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

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

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

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

Continue reading

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

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

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

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

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

Continue reading

The IRS Wants To Scan Your Face

Washington Post, IRS Wants to Scan Your Face:

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

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

Continue reading

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

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

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

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

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

Continue reading

National Taxpayer Advocate Delivers 2021 Annual Report To Congress

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

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

Continue reading

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

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

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

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

Continue reading

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

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

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

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

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

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

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

Continue reading

Can The IRS Be Trusted With Your Data?

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

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

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

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

Continue reading

WSJ: The Internal Revenue Leak Service

Wall Street Journal editorial, The Internal Revenue Leak Service:

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

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

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

Continue reading

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

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

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

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

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

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

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

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

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

Continue reading

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

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

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

Continue reading

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

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

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

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

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

Continue reading

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

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

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

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

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

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

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

Continue reading

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

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

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

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

Continue reading

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

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

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

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

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

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

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

Continue reading

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

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

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

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

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

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

Continue reading

The IRS Reads The Bible And Reveals Its Bias: A Bureaucrat Examined Our Religion And Declared It Republican

Following up on my previous posts (links below):  Wall Street Journal Letter to the Editor:  Bunni Pounds (President, Christians Engaged), The IRS Reads the Bible and Reveals Its Bias: A Bureaucrat Examined Our Religion and Declared it Republican:

William McGurn (“Defund Joe Biden’s IRS,” Main Street, July 6) and Holman W. Jenkins, Jr. (“The IRS is ProPublica’s Accessory,” Business World, July 7) articulate theoretical dangers from the IRS that my organization experienced in reality.

Christians Engaged was founded to help civically minded Christians think through their responsibility in voting. All the pieces were in place—staff, a board, resources—but we had to apply for recognition by the IRS as a 501(c)(3). It took more than 18 months to get a response. When the IRS’s response letter came in May, it seemed to examine in great detail the faith that informs the organization. It felt strange to have a bureaucrat examine our religion, belief in the Bible and how we believe our faith impacts the world.

Then came this sentence: “The bible teachings are typically affiliated with the [Republican] party and candidates. This disqualifies you from exemption under the IRC Section 501(c)(3).”

Because we believed in and taught the Bible, the IRS disqualified us from charitable recognition. The IRS determined that biblical values and Republican politics were so intertwined as to make us partisan.

Thankfully, we appealed and this month secured a quick reversal of the IRS decision. Still, the danger remains as long as the IRS views religious institutions with such political cynicism.

Continue reading

'The IRS Is A Hot Mess': It Only Answers 3% Of Phone Calls, 35 Million Tax Returns Remain Unprocessed

Washington Post, The IRS Is a Hot Mess: Millions of Tax Returns Haven’t Been Processed, and Calls Are Going Unanswered, Including Mine:

I want to apologize to every person I’ve encouraged to be patient with the Internal Revenue Service as it stumbles through the aftereffects of the pandemic. Your righteous indignation is warranted.

The IRS is critically malfunctioning.

I didn’t fully grasp, until a recent report from the national taxpayer advocate, that the IRS has officially given up on answering every taxpayer telephone call for assistance — and that has to be fixed.

The agency is a hot mess. You are right to be mad as hell when you can’t reach somebody to help explain why your filing or refund hasn’t been processed. And, yes, I cussed, because the time to be polite and forgiving for the failures at the IRS is so over.

Right now, millions of taxpayers are waiting for their much-needed refunds and stimulus payments. Millions more are trying to settle issues with past tax returns and unable get a human being on the telephone, while interest costs potentially tick up each day things go unresolved.

Continue reading

National Taxpayer Advocate Releases Mid-Year Report To Congress

IR-2021-139 (June 30, 2021), National Taxpayer Advocate Assesses Tax Filing Season and Identifies Areas For IRS Improvement in Midyear Report to Congress:

National Taxpayer Advocate Erin M. Collins today released her statutorily mandated midyear report to Congress. The report presents an assessment of the 2021 filing season, identifies key objectives the Taxpayer Advocate Service (TAS) will pursue during the upcoming fiscal year, and contains the IRS's responses to each of the 73 administrative recommendations the Advocate made in her 2020 Annual Report to Congress.

The Advocate's report emphasizes that the difficulties the IRS faced in performing its traditional work due to the COVID-19 pandemic and the added responsibilities it was assigned to make three rounds of stimulus payments combined to create significant challenges for taxpayers.

