TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

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)

Sunday, May 5, 2019

NY Times: You Can’t Tax The Rich Without The IRS

IRS Logo 2New York Times Sunday Review, You Can’t Tax the Rich Without the I.R.S.:

If no one is around to root out offshore accounts, tax cheats won’t be punished.

The hot policy in Democratic circles these days is raising taxes on the rich. Senator Elizabeth Warren has a plan to tax “ultramillionaires,” as she calls them. Senator Bernie Sanders wants to expand the estate tax. Representative Alexandria Ocasio-Cortez has floated raising the top income tax rate to 70 percent for those making over $10 million a year.

But before this country raises taxes, it should grapple with something much more prosaic but equally important for tackling inequality: saving the Internal Revenue Service.

Already, wealthy people and corporations easily get around today’s rules. However tough any new laws might seem, they’d soon be undercut.

Slowly and quietly over the past eight years, the I.R.S. has been eviscerated. It’s lost tens of thousands of employees. It has fewer auditors now than at any time since 1953. In real dollars, the agency’s budget has dropped by almost $3 billion since 2010.

Businesses and the wealthy benefit the most from this state of affairs. The largest corporations in America used to be audited every year. That started to change when the cuts began, and today, the audit rate has fallen by half. It’s a similar story for individuals making $10 million or more a year: With twice the chance of escaping I.R.S. scrutiny, the ultrarich are much less likely to lose at the game of audit roulette.

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May 5, 2019 in IRS News, Tax | Permalink | Comments (0)

Wednesday, May 1, 2019

ProPublica: Here’s How TurboTax Just Tricked You Into Paying To File Your Taxes

TurboTaxProPublica, Here’s How TurboTax Just Tricked You Into Paying to File Your Taxes:

Come along as we try to file our taxes for free on TurboTax!

Did you know that if you make less than $66,000 a year, you can prepare and file your taxes for free?

No? That’s no accident. Companies that make tax preparation software, like Intuit, the maker of TurboTax, would rather you didn’t know.

Intuit and other tax software companies have spent millions lobbying to make sure that the IRS doesn’t offer its own tax preparation and filing service. In exchange, the companies have entered into an agreement with the IRS to offer a “Free File” product to most Americans — but good luck finding it.

Here’s what happened when we went looking.

Our first stop was Google. We searched for “irs free file taxes.”

And we thought we found what we were looking for: Ads from TurboTax and others directing us to free products.

ProPublica

... It turns out that if you start the process from TurboTax.com, it’s impossible to find the truly free version. The company itself admits this. ...

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

Monte Jackel Named Special Counsel To The IRS Chief Counsel

JackelIR-2019-82 (Apr. 30, 2019), IRS Announces Selection of New Special Counsel to the Chief Counsel:

The Internal Revenue Service’s Chief Counsel today announced the appointment of Monte A. Jackel (Jackel Tax Law; @jackeltaxlaw) to the position of special counsel to the Chief Counsel, Office of Chief Counsel.

Jackel has extensive experience in both private practice as well as prior government service. Most recently, he was a Senior Tax Counsel with Akin Gump Strauss Hauer & Feld, where he focused on partnerships, international and corporate tax issues. Jackel previously served as a Special Counsel for the Office of Chief Counsel, Passthroughs and Special Industries, and earlier as the Deputy Associate Chief Counsel (Domestic-Technical).

Jackel also served as an Attorney Advisor in the Office of Tax Policy, U.S. Department of the Treasury. He received his J.D. from Hofstra University School of Law, and his LL.M. in Taxation from New York University School of Law. Jackel received his bachelor’s degree from Queens College, City University of New York.

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

Tuesday, April 30, 2019

Actor Wesley Snipes’ Offer In Compromise Got Sniped By The IRS

Snipes 2New York Law Journal, Actor Wesley Snipes’ Offer in Compromise Got Sniped by the IRS:

If you watch TV, listen to the radio, read a newspaper or hear conversations, invariably you will notice many organizations offering their services to settle tax liabilities for pennies on the dollar. How real are these offers to help a delinquent taxpayer?

There is no question that the Internal Revenue Service (IRS) has liberalized its collection policies and procedures. Specifically, the agency has established a “Fresh Start” initiative to permit qualified taxpayers a means to pay less taxes through the Offer in Compromise (O.I.C.) program. The IRS also grants different types of installment arrangements for taxpayers who may not qualify for an O.I.C. ...

Even though the O.I.C. program has become more commercialized, there are many taxpayers who do not qualify. Last year, Actor Wesley Snipes made headlines when his O.I.C. was rejected by the IRS. Upon information and belief, Snipes failed to file Federal Income Tax Returns for the years 2001-2006, allegedly owing the IRS at least $23.5 million. After the IRS issued numerous collection notices and liens, Snipes filed a Request for a Collection Due Process Hearing. He then submitted an O.I.C. for an $842,061.00 offer in full satisfaction of his $23.5 million debt to the IRS.

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April 30, 2019 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (1)

Friday, April 26, 2019

Peter Blessing Named IRS Associate Chief Counsel (International)

BlessingIR-2019-79 (Apr. 25, 2019), IRS Announces New Personnel Selection for Office of Chief Counsel:

The Internal Revenue Service’s Chief Counsel today announced the appointment of Peter Blessing to the position of Associate Chief Counsel, International, Office of Chief Counsel.

Blessing has many years of experience in private practice and has focused primarily on international tax law. “We are very fortunate to attract an individual of his caliber and expertise,” said Michael Desmond, IRS Chief Counsel.

The Associate Chief Counsel, International, is responsible for coordinating and directing all activities of the international organizational component of the Office of Chief Counsel. That organization provides legal advisory services on all international and foreign tax matters, including all matters relating to the activities of non-U.S. persons or entities within the United States and the activities of U.S. or U.S.-related persons or entities outside the United States. These services support uniform interpretation, application and enforcement of all international provisions of the United States revenue laws, all bilateral and multilateral tax treaties and agreements to which the United States is a party, and all foreign revenue laws that pertain to or affect tax matters in the United States.

