. Treasury Department: Disparities In The Benefits Of Tax Expenditures By Race And Ethnicity

Lily Batchelder (Assistant Secretary for Tax Policy) & Greg Leiserson (Deputy Assistant Secretary for Tax Analysis), Disparities in the Benefits of Tax Expenditures by Race and Ethnicity:

This analysis, the subject of a new Office of Tax Analysis (OTA) working paper [Tax Expenditures by Race and Hispanic
Ethnicity: An Application of the U.S. Treasury Department's Race and Hispanic Ethnicity Imputation], finds disparities in the benefits of some tax expenditures among White, Black, and Hispanic families. Tax expenditures are provisions of federal law that allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability for certain activities. Examples include the preferential rates for capital gains, the home mortgage interest deduction, and the Earned Income Tax Credit. OTA working papers are works in progress intended to generate discussion and critical comment.

Researchers frequently analyze the distributional effects of tax policies across an array of demographic information, including income, family structure, age, and geography. However, it is challenging to perform such analysis by race and ethnicity because there is no single data source with both tax and race/ethnicity information. Tax liability does not depend on race or ethnicity, and this information is not collected on tax returns.

To overcome this challenge, Treasury researchers have developed a method to impute race and ethnicity in tax data. Under this method, researchers estimate the probability that the primary filer—the person listed first on the tax return—is Asian, Black, Hispanic, Native American, White, or multiple race based on other information available in the tax data. These probabilities are then used as weights to construct estimates for different groups. ...

The new working paper on the distribution of tax expenditures, by Julie-Anne Cronin, Portia DeFilippes, and Robin Fisher of OTA, examines eight of the largest individual income tax expenditures. It estimates the distribution of benefits for certain racial and ethnic groups first on an overall per capita basis, and then within income deciles (tenths of the income distribution).

On an overall per capita basis, the paper finds that the preferential rates for capital gains and dividends, deduction for pass-through income, charitable deduction, home mortgage interest deduction, and deduction for employer-provided health insurance disproportionately benefit White families. In contrast, Black and Hispanic families, who make up a disproportionate share of low-wage workers, disproportionately benefit from the Earned Income Tax Credit, which is designed to help low- to moderate-income workers and their families. Hispanic families, who have comparatively low rates of employer-sponsored health insurance, also disproportionately benefit from the Premium Tax Credit, which provides assistance for the purchase of health insurance through the Marketplaces. Finally, Hispanic families disproportionately benefit from the Child Tax Credit. The current analysis focuses on Black, White, and Hispanic people due to high levels of uncertainty in estimates for other groups.

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The IRS’s Christmas Gift To Airbnb And PayPal Is A Loss For Law-Abiding Taxpayers

Following up on my previous post, IRS Delays Implementation Of $600 Reporting Threshold For Third-Party Payment Platforms Like Etsy, Venmo:  Daniel Hemel (NYU; Google Scholar) & Steven M. Rosenthal (Tax Policy Center), The IRS’s Christmas Gift to Airbnb and PayPal Is a Loss for Law-Abiding Taxpayers:

Third-party payment platforms such as Airbnb, eBay, and PayPal found a surprise gift from the Biden Administration in their Christmas stockings last month—one that likely will cost the federal government more than $1 billion this tax season. And beyond the short-term budgetary impact, it sets a terrible precedent for the future of tax enforcement.

Since 2011, third party platforms have been required to file a simple half-page tax form, Form 1099-K, when they process payments to sellers and service providers, such as Airbnb hosts or eBay merchants. Before tax year 2022, platforms had to report only for users whom they paid more than $20,000, and only then if those users conducted more than 200 transactions annually.

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National Taxpayer Advocate Delivers 2022 Annual Report To Congress

IR-2023-04 (Jan. 11, 2023, National Taxpayer Advocate Delivers 2022 Annual Report To Congress; Focuses On Taxpayer Impact Of Processing And Refund Delays

National Taxpayer Advocate Erin M. Collins today released her 2022 Annual Report to Congress, saying taxpayers and tax professionals "experienced more misery in 2022" due to paper processing delays and poor customer service. But the report also says the Internal Revenue Service made considerable progress in reducing the volume of unprocessed tax returns and correspondence and is poised to start the 2023 filing season in a stronger position.