Continue reading

Johnston: 'Diabolical' Trump Scheme To Undermine Estate & Gift Tax Enforcement

David Cay Johnston, Raw Story Uncovers a Huge Secret Tax Favor For the Super Wealthy:

Raw Story has uncovered a secret IRS tax favor for the super-rich—authorized when Donald Trump was president—that will take effect on Thursday, July 1. President Biden can stop it with one phone call. Will he?

The Biden White House was unaware of this Trump tax favor—disguised as a crackdown on wealthy tax cheaters—when Raw Story asked about it on Friday.

That's not surprising because the IRS remains under the control of Charles Rettig, a holdover from the Trump era. Before Trump named him IRS commissioner, Rettig was a Beverly Hills tax lawyer who helped the super-wealthy escape taxes and—if they got caught cheating—negotiated secret settlements that avoided public humiliation while minimizing taxes and penalties.

If Biden lets this Trump policy take effect it would be a huge benefit to clients of Rettig's old law firm and others like it. And it would make an already unfair tax system even more heavily tilted in favor of billionaires.

Internally the IRS characterized the new favor for the rich as nothing more than a subtle change to comply with arcane civil service policy. But at least one high-level IRS manager saw through this façade and fought the plan, an email obtained by Raw Story shows.

What makes this Trumpian scheme diabolical is that on the surface, it appears to be a 50% increase in enforcement of gift and estate tax law, areas where cheating is rampant. Actually, it's the opposite.

Starting Thursday, July 1, the IRS will hire 71 new people to examine estate and gift tax returns.

The 137 IRS tax lawyers who do this work now are, in effect, highly trained colonels on the tax police force. They need sophisticated detective skills to understand the mind-numbingly complex trusts and other devices that lawyers like Rettig designed to hide money from the IRS.

The new hires, however, won't be lawyers, only lightly trained "tax specialists." They will be equivalent of mere corporals on the tax police force, lacking the legal education required to see through the fog of confusion that tax lawyers get paid fat fees create so their clients can pay little to nothing in taxes. ...

The question is whether Biden will do what he promised or reveal himself to just be another politician who tells voters what he thinks they want to hear and then doesn't act.

David Cay Johnston, How Trump’s Toothless IRS Let the Rich Off Easy:

The amount of additional taxes that the richest Americans owed after the IRS audited their tax returns fell more than 99% in Donald Trump’s first full year in office, data tables released this week show.

Continue reading

IRS Releases 2020 Data Book

IR-2021-134, IRS Releases Data Book For Fiscal 2020 Describing Agency’s Activities During Pandemic (June 24, 2021):

The Internal Revenue Service today issued the Data Book detailing the agency's activities during fiscal year 2020 (Oct. 1, 2019 – Sept. 30, 2020).

"This year's Data Book describes the important work that IRS employees accomplish on behalf of the public," said IRS Commissioner Chuck Rettig. "The IRS accounts for approximately 96% of the funding that supports the federal government's operations, while proudly serving and interacting with more Americans than any other public or private organization."

"The 2020 Data Book also details the extraordinary measures the IRS took to protect the health and safety of taxpayers and IRS employees during the COVID-19 pandemic while implementing critical economic relief legislation – the largest economic rescue packages in US history," Rettig added.

Continue reading

IRS Denies Tax-Exempt Status To Organization That Encourages Christians To 'Pray, Vote, Engage' Because '[B]ible Teachings Are Typically Affiliated With The [Republican] Party'

• Christians Engaged IRS Determination Letter (May 18, 2021)
• Christians Engaged IRS Appeal Letter (June 16, 2021)

Newsweek, First Liberty Appeals Denial of Tax Exemption for Group Alleged to Have Republican Ties:

Christian legal organization First Liberty Institute is appealing the recent denial by the IRS to grant tax exemption status to a Texas Christian group that the federal agency alleges supports the Republican Party.

In May the IRS denied 501(c)(3) status to the Texas-based prayer group Christians Engaged because it encourages its members to vote for state and national leaders. The federal agency specifically noted in its rejection that the group supports Republican candidates.

In its letter, IRS Director of Exempt Organizations Stephen A. Martin concluded the group does not qualify as an organization described in IRS Section 501(c)(3) because it is not operated exclusively for religious and educational purposes. Specifically Martin noted, "You are engaged in prohibited political campaign invention" and "You are also not operated exclusively for one or more exempt purposes...because you operate for a substantial non-exempt private purpose and for the private interest of the 'D party.'" The "D party" is a reference to the Republican Party, according to a "legend" provided at the top of Martin's letter to the religious group.

