Archive for the ‘IRS’ Category

Let’s Give Lois Lerner Credit Where Credit Is Due

Wednesday, September 10th, 2014

We don’t know with certainty what Lois Lerner’s role is in the IRS scandal. However, let’s give credit to Ms. Lerner in exposing something that definitely is wrong with the IRS.

It turns out that Ms. Lerner was upset with an unnamed IRS employee who was paid $138,136 a year and was doing “nothing.” The Washington Examiner reported on this in an article on a letter written by House Ways & Means Subcommittee on Oversight Chairman Charles Boustany (R-LA) to IRS Commissioner John Koskinen. Here’s an excerpt of the Examiner’s article:

In a 2011 email recently uncovered by the committee, Lerner wrote to colleagues that she “learned than [an] employee who is assigned to a special project has spent most of the last year doing nothing and reporting to her manager on on timesheets that she has been working on the project full time.” The worker was paid $106,263-$138,136.

Lerner said that “We can’t do anything” about the worker, though some argued for termination, explained Boustany’s letter. Instead, the unnamed worker was given a lower performance rating.

While this will do nothing to help the IRS’s reputation, kudos to Ms. Lerner for trying to stop such activities. As for Congressman Boustany’s letter to Commissioner Koskinen, I’m not holding my breath for any results.

Another Friday: More IRS Revelations

Sunday, September 7th, 2014

Shock of shocks, another Friday and we get more revelations on the IRS Scandal. Of course, if one believes the IRS and the Obama Administration, Lt. Frank Drebin had it right:

Let’s get to the updates:

First, the IRS announced that five of the 82 individuals being questions on the scandal had emails that disappeared. This included Judy Kindell, a former senior adviser to Lois Lerner.

Next, we discover that Lois Lerner’s Blackberry was wiped clean after the IRS was told that the emails were wanted.

Do you know Andrew Strelka–the Andrew Strelka who used to work for the Department of Justice? If you do, Jim Jordan, Congressman from Ohio, would like to hear from you. The DOJ refuses to assist Congressman Jordan and the House Oversight and Government Reform Committee in finding Mr. Strelka. Congressman Jordan gave the DOJ until Friday to send a forwarding address for Mr. Strelka.

Finally, Judicial Watch reports that the IRS had a ‘Secret Research Project’ for conservative donor lists. An excerpt:

Sure enough, these latest emails are treasure trove for truth-seekers about this Nixonian scandal. Contained in the newly released IRS documents is an email from Deputy Associate Chief Counsel Margo L. Stevens that was sent in response to a question from Lerner concerning attempts to return donor lists the IRS had inappropriately obtained. In Stevens’ May 21, 2012, email to Lerner, she wrote:

Lois, I wanted to get back with you with respect to your question whether TEGE [Tax Exempt & Government Entities] could return to those organizations from whom donor names were solicited in questionnaires following their submission of applications for recognition of their tax exempt status (under 501(c)(4)), now that TEGE has reviewed those files and determined that such information was not needed across-the-board and not used in making the agency’s determination on exempt status.

For those who want to say there’s nothing to see here, Lt. Drebin and the Obama Administration thank you. The rest of us owe a debt of gratitude to Judicial Watch; their lawsuit against the IRS has done more to get to the truth then the current Congressional investigations.

IRS Won’t Say Why It Erased Lois Lerner’s Blackberry

Thursday, September 4th, 2014

Let’s assume you’re under a court order to find some emails. Your hard drive crashed, but you think that some of them are saved on your Blackberry. Would you:
(a) Try to find them on the Blackberry,
(b) Do nothing, or
(c) Erase the Blackberry.

If you’re the IRS, the answer is (c). After the IRS was on notice about the missing Lois Lerner emails the IRS then wiped clean Ms. Lerner’s Blackberry. The Washington Post notes,

In response to the judge’s order, a top IRS official said in a signed declaration that the agency has no record of attempting to recover data from the mobile device.

IRS attorney Thomas J. Kane said in a separate declaration that the agency “removed or wiped clean” information from the Blackberry in June 2012, shortly after congressional staffers questioned Lerner about the targeting allegations and in the same month that the IRS inspector general began examining the issue.

Kane offered no explanation for why the IRS “removed or wiped clean” the data, and the IRS did not respond to the same question when asked by The Washington Post on Wednesday.

As Reason.com stated,

There may be a reasonable explanation for all this. But if there is, the IRS has yet to provide it, and in fact has refused when asked to do so. Combined with all the other suspicious and convenient omissions, lapses, and losses related to this case, it does make one wonder if perhaps there isn’t a reasonable explanation to be offered.

There’s nothing to add to Reason’s conclusion.

This Won’t Help Confidence in the IRS

Wednesday, September 3rd, 2014

From South Florida comes a story of one IRS employee who allegedly liked to help taxpayers…just in the wrong way. Charles Corbitt worked for the IRS in West Palm Beach, Florida. He was charged with wire fraud today and is looking at 20 years at ClubFed if found guilty. He’s accused of “helping” taxpayers prepare returns for 2009 through 2012 and making sure they included residential energy credits. There’s just one issue supposedly with those returns (I’m sure you’re ahead of me): Those taxpayers didn’t qualify for residential energy credits. Oops.