The Advocate's report assesses taxpayer service during 2022, identifies the ten most serious problems taxpayers are experiencing in their dealings with the IRS, and makes administrative and legislative recommendations to address those problems. This year's report recommends specific initiatives that Collins is urging the IRS to include in its plan showing how the additional funding it received in the Inflation Reduction Act will be spent. It also contains two research studies – one on ways to restructure the Earned Income Tax Credit to increase participation among eligible taxpayers while reducing improper payments, and the other designed to help the IRS improve its online operations by studying the functionality of online operations offered by over 40 states and several foreign countries.

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Grewal: The IRS Audits Trump

Following up on my previous posts (links below):  Andy Grewal (Iowa; Google Scholar), The IRS Audits Trump, 39 Yale J. on Reg.: Notice & Comment (Dec. 26, 2022):

In a widely anticipated move, the House Ways & Means Committee released a report on how the IRS audited Donald Trump’s tax returns. The W&M report along with the related Joint Committee on Taxation report show that Trump had ongoing audits with the IRS before he assumed office. The IRS continued those audits throughout the Trump presidency. However, the IRS did not immediately commence “mandatory” audits for returns that Trump filed after becoming President. Trump’s 2019 return was not even selected for audit until earlier this year, and his 2020 return remains entirely audit.

The W&M report has led to some heated commentary about whether the IRS failed to do its job. With that backdrop, this post will explain the mandatory audit program for Presidents, discuss some reasons that the IRS might have focused on Trump’s ongoing audits, and suggest some issues to consider in any potential reforms. 

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IRS Delays Implementation Of $600 Reporting Threshold For Third-Party Payment Platforms Like Etsy, Venmo

• IR-2022-226, IRS Announces Delay For Implementation of $600 Reporting Threshold For Third-Party Payment Platforms’ Forms 1099-K
• Notice 2023-10, Revised Timeline Regarding Implementation of Amended Section 6050W(e)

• New York Times, I.R.S. Delays Tax Change for Users of Venmo, Cash App and Other Digital Wallets
• Wall Street Journal, IRS Delays Gig-Tax Filing Rule for Side Hustles of More Than $600

Inspector General: No Political Influence In Comey|McCabe Audits During Trump Administration

Following up on my previous posts:

• New York Times, Comey And McCabe, Who Infuriated Trump, Both Faced Intensive IRS Audits
• Wall Street Journal, Comey|McCabe IRS Audits AND ProPublica Tax Leak Should Be Investigated
• IRS, No Political Influence In Comey|McCabe Audits

Treasury Inspector General for Tax Administration, National Research Program Tax Return Selection Process for Tax Years 2017 and 2019:

In July 2022, a media outlet reported that the Internal Revenue Service’s (IRS) process to select specific taxpayers for the Tax Years 2017 and 2019 NRP audits may not have been random. At the request of the Commissioner of Internal Revenue and representatives from Congress, TIGTA’s Office of Inspections and Evaluations, initiated a review to determine if the IRS randomly selected individual income tax returns for Tax Years 2017 and 2019 NRP audits.

A new report released today by the Treasury Inspector General for Tax Administration (TIGTA) found that the IRS randomly selected Tax Years 2017 and 2019 tax returns for National Research Program (NRP) audits.

Washington Post, Trump Did Not Target ex-FBI Leaders With Tax Audits, Investigators Say:

Investigators at the Treasury Department determined that the IRS did not inappropriately target former FBI leaders James B. Comey and Andrew McCabe with aggressive audits, following a New York Times report in July that raised questions about whether President Donald Trump sicced the tax agency on his political enemies.

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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): 

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

White House Statement, President Biden Announces Key Nominee:

Today, 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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WSJ: The IRS And The 8th Amendment

Update:  The FBAR’s Muddy Morass

Wall Street Journal, The IRS and the Eighth Amendment:

Navigating 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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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.

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

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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