Press Release, IRS Denies Religious Group Tax Exempt Status; States “Bible Teachings” Are “Affiliated With the Republican Party”:

Today, First Liberty Institute appealed an IRS determination denying tax exempt status to Christians Engaged, a nonprofit organization that exists to educate and empower Christians to pray for our nation and elected officials, vote, and be civically engaged. In a letter issued in May, the IRS argued that Christians Engaged was not eligible for 501(c)(3) status in part because “[B]ible teachings are typically affiliated with the [Republican] party and candidates.” ...

“The IRS states in an official letter that Biblical values are exclusively Republican.  That might be news to President Biden, who is often described as basing his political ideology on his religious beliefs,” said Lea Patterson, Counsel for First Liberty Institute. “Only a politicized IRS could see Americans who pray for their nation, vote in every election, and work to engage others in the political process as a threat. The IRS violated its own regulations in denying tax exempt status because Christians Engaged teaches biblical values.”

Continue reading

House Holds Hearing Today On Minding The Tax Gap: Improving Tax Administration For The 21st Century

The House Ways and Means Committee is holding a hearing today at 12:00 ET on Minding The Tax Gap: Improving Tax Administration For The 21st Century (livestream):

• Steven Dean (Brooklyn) (testimony:  "In my testimony today, I will explain why a race-blind approach to tax enforcement produces bad tax policy. I will use three very different examples to show why leaving race out of the equation fails to prevent bias and how destructive that bias can be for everyone. Ignoring race doesn’t solve problems, it creates them. You have already heard from ProPublica that the ten most heavily audited counties in the United States are Black and poor. I will tell you how we can do better.")
• Janet Holtzblatt (Tax Policy Center) (testimony)
• Mark Mazur (Deputy Assistant Secretary for Tax Policy, U.S. Treasury Department) (testimony)

Continue reading

Treasury Releases Explanation Of Tax Proposals In President Biden's FY22 Budget

Presidents from George H.W. Bush through Barack Obama released General Explanations of the Administration’s Revenue Proposals — commonly known as the "Green Book" — an explanation of the Administration's revenue proposals for that fiscal year. President Trump did not follow this tradition in FY18 - FY21. President Biden has returned to that tradition and released General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals:

In the Fiscal Year 2022 Budget, the President proposes a number of reforms to the Internal Revenue Code (Code) that would modernize our tax system to respond to today’s challenges. These changes would raise revenue, improve tax administration, and make the tax system more equitable and efficient.

The American Jobs Plan includes revenue proposals that reform corporate taxation, support housing and infrastructure, and prioritize clean energy. Reforms to the corporate income tax aim to collect sufficient revenue, build a fairer tax system, and reduce tax incentives that encourage profit shifting and offshoring. Housing and infrastructure tax credits would support low-income housing, economic development, and public school and transportation infrastructure. The American Jobs Plan would eliminate all fossil fuel subsidies that linger in the Code, while substantially expanding tax incentives that encourage clean energy sources, energy efficiency, carbon sequestration, and electric vehicle adoption.

Continue reading

U.S. Proposes 15% Global Minimum Corporate Tax To Curb Profit Shifting Overseas

U.S. Treasury Department, Office of Tax Policy Meetings:

Over the last two days, leaders from the Office of Tax Policy at the U.S Department of the Treasury participated in meetings with the Steering Group of the Inclusive Framework on base erosion and profit shifting (BEPS) as part of the Organization for Economic Cooperation and Development (OECD) / G20 international tax negotiations. As part of those meetings, discussions on the global corporate minimum tax rate began in earnest.

Treasury expressed its belief that the international tax architecture must be stabilized, that the global playing field must be fair, and that we must create an environment in which countries work together to maintain our tax bases and ensure the global tax system is equitable and equipped to meet the needs of  for the 21st century global economy.  It is imperative to work multilaterally to end the pressures of corporate tax competition and corporate tax base erosion. Treasury reiterated that with the global corporate minimum tax functionally set at zero today, there has been a race to the bottom on corporate taxes, undermining the United States’ and other countries’ ability to raise the revenue needed to make critical investments. Treasury made clear that a global corporate minimum tax rate would ensure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and would spur innovation, growth, and prosperity while improving fairness for middle class and working people.

Treasury proposed to the Steering Group that that the global minimum tax rate should be at least 15%. Treasury underscored that 15% is a floor and that discussions should continue to be ambitious and push that rate higher. 