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April 26, 2019 in IRS News, Tax | Permalink | Comments (0)

Thursday, April 25, 2019

ProPublica: Lawmakers Confront The IRS Over Tax Audits That Target The Poor

Pro PublicaProPublica, Lawmakers Just Confronted the IRS Over Tax Audits That Target the Poor:

Over the past six months, ProPublica has detailed the myriad ways the IRS has been gutted and how that has impacted its ability to do its job. In sum: The wealthy escape scrutiny while the working poor, an easier target, are audited at high rates.

This week, Congress, in two separate hearings, confronted IRS Commissioner Charles Rettig with the findings.

“How can the Congress stand by a tax-enforcement system that punishes working people and gives the wealthy a green light to cheat?” asked Sen. Ron Wyden, D-Ore., ranking member of the Senate Finance Committee, during his opening statement on Wednesday.

Wyden was referring to a ProPublica investigation last week into the fate of the elite unit the IRS formed to keep up with the complicated tax-avoidance schemes of the wealthy. Faced with staff cuts and blowback from the wealthy and their tax representatives, the effort fumbled and was scaled way back.

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April 25, 2019 in IRS News, Tax | Permalink | Comments (5)

D.C. Circuit Upholds IRS's Voluntary Regulation Of Tax Preparers

Frank G. Colella (Pace), D.C. Circuit Upholds IRS's Voluntary Regulation of Tax Preparers — Majority Holds APA's Statutory Notice and Comment Not Required: AICPA v. IRS, 15 N.Y.U. J. L. & Bus.229 (2019):

In American Institute of Certified Public Accountants (“AICPA”) v. Internal Revenue Service (“IRS”), the D.C. Circuit for the District of Columbia Circuit (“D.C. Circuit”) reversed the District Court for the District of Columbia’s (“District Court”) dismissal and held, for a second time, that the AICPA had standing to challenge the IRS’s promulgation of the Annual Filing Season Program (“AFSP” or “the Program”). The D.C. Circuit then went a step further and ruled on the merits of the AICPA’s challenge to the IRS’s rulemaking. It held that the IRS had the statutory authority to promulgate the voluntary program to enhance the skills of licensed tax return preparers. However, while the D.C. Circuit was unanimous on standing and the merits, it split two-to-one on whether the IRS had followed proper procedure when it adopted the AFSP without first providing the requisite “notice and comment” period required by the Administrative Procedures Act (“APA”).

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April 25, 2019 in IRS News, New Cases, Tax | Permalink | Comments (0)

Wednesday, April 24, 2019

ProPublica: How The IRS Gave Up Fighting Political Dark Money Groups

Pro PublicaProPublica, How the IRS Gave Up Fighting Political Dark Money Groups:

Six years after it was excoriated for allegedly targeting conservative organizations, the agency has largely given up on regulating an entire category of nonprofits. The result: More dark money gushes into the political system.

In the past decade, people, companies and unions have dispensed more than $1 billion in dark money, according to the Center for Responsive Politics. The very definition of that phrase, to many critics, epitomizes the problem of shadowy political influence: Shielded by the cloak of anonymity, typically wealthy interests are permitted to pass limitless pools of cash through nonprofits to benefit candidates or political initiatives without contributing directly to campaigns.

Such spending is legal because of a massive loophole. Section 501(c)(4) of the U.S. tax code allows organizations to make independent expenditures on politics while concealing their donors’ names — as long as politics isn’t the organization’s “primary activity.” The Internal Revenue Service has the daunting task of trying to determine when nonprofits in that category, known colloquially as C4s, violate that vague standard.

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April 24, 2019 in IRS News, Tax | Permalink | Comments (2)

Monday, April 22, 2019

Who Profits When You Pay Your Taxes?

Free FileWNYC Studios, Who Profits When You Pay Your Taxes?:

Tax Day is behind us, but the Taxpayer First Act is not. The bipartisan proposal passed the House last week and is now under consideration in the Senate — and one of the provisions is exactly what the for-profit tax preparation industry has been pushing for.

Through an agreement with the IRS, companies like H&R Block and Intuit currently offer free tax filing services to taxpayers making less than $66,000 dollars a year. But only 1.6 percent of taxpayers actually use Free File, and critics say that the companies engage in aggressive up-selling through the portal. A provision in the Taxpayer First Act would bar the IRS from developing their own free system.

Dennis Ventry is a tax scholar at the University of California, Davis. He has written about the shortcomings of the Free File program, and explains to Bob why he thinks the IRS isn't doing enough to protect taxpayers who try to use it. He wrote an opinion piece last year titled Free File Providers Scam Taxpayers; Congress Shouldn't Be Fooled — which made him the target of a public records request from an industry group [New York Times, Industries Turn Freedom of Information Requests on Their Critics].

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

Sunday, April 14, 2019

Taxpayer Advocate: The IRS Should Redesign Its Notices Using Psychological, Cognitive, And Behavioral Science Insights

Taxpayer Advocate (2016)Nina Olson (National Taxpayer Advocate), The IRS Should Redesign Its Notices Using Psychological, Cognitive, and Behavioral Science Insights to Protect Taxpayer Rights, Enhance Taxpayer Understanding, and Reduce Taxpayer Burden:

With the filing season in full operation, many taxpayers are receiving correspondence from the IRS that convey significant taxpayer rights and require taxpayers to take prompt action. As part of my recently released Annual Report to Congress, I included a Literature Review that investigated how notices can be improved using insights from the available psychological, cognitive, and behavioral science research. A major issue with current IRS notices is that many taxpayers have difficulty understanding them. They may be unsure about what the notice requires them to do, the steps they may need to take, or the rights they have to challenge the IRS’s determination in a notice. This, in part, is because the design of IRS notices does not take into account the findings of available literature and research regarding effective notice design. Nor are IRS notices designed from a taxpayer rights perspective, which can prevent taxpayers from learning about or exercising their rights—for example, by relegating the segment on their rights to the last page of the notice, which they are least likely to read. In fact, notices are often designed with the goal of increasing revenue rather than adequately informing taxpayers of their rights. In the three Most Serious Problems on notices included in my 2018 Annual Report to Congress (here, here, and here), I provide both critiques of current IRS notices and suggestions for improvement. One of those suggestions is for the IRS to improve taxpayer understanding and decrease taxpayer burden by redesigning its notices using psychological, cognitive, and behavioral science insights. These suggestions are summarized below. ...