Continue reading

IRS Seeks To Hire Five Transfer Pricing Attorneys

The IRS Large Business & International Division (LB&I) seeks to hire five transfer pricing attorneys (salary: $108,885 to $162,753) among these twelve locations:

• Denver, CO
• Chicago, IL
• Downers Grove, IL
• Schiller Park, IL
• Indianapolis, IN
• Farmington Hills, MI
• Grand Rapids, MI
• Bloomington, MN
• Cincinnati, OH
• Columbus, OH
• Tulsa, OK
• Houston, TX

The Transfer Pricing Practice (TPP) is part of Treaty and Transfer Pricing Operations (TTPO) in the Large Business & International (LB&I) division of the IRS. Transfer pricing essentially involves the pricing of goods, services, and intellectual property transferred between related entities of multinational enterprises (typically corporations with a common parent company). When these transactions involve related entities located in foreign countries, tax issues arise over how much income should be reported in each country. The United States and foreign tax administrations have complex tax rules about how intercompany pricing is to be determined and income reported. It is an area of significant tax controversy, not only in the United States, but also in numerous countries around the world.

Continue reading

Tax Practitioners Scoff At Janet Yellen's Comment That 'The IRS Has Put On A Masterclass In How The Machinery Of Government Should Work'

Forbes, Treasury Secretary’s IRS Praise Sparks Backlash From Those Who Must Deal With The Tax Agency:

Is the IRS broken? It depends on whom you ask. Yesterday Treasury Secretary Janet Yellen tweeted “It’s a stunning achievement. In the midst of a crisis, the IRS has put on a masterclass in implementation and how the machinery of government should work.” The pushback from tax industry professionals was immediate and vehement.

Brian Streig, CPA and Tax Director at Calhoun, Thomson & Matza, LLP in Austin, Texas, responded “Yes, the IRS did a great job at implementing CARES Act and other Covid tax law changes. But, the IRS has completely failed American taxpayers in their primary function of processing tax returns, issuing refunds, and handling notices.” ...

Continue reading

IRS Seeks Grant Applications For Funding Low Income Taxpayer Clinics

The IRS has announced (IR-2021-100) that it is accepting grant applications through June 18 for Low Income Taxpayer Clinics for the 2022 grant cycle (Jan. 1 - Dec. 31, 2022):

The LITC Program is a federal grant program administered by the Office of the Taxpayer Advocate at the IRS, which is led by National Taxpayer Advocate (NTA) Erin M. Collins. LITCs can make a tremendous impact on the lives of taxpayers, as detailed in this recent blog from the NTA:  Not all Superheroes Wear Capes: Join the Low Income Taxpayer Clinic Community and Be a Hero to Taxpayers Most in Need.

Continue reading

D.C. Circuit: Law Prof May Be Entitled To Attorney's Fees Due To Her 'Serious Scholarly Interest' After Beating IRS In FOIA Litigation

Kwoka v. IRS, No. 19-5310 (D.C. Cir. Mar. 9, 2021):

This case presents a recurring question in our court: under what circumstances is a prevailing plaintiff in a Freedom of Information Act (FOIA) case—here a law professor [Margaret Kwoka (Denver)] seeking information from the Internal Revenue Service—entitled to an award of attorney’s fees? The district court denied the professor’s request for fees. For the reasons set forth below, we vacate and remand for further proceedings consistent with this opinion. ...

Continue reading

IRS Low Income Taxpayer Clinic Program Annual Report

IR-2021-41 (Feb. 19, 2021), Low Income Taxpayer Clinics Represented Over 20,000 Taxpayers Dealing With an IRS Tax Controversy; See the Latest Program Report and the 2021 LITC Grant Recipient List:

The Internal Revenue Service's Low Income Taxpayer Clinic (LITC) Program office today announced highlights from its 2020 annual report, featuring successful taxpayer outreach to thousands of taxpayers. The report describes how LITCs provide representation, education and advocacy for taxpayers who are low income or speak English as a second language (ESL). The program also announced its 2021 LITC grant recipient list. ...

During 2019, LITCs represented 20,259 taxpayers dealing with an IRS tax controversy. They helped taxpayers secure more than $6.8 million in tax refunds and reduced taxpayers' liabilities by more than $50 million. They also brought more than 4,100 taxpayers back into payment compliance.

Continue reading

National Taxpayer Advocate Delivers 2020 Annual Report To Congress

IR-2021-11 (Jan. 13, 2021), National Taxpayer Advocate Delivers Annual Report to Congress; Focuses on Taxpayer Impact of COVID-19 and IRS Funding Needs:

National Taxpayer Advocate Erin M. Collins today released her 2020 Annual Report to Congress, focusing on the unprecedented challenges taxpayers faced in filing their tax returns and receiving refunds and stimulus payments during a year consumed by the COVID-19 pandemic. The report also finds that a roughly 20% inflation-adjusted reduction in the IRS's budget since fiscal year (FY) 2010 has left the agency with antiquated technology and inadequate staffing levels to meet taxpayers' needs.

As part of the report, Collins released the fourth edition of the National Taxpayer Advocate's "Purple Book," a compilation of 66 legislative recommendations designed to strengthen taxpayer rights and improve tax administration.

Continue reading

IRS Whistleblower Awards Fall 28% (On Top Of 61% Decline Last Year)

The IRS's Whistleblower Office has released its FY 2020 Annual Report to Congress:

Continue reading

Lipman: What National Taxpayer Advocate Nina Olson Did For America's Kids And Their Families

Francine J. Lipman (UNLV), Humanizing the Tax System: What National Taxpayer Advocate Nina E. Olson Did For America's Kids and their Families, 18 Pitt. Tax Rev. ___ (2020):

At their core, taxpayer rights are human rights. They are about our inherent humanity. — Nina E. Olson

The federal income tax system does not exist for statutes, regulations, codes, enforcement, assessments, collection, redistribution, procedures, publications, liens, levies, refunds, liabilities, litigation, compliance, or even revenue. At its core, the federal income tax system exists for people. People like you, me, and all our loved ones including spouses, partners, parents, kids, brothers, sisters, nieces, nephews, grandparents, grandkids, friends, and neighbors. The people who eat at our tables and sleep under our roofs. The tax system is about current and future generations who live and work in America, and even those who don’t but have the coveted prize of U.S. citizenship. It is about our shared vision of ensuring the well-being of all people, young, old, Black, Brown, White, Asian, Native, multiracial, religious, atheist, agnostic, male, female, transgender, straight, queer, or nonconforming. It is about ensuring that the people of and in America have what they need to survive and thrive, especially those who are vulnerable for any reason or no reason at all. Tax systems, like other government institutions, should be designed and administered to make life better for everyone. Because “we the people” are America, the beautiful, the federal tax system serves us. This is the truth that Nina E. Olson laid bare during her eighteen years of service as the longest-serving National Taxpayer Advocate (NTA).

Continue reading

Questions Raised About Purdue Global University's Tax-Exempt Status

Inside Higher Ed, Questions Raised About Purdue Global's Tax-Exempt Status:

A review conducted by the Century Foundation raised questions about the documents Purdue University Global presented to the Internal Revenue Service when it applied for tax-exempt status in August 2019.

Purdue University acquired for-profit Kaplan University from Graham Holdings in 2017, then used the acquisition to create a new online institution called Purdue University Global. Purdue Global relies on a Graham subsidiary, the educational services company Kaplan, to provide numerous support activities like financial aid administration, marketing, international student recruiting, business office functions and first-year student advising. Purdue Global acquired tax-exempt status from the IRS in December 2019.

Bob Shireman, director of higher education excellence and senior fellow at the Century Foundation, believes that the IRS was provided with misleading information about the nature of the deal between Purdue Kaplan. After reviewing documents provided by Purdue, Shireman said that Purdue Global excluded Kaplan from its list of contractors and failed to disclose Kaplan as an organization with which the university has a "close connection." ...

Continue reading

Free Zoom Today On Federal Career Opportunities In Tax Law

Federal Career Opportunities in Tax Law

Why a federal career in tax law?  Contrary to popular belief, accounting expertise is not required to excel in this rewarding field.  In fact, you don’t even have to be a math whiz!  You are invited to hear a panel of federal tax (and non-tax) attorneys discuss the variety of federal career opportunities in the IRS Office of Chief Counsel and the Department of Justice, Tax Division.  We will also discuss opportunities for attorneys who want to focus on federal labor and employment practices.  Our panel will describe a typical day for experienced and new attorneys working for the Department of Justice, Tax Division, or the IRS Office of Chief Counsel.  Following the discussion, the panel will answer your questions.  So, by now you may be wondering: are we hiring?  YES, and we hope to meet you soon!

When and Where
Tuesday, September 1, 2020, at 12:00 p.m. – 1:00 p.m. EDT (live) and 3:00 p.m. – 4:00 p.m. EDT (video rebroadcast with live Q&A) via Zoom:
Meeting ID: 161 406 7274; Passcode: 9i?LhBYb

Continue reading