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April 14, 2019 in IRS News, Tax | Permalink | Comments (0)

Friday, April 12, 2019

IRS Commissioner Says College Admission Scandal Parents May Face Hefty Tax Bills

Bloomberg, IRS Head Says College Admission Scandal Parents May Face Hefty Tax Bills:

Some of the parents charged with paying bribes to get their offspring into college could end up owing a lot more to the Internal Revenue Service.

IRS Commissioner Chuck Rettig told the Senate Finance Committee his agency anticipates that “numerous other individuals” will be charged with criminal tax violations as a result of the investigation into alleged bribes paid to test examiners and college sports coaches to guarantee spots for students at elite U.S. universities.

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April 12, 2019 in IRS News, Tax | Permalink | Comments (7)

Thursday, April 11, 2019

Congress To Ban Free Online Tax Filing. Thank TurboTax.

TurboTaxProPublica, Congress Is About to Ban the Government From Offering Free Online Tax Filing. Thank TurboTax.:

Just in time for Tax Day, the for-profit tax preparation industry is about to realize one of its long-sought goals. Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.

Last week, the House Ways and Means Committee, led by Rep. Richard Neal, D-Mass.passed the Taxpayer First Act, a wide-ranging bill making several administrative changes to the IRS that is sponsored by Reps. John Lewis, D-Ga., and Mike Kelly, R-Pa.

In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.

“This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center.

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April 11, 2019 in IRS News, Tax | Permalink | Comments (4)

Monday, April 8, 2019

The IRS Tried To Take On The Ultrawealthy. It Didn’t Go Well.

ProPublicaProPublica, The IRS Tried to Take on the Ultrawealthy. It Didn’t Go Well.:

Ten years ago, the tax agency formed a special team to unravel the complex tax-lowering strategies of the nation’s wealthiest people. But with big money — and Congress — arrayed against the team, it never had a chance.

In 2009, the IRS ... formed a crack team of specialists to unravel the tax dodges of the ultrawealthy. In an age of widening inequality, with a concentration of wealth not seen since the Gilded Age, the rich were evading taxes through ever more sophisticated maneuvers. The IRS commissioner aimed to stanch the country’s losses with what he proclaimed would be “a game-changing strategy.” In short order, Charles Rettig, then a high-powered tax lawyer and today President Donald Trump’s IRS commissioner, warned that the squad was conducting “the audits from hell.” If Trump were being audited, Rettig wrote during the presidential campaign, this is the elite team that would do it. ...

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April 8, 2019 in IRS News, Tax | Permalink | Comments (1)

Wednesday, April 3, 2019

Crypto Lenders Push No-Tax Perk Of Leveraging Bitcoin For Cash

Bitcoin IRSBloomberg, Crypto Lenders Push No-Tax Perk of Leveraging Bitcoin for Cash:

Former Wall Street trader Edgar Fernandez used some of his Bitcoin as collateral to borrow nearly $100,000, a move that let him keep his cryptocurrency and avert a tax bill on the newly acquired cash.

The tax perk stems from a longstanding principle that assets aren’t taxed until sold, much like borrowing against stock holdings. Yet digital currency carries far greater risks, from price volatility, to hacks and thefts that can make the collateral disappear, to sometimes shadowy players without long track records in the field.

Since last fall, when the value of digital money plummeted, lenders have been pushing people who have paper profits to leverage them into cash by borrowing against their cryptocurrencies. And the fact that there’s no tax bill on the transactions is a big selling point. The Internal Revenue Service treats crypto money as a capital asset like stocks or property, not as a currency. ...

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

Where In The U.S. Are You Most Likely To Be Audited By The IRS?

ProPublica, Gutting the IRS: Where in The U.S. Are You Most Likely to Be Audited by the IRS?:

Humphreys County, Mississippi, seems like an odd place for the IRS to go hunting for tax cheats. It’s a rural county in the Mississippi Delta known for its catfish farms, and more than a third of its mostly African American residents are below the poverty line. But according to a new study, it is the most heavily audited county in America.

IRS Audits

In a baffling twist of logic, the intense IRS focus on Humphreys County is actually because so many of its taxpayers are poor. More than half of the county’s taxpayers claim the earned income tax credit, a program designed to help boost low-income workers out of poverty. As we reported last year, the IRS audits EITC recipients at higher rates than all but the richest Americans, a response to pressure from congressional Republicans to root out incorrect payments of the credit.

The study estimates that Humphreys, with a median annual household income of just $26,000, is audited at a rate 51 percent higher than Loudoun County, Virginia, which boasts a median income of $130,000, the highest in the country.

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April 3, 2019 in IRS News, Scholarship, Tax | Permalink | Comments (2)

Saturday, March 30, 2019

NY Times: The Taxman Is (Not) Coming After You

IRS Logo 2New York Times editorial, The Taxman Is (Not) Coming After You:

The federal government is ignoring the easy part of the solution to its fiscal problems — collecting billions of dollars in unpaid taxes.

According to federal prosecutors, the California lawyer Michael Avenatti has not filed a federal income tax return since 2010, and he has not paid federal income taxes since 2008.

This may seem astonishing to the millions of Americans who dutifully file tax returns each year, under the assumption that the government would notice if they didn’t.

But it should not come as a surprise. Congressional Republicans led the charge to sharply reduce funding for the Internal Revenue Service over the past decade, and the agency has warned repeatedly that it has been deprived of the resources necessary to catch tax cheats.

The government has been operating on the honor system — and hoping that no one noticed. ...

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March 30, 2019 in IRS News, Tax | Permalink | Comments (4)

Monday, March 18, 2019

Michael Desmond Confirmed And Sworn In As Trump's First IRS Chief Counsel

DesmondAfter a year-long wait, California tax lawyer Michael Desmond has been confirmed by the Senate (83-15) as IRS Chief Counsel. He was sworn in on March 8. Wall Street Journal, Senate Confirms Trump Pick for Top IRS Lawyer:

The Senate confirmed Michael Desmond as chief counsel of the IRS, filling an administration vacancy that had lasted for more than two years.

Mr. Desmond, a California tax lawyer and former Treasury official, will hold one of two presidentially appointed positions at the Internal Revenue Service. He will oversee the lawyers who write regulations, provide internal legal advice during audits and defend the agency in litigation.

No Republicans voted against the nomination. The no votes included presidential candidates Cory Booker (D., N.J.), Kirsten Gillibrand (D., N.Y.), Kamala Harris (D., Calif.), Amy Klobuchar (D., Minn.), Bernie Sanders (I., Vt.) and Elizabeth Warren (D., Mass.).

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March 18, 2019 in IRS News, Tax | Permalink | Comments (0)

Saturday, March 16, 2019

National Taxpayer Advocate: The IRS Should Either Fix Or Eliminate The Free File Program

Free FileNTA Blog, The Free File Program Is Failing to Achieve Its Objectives and Should be Substantially Improved or Eliminated:

I highlight my concerns with the IRS Free File program, which I also discussed in my 2018 Annual Report to Congress and my recent testimony before the House Ways and Means Subcommittee on Oversight. I also describe my personal experience using Free Fillable Forms and make some recommendations for improving these products. 

Background
The IRS Restructuring and Reform Act of 1998 directed the IRS to set a goal of increasing the e-file rate to at least 80 percent by 2007. In 2002, the IRS entered into an agreement with a consortium of tax software companies, known as Free File, Inc. (FFI), under which the companies would provide free tax return software to a certain percentage of U.S. taxpayers, and in exchange, the IRS would not compete with these companies by providing its own software to taxpayers. The agreement has been renewed at regular intervals, and for at least the past decade, the agreement has provided that the consortium would make free tax return software available for 70 percent of taxpayers (currently, about 105 million), particularly focusing on increasing access for economically disadvantaged and underserved communities, as measured by adjusted gross income.

The program provides two return preparation options for taxpayers that can be accessed on the IRS.gov homepage:

  • Free File Software: options for online software to guide taxpayers through return preparation available to taxpayers with incomes less than $66,000; and
  • Free File Fillable Forms: an electronic version of IRS paper forms available to all taxpayers, regardless of income.

The Services Provided by Free File, Inc. Fail to Meet the Needs of Taxpayers, and Use of the Program Continues to Decline
While e-filing has increased by over 180 percent since 2002, use of the Free File program has not. In 2018, individual taxpayers filed more than 154 million tax returns. Yet fewer than 2.5 million of those returns, or 1.6 percent, were filed using Free File software (this calculation does not include the number of taxpayers who used Free Fillable Forms to file their tax returns). Thus, about 68 percent of all taxpayers were eligible to use Free File software but did not do so—frequently paying to purchase the same or comparable software instead. In fact, use of the Free File program has decreased since 2014—meaning that taxpayers who used Free File in previous years chose a different option to file their returns in the following year.

NTA 1

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

Saturday, March 9, 2019

Millionaires And Corporate Giants Escaped IRS Audits In FY 2018

The Transactional Records Access Clearinghouse at Syracuse University has released Millionaires and Corporate Giants Escaped IRS Audits in FY 2018:

The latest data reveal that 97 out of every 100 taxpayers reporting over a million dollars of income were not audited last year. And for these millionaires the puny number of IRS audits has been cut in half since 2010.

TRAC 1

More than half of the 633 largest corporations in the country - those with over $20 billion in assets - were not even audited last year. This is the first year that the audit rate has slipped below 50 percent. As recently as 2010, nearly all such returns (96%) were being examined by IRS.

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

Thursday, March 7, 2019

Nina Olson To Retire After 18 Years As National Taxpayer Advocate

Olson (2018)A Personal Message from the National Taxpayer Advocate:

On this date eighteen years ago — March 1, 2001 — I walked through the doors of the IRS headquarters building in Washington, DC to begin my tenure as National Taxpayer Advocate of the United States.  It was the beginning of an always fascinating, usually complicated, and yes, sometimes frustrating journey.  Along the way, I have been privileged — and I use that word in every sense — to have worked with extraordinary people — in the Taxpayer Advocate Service, in the IRS, in Treasury, in Congress, and most importantly, directly with taxpayers and their representatives.

In addition to celebrating my March 1 anniversary, I crossed another milestone a few weeks ago.  In the eyes of the Internal Revenue Code, I am now “elderly” — that is, I am now of the age to qualify for the additional credit for the elderly under IRC § 22.  This has caused me to reflect on how I want to proceed with the remaining stages of my life, and I have concluded that I am ready to move on to a new stage.

So it is with a mix of excitement and bittersweet emotions that I am announcing today I will be retiring from the position of National Taxpayer Advocate on July 31, 2019.

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March 7, 2019 in IRS News, Tax | Permalink | Comments (1)

Leslie Book Named IRS Professor-In-Residence

Book (2019)Leslie Book (Villanova) has been named Professor-in-Residence at the IRS. He joins a long line of distinguished Tax Profs who have held this important position:

  • 2010-11: Charlotte Crane (Northwestern)
  • 2009-10:  Jon Forman (Oklahoma)
  • 2008-09: David Hasen (Florida)
  • 2007-08: Greg Polsky (Georgia)
  • 2007: Calvin Johnson (Texas)
  • 2007: IRS Chief Counsel Revitalizes Professor-In-Residence Program
  • 1991-92: Alan Feld (Boston University) 
  • 1990-91: Laurence Wohl (Dayton) & Larry Zelenak (Duke)
  • 1988-89: Marilyn Brookens (Baylor), Mark Cochran (St. Mary’s) & Stanley Neeleman (BYU)
  • 1987-88: Bill Lyons (Nebraska), Scott Taylor (New Mexico)
  • 1986-87: Marty McMahon (Florida), Dan Simmons (UC-Davis)

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March 7, 2019 in IRS News, Tax | Permalink | Comments (0)

Wednesday, March 6, 2019

Fourth International Conference On Taxpayer Rights

Taxpayer Rights 2The National Taxpayer Advocate is convening the fourth International Conference on Taxpayer Rights (agenda) on May 23-24, 2019 at Minnesota:

The conference brings together government officials, scholars, and practitioners from around the world to explore how global taxpayer rights serve as the foundation for effective tax administration. For two days, speakers, panelists and attendees will explore the role of taxpayer rights in the digital age, and the implications of the expanding digital environment for transparency, certainty, and privacy in tax administration.

Panel discussions will focus on the following and more:

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March 6, 2019 in Conferences, IRS News, Scholarship, Tax | Permalink | Comments (0)

Saturday, February 23, 2019

IRS Investigator Charged With Leaking Records Of Trump Lawyer Michael Cohen

IRS Logo 2New York Times, I.R.S. Employee Charged With Leaking Confidential Records of Trump Lawyer Michael Cohen:

Federal prosecutors in San Francisco on Thursday charged an employee of the Internal Revenue Service with illegally leaking banking records connected to Michael D. Cohen, President Trump’s former personal lawyer and fixer.

Prosecutors said that in his role working for the investigative unit of the I.R.S., John C. Fry, an employee of the agency since 2008, had access “to various law enforcement databases” and had used them to search for records related to Mr. Cohen multiple times. He then gave the information to Michael Avenatti, the lawyer for the adult film actress Stephanie Clifford, also known as Stormy Daniels, who has claimed to have had an affair with Mr. Trump, according to the prosecutors. ...

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February 23, 2019 in IRS News, Tax | Permalink | Comments (2)

Thursday, February 14, 2019

National Taxpayer Advocate Delivers Annual Report to Congress, Releases 'Purple Book'

NTAIR-2019-11, National Taxpayer Advocate Delivers Annual Report to Congress: Addresses Impact of Shutdown; Urges More Funding for IT Modernization (Feb. 12, 2019):

National Taxpayer Advocate Nina E. Olson today released her 2018 Annual Report to Congress, describing challenges the IRS is facing as a result of the recent government shutdown and recommending that Congress provide the IRS with additional multi-year funding to replace its core 1960s-era information technology (IT) systems. The release of the National Taxpayer Advocate’s report was delayed by a month because of the government shutdown.

Olson also released the second edition of the National Taxpayer Advocate’s “Purple Book,” which presents 58 legislative recommendations designed to strengthen taxpayer rights and improve tax administration. ...

Related Items:

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February 14, 2019 in IRS News, Tax | Permalink | Comments (2)

Saturday, January 19, 2019

IRS Releases Final Regs On New 20% Business Tax Deduction

IR-2019-04 (Jan. 18, 2019), Treasury, IRS Issue Final Regulations, Other Guidance on New Qualified Business Income Deduction; Safe Harbor Enables Many Rental Real Estate Owners to Claim Deduction:

Today the Treasury Department and the Internal Revenue Service issued final regulations and three related pieces of guidance, implementing the new qualified business income (QBI) deduction (section 199A deduction).

The new QBI deduction, created by the 2017 Tax Cuts and Jobs Act (TCJA) allows many owners of sole proprietorships, partnerships, S corporations, trusts, or estates to deduct up to 20 percent of their qualified business income.  Eligible taxpayers can also deduct up to 20 percent of their qualified real estate investment trust (REIT) dividends and publicly traded partnership income.

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January 19, 2019 in IRS News, Tax | Permalink | Comments (0)

Friday, January 18, 2019

Conservative Groups Targeted In Lois Lerner’s IRS Scandal Receive Settlement Checks

IRS Logo 2The Daily Signal, Conservative Groups Targeted in Lois Lerner’s IRS Scandal Receive Settlement Checks:

Dozens of conservative organizations are receiving late Christmas presents years after the IRS handed them a lump of coal.

The federal government in recent days has been issuing settlement checks to 100 right-of-center groups wrongfully targeted for their political beliefs under the Obama administration’s Internal Revenue Service, according to an attorney for the firm that represented plaintiffs in NorCal v. United States.

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January 18, 2019 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Wednesday, January 16, 2019

IRS Recalls 46,000 Workers To Handle Tax Returns And Process Refunds During Government Shutdown

IRS Logo 2The IRS yesterday released a plan to have 46,000 of its 80,000 employees on the job for tax-filing season, up from 10,000 employees.

January 16, 2019 in IRS News, Tax | Permalink | Comments (4)

Thursday, January 10, 2019

GAO: The IRS Has 4,500 Guns, 5,000,000 Rounds of Ammunition

Government Accountability Office, Purchases and Inventory Controls of Firearms, Ammunition, and Tactical Equipment (GAO-19-175) (Dec 13, 2018):

GAO 1

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January 10, 2019 in IRS News, Tax | Permalink | Comments (9)

Sunday, January 6, 2019

The IRS Wants To Use Social Media To Catch Tax Cheats

IRS Big DataQuartz, The IRS Wants to Use Social Media to Catch Tax Cheats:

The Internal Revenue Service is looking for ways to scour social media platforms like Facebook, Instagram, and Twitter in its ongoing quest to catch tax cheats.

That’s according to a request for information issued December 18 by the IRS’s National Office of Procurement. The mining of social media data by the agency has been suspected in the past, but the IRS has never before confirmed the practice.

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January 6, 2019 in IRS News, Tax | Permalink | Comments (4)

Sunday, December 16, 2018

IRS Releases New Shorter Form 1040 For 2018, With Six New Schedules

IRS, About Form 1040, U.S. Individual Income Tax Return:

For Tax Year 2018, you will no longer use Form 1040A or Form 1040EZ, but instead will use the redesigned Form 1040. Many people will only need to file Form 1040 and no schedules.

Page 1:
1040

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December 16, 2018 in IRS News, Tax | Permalink | Comments (4)

Wednesday, November 28, 2018

Call For Proposals: IRS Statistics of Income Research Program

IRS Logo 2Call for Proposals:

Through its Joint Statistical Research Program (JSRP), the Statistics of Income (SOI) seeks to enable the use of tax microdata by qualified researchers outside the Federal government. Such research can provide new insights and advance the understanding of the ways that existing tax policies affect individuals, businesses, and the economy. It can also provide a new understanding of taxpayer behavior that can aid in the administration of the U.S. tax system. Finally, such research can lead to the development of new datasets useful for future tax administration research, as well as new tabulations that can be released to the public. SOI is a division of the IRS’s Research, Applied Analytics, and Statistics (RAAS) office.

The following subjects are of particular interest to the IRS and the tax research community:

  • Tax administration in a global economy
  • Taxpayer needs and behavior, particularly the roles of information, complexity, salience, engagement, and compliance costs
  • Filing, payment, and reporting compliance measures, behaviors, and drivers
  • Taxpayer response to policy changes, particularly taxpayer responses to changes in incentives
  • Role of complex business structures in tax planning
  • Application of new research methods for tax administration, particularly data science, behavioral insights, or other interdisciplinary approaches

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November 28, 2018 in IRS News, Tax | Permalink | Comments (1)

Tuesday, November 27, 2018

The IRS Hired Private Debt Collectors Who Are Failing To Meet Goals While Squeezing Poor People And Hurricane Victims

IRS Logo 2Quartz, The IRS Hired Private Debt Collectors Who Are Squeezing Poor People and Hurricane Victims:

An IRS program using private debt collectors to handle delinquent tax bills is improperly demanding payment from hurricane victims and squeezing some of the poorest Americans—all the while turning a profit far below industry standards.

Since April 2017, four debt collection companies have been assigned half a million delinquent taxpayers to contact. So far, they’ve brought in less than 1% of what Congress hopes the program will ultimately generate. Meanwhile, tax experts and the IRS’ own oversight board fear that the targeted taxpayers are being pressured to empty out their savings and take on unnecessary financial risk. The National Taxpayer Advocate, an independent office within the IRS that ensures “every taxpayer is treated fairly,” calls the program ”a serious threat to taxpayer rights.”

Two US senators pushed the IRS to outsource its debt collection to private companies through this program: Chuck Grassley, a Republican from Iowa, and Chuck Schumer, a Democrat from New York who has hailed the initiative for bringing jobs to one of the poorest parts of his state. As if by coincidence, three of the four debt-collecting companies contracted by the IRS are based in Iowa and New York. They declined to comment on the program.

The IRS normally brings in $4 for every $1 put into its budget. But the private collectors don’t appear to be as effective as their government counterparts. From Oct. 2017 to Sept. 2018, the program’s most profitable 12 months, collection companies Pioneer Credit Recovery, ConServe Debt Recovery, Performant Recovery, and CBE Group collected just $2.64 for every $1 the government spent on the program.

The program hasn’t even met the private debt-collection industry’s own financial standards. By June 2018, the companies had recovered just 1% of the of the $4.1 billion in receivables assigned to them, according to a recent report by the Treasury Inspector General for Tax Administration (TIGTA). The industry average collection rate is 9.9%.

And of the total $88.8 million in revenue that the companies did manage to collect, the IRS only received $22.3 million. That’s because the scheme has cost the US government $66.5 million, between startup costs and commission fees of up to 25%. To reach the Congressional Joint Committee on Taxation’s target of $2.4 billion in total additional revenue by 2025, annual collections need to rise to around 15 times what’s been collected so far, for the next seven years.

The odds are against the hired collectors. After three years, a debt is considered statistically uncollectible—and the accounts the IRS assigned to the private collectors were an average of 3.97 years old, TIGTA reports.

Congress, which forced the scheme upon the IRS, doesn’t seem to have learned much from past failures with private debt collectors. A 1996 pilot program resulted in a net loss of $17 million and was canceled after a year. Another attempt in 2006 led to a net loss of almost $30 million. The most recent available IRS data says the agency is owed more than $131 billion in delinquent payments on 14 million accounts.

Many, though not all, of the accounts the IRS has assigned to private debt collectors involve America’s most vulnerable taxpayers: poor people, and survivors of natural disasters. ...

Tax experts say it would be safer and more efficient to direct the entire program budget to the IRS itself. Unlike private collectors, the agency has to abide by stringent checks on taxpayer financial well-being, and it has consistently driven an excellent return on its budget.

“The IRS wouldn’t be hiring collection personnel using scraps salvaged from private profiteering businesses if Congress would do its job and properly fund our most essential government functions, including that of tax collection,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center. “Congress created this problem so its friends in private industry could come along and fix it, at a high price to taxpayers.”

November 27, 2018 in IRS News, Tax | Permalink | Comments (1)

Saturday, November 24, 2018

Another IRS Free Speech Scandal

IRS Logo 2Wall Street Journal op-ed:  Another IRS Free-Speech Scandal, by David B. Rivkin (Baker & Hostetler, Washington, D.C.) & Randal John Meyer (Cato Institute Center for Constitutional Studies):

The Internal Revenue Service infamously targeted dissenters during President Obama’s re-election campaign. Now the IRS is at it again. Earlier this year it issued a rule suppressing huge swaths of First Amendment protected speech. The regulation appears designed to hamper the marijuana industry, which is still illegal under federal law although many states have enacted decriminalization measures. But it goes far beyond that.

The innocuously named Revenue Procedure 2018-5 contains a well-hidden provision enabling the Service to withhold tax-exempt status from organizations seeking to improve “business conditions . . . relating to an activity involving controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act) which is prohibited by federal law.” That means that to obtain tax-exempt status under any provision of the Internal Revenue Code’s Section 501—whether as a charity, social-welfare advocacy group or other type of nonprofit—an organization may not advocate for altering the legal regime applicable to any Schedule I or II substance.

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November 24, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, November 21, 2018

IRS Won't Clawback Gifts When Exclusion Reverts Back To $5 Million In 2026

IRS Logo 2IR-2018-229 (Nov. 20, 2018), Making Large Gifts Now Won’t Harm Estates After 2025:

Today the IRS announced that individuals taking advantage of the increased gift and estate tax exclusion amounts in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels.

The Treasury Department and the IRS issued proposed regulations which  implement changes made by the 2017 Tax Cuts and Jobs Act (TCJA). As a result, individuals planning to make large gifts between 2018 and 2025 can do so without concern that they will lose the tax benefit of the higher exclusion level once it decreases after 2025.

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November 21, 2018 in IRS News, Tax | Permalink | Comments (1)

Sunday, November 18, 2018

WSJ: Switch To Chained CPI Will Erode Trump Tax Cut Next Year

Wall Street Journal, Trump Tax Cut to Be Eroded Next Year by Inflation Switch:

Last year’s big tax cut is about to start shrinking.

The Internal Revenue Service on Thursday announced the tax code’s parameters for 2019, implementing a new method for making inflation adjustments that will result in higher tax payments—and government revenue—over time.

The shift will cost Americans $133.5 billion over a decade, according to Congress’s Joint Committee on Taxation.

The tax law enacted last year lowered tax rates and reduced tax burdens for most households in 2018. It also required the IRS to switch to a different, slower-moving measure of inflation to adjust a variety of tax-code features for rising prices. ...

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November 18, 2018 in IRS News, Tax | Permalink | Comments (0)

Wednesday, November 14, 2018

Amazon Could Win Big Under Trump's New Opportunity Zone Tax Break

Amazon logo (2018)Bloomberg Tax, Amazon NY Could Win Big Under Tax Break Meant for Distressed Zones:

Amazon could benefit from federal tax breaks designed to revitalize struggling communities if it builds all or part of its second headquarters in Long Island City.

The company’s eligibility comes down to whether the IRS would view a new headquarters as a new entity or as a part of Amazon’s larger umbrella. ...

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November 14, 2018 in IRS News, Tax | Permalink | Comments (0)

Monday, November 5, 2018

NY Times: Democrats Eye Trump’s Tax Returns, With Mnuchin In The Middle

Trump Tax ReturnsNew York Times, Democrats Eye Trump’s Tax Returns, With Mnuchin in the Middle:

Democrats are preparing to use an obscure law to try to obtain a copy of President Trump’s tax returns if they win control of the House or Senate — a scenario that could force one of the president’s most trusted aides to reveal his most closely guarded secret.

Steven Mnuchin, the Treasury secretary, said in an interview that he would honor any legal requests from Congress to release the president’s tax returns, which are stored in a vault at the Internal Revenue Service. But the demand would undoubtedly thrust Mr. Mnuchin into the fraught position of balancing his loyalty to Mr. Trump with a legal requirement to deliver the returns.

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November 5, 2018 in IRS News, Tax | Permalink | Comments (2)

Friday, November 2, 2018

The Proposed Opportunity Zone Regulations

David S. Miller, Jean Bertrand & Sejin Park (Proskauer), The Proposed Opportunity Zone Regulations:

On October 19, 2018, the Internal Revenue Service and the U.S. Department of the Treasury issued proposed regulations under section 1400Z-2 of the Internal Revenue Code regarding the qualified opportunity zone program. This paper summarizes some of the most important aspects of the proposed regulations.

November 2, 2018 in IRS News, Scholarship, Tax | Permalink | Comments (0)

Monday, October 22, 2018

Call For Tax Papers And Presentations: 4th International Conference On Taxpayer Rights

ICTR

Call For Conference Papers and Presentations: 4th International Conference on Taxpayer Rights: Taxpayer Rights in the Digital Age: Implications for Transparency, Certainty, and Privacy:

The National Taxpayer Advocate will convene the 4th International Conference on Taxpayer Rights on May 23 and 24, 2019, in Minneapolis, Minnesota. The conference is hosted by the University of Minnesota School of Law and sponsored by Tax Analysts, with technical assistance from IBFD. The 2019 conference will explore the role of taxpayer rights in the digital age, and the implications of the expanding digital environment for transparency, certainty, and privacy in tax administration.

We are currently seeking presentation and paper proposals on a range of topics. In developing proposals, the conference encourages proposals from multiple disciplines (e.g., from the fields of law, economics, psychology, anthropology, sociology, computer science as well as from government officials and ombuds and taxpayer advocates) that address the following topics:

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October 22, 2018 in Conferences, IRS News, Scholarship, Tax | Permalink | Comments (0)

IRS Issues Proposed Regs On New Opportunity Zone Tax Incentive

IRS Logo 2R-2018-206 (Oct. 19, 2018), Treasury, IRS Issue Proposed Regulations on New Opportunity Zone Tax Incentive:

The Treasury Department and the Internal Revenue Service today issued proposed regulations and other published guidance for the new Opportunity Zone tax incentive.

Opportunity Zones, created by the 2017 Tax Cuts and Jobs Act, were designed to spur investment in distressed communities throughout the country through tax benefits. Under a nomination process completed in June, 8,761 communities in all 50 states, the District of Columbia and five U.S. territories were designated as qualified Opportunity Zones. Opportunity Zones retain their designation for 10 years. Investors may defer tax on almost any capital gain up to Dec. 31, 2026 by making an appropriate investment in a zone, making an election after December 21, 2017, and meeting other requirements.

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October 22, 2018 in IRS News, Tax | Permalink | Comments (0)

Thursday, October 18, 2018

WSJ: What’s A Service Business? That’s Now A Multibillion-Dollar Tax Question

Wall Street Journal, What’s a Service Business? That’s Now a Multibillion-Dollar Tax Question:

For Extraco Banks of central Texas, the 2017 tax law that promised a 20% deduction is turning into something of a headache.

S-corporation banks such as Extraco technically qualify for the break. But under proposed IRS regulations, Extraco might lose out, because it gets too much revenue from managing trusts and selling mortgages into the secondary market. Those activities may be ineligible and taint the ability of the whole business to qualify.

Situations like Extraco’s were a crucial part of an IRS public hearing Tuesday, as the agency prepares to finish the rules for the new 20% deduction for pass-through businesses such as partnerships and S corporations, closely held companies that don’t pay standard corporate taxes.

Companies and the government are struggling over who is eligible for the tax break, and representatives of veterinarians, escrow agents, automobile dealers and franchised businesses pleaded their case at the hearing. Major League Baseball sent in a new detailed letter explaining why teams think they should get the tax break.

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October 18, 2018 in IRS News, Tax | Permalink | Comments (0)

Tuesday, October 16, 2018

Johnston: We Need A Tax Police To Go After The Likes Of Donald Trump

David Cay Johnston, We Need Tax Police – And They Should Go After the Likes of Donald Trump:

When the New York Times exposed decades of tax cheating and “outright fraud” by the sitting president, it prompted people to ask important questions about the corrupt practices of the Trump family. The answers are central to the future of America.

Where was the Internal Revenue Service? How did the Trumps get away with decades of schemes the Times said allowed them to evade close to a half-billion dollars of income and gift taxes? Is Donald Trump continuing these practices? Is that why he refuses to make his own tax returns public? Can anything be done about it?

I’m in a unique position to answer those questions. I am the Times’ former tax reporter, the journalist who has covered Trump longer than anyone else, more than 30 years. ...

Congress, which makes tax law, has never properly supported the IRS, which I like calling the Tax Police Department.

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October 16, 2018 in IRS News, Tax | Permalink | Comments (8)

Wednesday, October 10, 2018

IRS Internal Watchdog Faults Vigilance On Nonprofits' Political Activities

TIGTAWall Street Journal, IRS Internal Watchdog Faults Vigilance on Nonprofits' Political Activities:

The IRS is still struggling with its role policing nonprofit groups’ political activities, the tax agency's inspector general said in a new report [Review of the Processing of Referrals Alleging Impermissible Political Activity by Tax-Exempt Organizations (2019-10-006) (Oct. 4, 2018)].

The report included no allegations of political bias inside the Internal Revenue Service, but the inspector general found IRS officials aren't sending enough allegations of impermissible political activity—such as involvement in a partisan campaign—to the Political Activities Referral Committee of managers responsible for deciding whether to pursue enforcement.

Based on the inspector general's sample, more than 1,000 cases in 2015 and 2016 could have gone to the the three-person committee, the report said. The committee reviewed 19 high-profile cases.

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October 10, 2018 in IRS News, Tax | Permalink | Comments (0)

Friday, October 5, 2018

NY Times: Hobbled by Budget Cuts, The IRS Brings Fewer Tax Fraud Cases; Provided You’re Not An Associate Of President Trump, There May Never Be A Better Time To Be A Tax Cheat

New York Times, Hobbled by Budget Cuts, the I.R.S. Brings Fewer Tax Fraud Cases:

Tax evasion is at the center of the criminal cases against two associates of the president, Paul Manafort and Michael D. Cohen. The sheer scale of their efforts to avoid paying the government has given rise to a head-scratching question: How were they able to cheat the Internal Revenue Service for so many years?

The answer, researchers and former government auditors say, is simple. The I.R.S. pursues fewer cases of tax evasion than it did less than 10 years ago. Provided you’re not a close associate of President Trump, there may never be a better time to be a tax cheat.

Last year, the I.R.S.’s criminal division brought 795 cases in which tax fraud was the primary crime, a decline of almost a quarter since 2010. “That is a startling number,” Don Fort, the chief of criminal investigations for the I.R.S., acknowledged at a New York University tax conference in June.

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October 5, 2018 in IRS News, Tax | Permalink | Comments (5)

Sunday, September 30, 2018

Democrats Plan To Examine Trump’s Tax Returns After Midterm Election; Strategy Could Be Applied To Anyone's Tax Return

Trump Tax ReturnsPolitico, Democrats Planning To Examine Trump’s Tax Returns After the Midterms:

The years-old mystery of what’s in President Donald Trump’s tax returns will likely quickly unravel if Democrats win control of at least one chamber of Congress.

Democrats, especially in the House, are quietly planning on using an obscure law that will enable them to examine the president’s tax filings without his permission.

The nearly 100-year-old statute allows the chairmen of Congress’ tax committees to look at anyone’s returns, and Democrats say they intend to use that power to help answer a long list of questions about Trump’s finances. Many also want to use it to make public confidential information about Trump’s taxes that he’s steadfastly refused to release.

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September 30, 2018 in Congressional News, IRS News, Tax | Permalink | Comments (9)

Wednesday, September 26, 2018

IRS Weighs Easing Tax-Free Spinoff Rules In Boon to Tech, Pharma

Bloomberg, IRS Weighs Easing Tax-Free Spinoff Rules in Boon to Tech, Pharma:

The Internal Revenue Service is considering relaxing the rules for companies to qualify for tax-free spinoffs — a shift that could benefit drugmakers and tech firms with promising early-stage products.

The agency said Tuesday it’s looking into whether units should still be required to generate revenue before a spinoff from a larger company can be deemed tax-free. Current rules generally require units to have been engaged in a trade or business involving income collection and payment of expenses for at least five years. The change could be a way for the U.S. government to promote research and development within the country by giving companies a tax break on the spinoff transaction.

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September 26, 2018 in IRS News, Tax | Permalink | Comments (0)

Thursday, September 20, 2018

Grewal: When IRS Guidance Backfires

Andy Grewal (Iowa), When IRS Guidance Backfires, 36 Yale J. on Reg.: Notice & Comment (Sept. 7, 2018):

This week, the IRS tried to clarify how proposed regulations on state tax credit programs apply to Section 162(a) business deductions. But its attempted clarification has created only more problems.

Under the proposed regulations, a taxpayer who makes a transfer to a Section 170(c) organization must reduce her charitable contribution deduction by the amount of any state tax credits received. See Prop. Reg. § 1.170A-1(h)(3)(i). Some businesses contacted the IRS and presumably expressed concerns that transferred amounts might not be deductible at all. That is, if Section 170 deductions were denied for creditable transfers, then Section 162 deductions might be denied too.

In IR-2018-178 (Sept. 5, 2018), the IRS cryptically announced that “taxpayers who make business-related payments to charities or government entities for which the taxpayers receive state or local tax credits can generally deduct the payments as business expenses.” See also IRS State and Local Income Tax FAQ. The IRS did not provide any further guidance on when a transfer to a state tax credit program will qualify as “business related.”

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September 20, 2018 in IRS News, Scholarship, Tax | Permalink | Comments (0)