Mr. Corbitt allegedly took part of the refund as his fee for preparing the returns. His fee was based on the size of the refund (according to the indictment); that’s a violation of ethics rules. He also allegedly inflated other itemized deductions.

As I said in the headline, the IRS desperately needs some good news…but there hasn’t been much this year.

Do Call Us, We Won’t Call You

Thursday, August 28th, 2014

The IRS does not initiate collection activities by phone calls. If you owe money to the IRS, the first notice will always be a letter delivered by the Postal Service. Unfortunately, scammers are continuing to pray on people. The IRS issued this press release today:

Scam Phone Calls Continue; IRS Identifies Five Easy Ways to Spot Suspicious Calls

WASHINGTON — The Internal Revenue Service issued a consumer alert today providing taxpayers with additional tips to protect themselves from telephone scam artists calling and pretending to be with the IRS.

These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request.

“These telephone scams are being seen in every part of the country, and we urge people not to be deceived by these threatening phone calls,” IRS Commissioner John Koskinen said. “We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry, shake-down calls are not how we do business.”

The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.

The IRS will never:
1. Call you about taxes you owe without first mailing you an official notice.
2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
4. Ask for credit or debit card numbers over the phone.
5. Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:
• If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040. The IRS workers can help you with a payment issue.
• If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at www.tigta.gov.
• If you’ve been targeted by this scam, also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add “IRS Telephone Scam” to the comments of your complaint.

Remember, too, the IRS does not use email, text messages or any social media to discuss your personal tax issue. For more information on reporting tax scams, go to www.irs.gov and type “scam” in the search box.

For all the grief that the IRS has (rightly) gotten over the IRS Scandal, they deserve no grief from these scam artists. The tips the IRS gives are completely accurate. If you get a phone call from the IRS demanding money, call TIGTA and report all the details.

Remember Those Missing IRS Emails? They Appear to Exist….

Monday, August 25th, 2014

“There’s no such thing as Lois Lerner’s missing emails. It’s all been a big lie. They’ve been lying to the courts, to the American people, and to Contgess. It is really outrageous.” That’s Tom Filton, President of Judicial Watch:

The reason that the IRS allegedly hasn’t attempted to recover the missing emails? “It would be too difficult.”

Now, I do need to point out that all we have at this point is Mr. Filton’s stating that Department of Justice attorneys stated this (along with a statement released by Judicial Watch). It’s possible that this isn’t true. That said, it makes sense that there are backup systems in place. I backup information and I have nowhere near the critical needs of the government.

Assuming that what Mr. Filton stated is true, both Congress and the Courts have been lied to by the current IRS Commissioner John Koskinen and by various attorneys. This isn’t deceit, this isn’t misstatements; this is out-and-out lying. If I were a federal judge being told today that the emails exist (after telling you they didn’t) but it’s too hard to get them, I know what my reaction would be. I suspect most judges will have the same reaction.

The next court hearing involving this scandal should be mighty interesting….

Judge Sullivan Not Impressed by the “Dog Ate my Homework” Excuse

Sunday, August 17th, 2014

Judicial Watch filed a Freedom of Information Act (FOIA) request with the IRS for information on the targeting of conservative groups. When the FOIA request went nowhere, Judicial Watch filed a lawsuit against the IRS. In July, Judge Emmet Sullivan required the IRS to issue a written response (due last week) on what happened. The IRS response was insufficient for Judge Sullivan:

MINUTE ORDER. In light of [26] the Declarations filed by the IRS, the IRS is hereby ORDERED to file a sworn Declaration, by an official with the authority to speak under oath for the Agency, by no later than August 22, 2014.

In this Declaration, the IRS must:

(1) provide information about its efforts, if any, to recover missing Lois Lerner emails from alternate sources (i.e., Blackberry, iPhone, iPad);

(2) provide additional information explaining the IRS’s policy of tracking inventory through use of bar code property tags, including whether component parts, such as hard drives, receive a bar code tag when serviced. If individual components do not receive a bar code tag, provide information on how the IRS tracks component parts, such as hard drives, when being serviced;

(3) provide information about the IRS’s policy to degauss hard drives, including whether the IRS records whose hard drive is degaussed, either by tracking the employee’s name or the particular machine with which the hard drive was associated; and

(4) provide information about the outside vendor who can verify the IRS’s destruction policies concerning hard drives.

Signed by Judge Emmet G. Sullivan on August 14, 2014. [paragraphing added for ease of reading]

The Hill noted,

Tom Fitton, Judicial Watch’s president, celebrated Sullivan’s new order, saying it proved the government had offered little in their filings on Monday.

“Today’s order confirms Judicial Watch’s read of this week’s IRS’ filings that treated as a joke Judge Sullivan’s order,” Fitton said in a statement.

In a statement to The Hill, Fitton later called Sullivan’s order “an incredible court intervention.”

“Judicial Watch has filed hundreds of FOIA lawsuits,” Fitton said.” I have never seen this type of court action in all my 16 years at Judicial Watch.”

We’ll see what response the IRS comes up with this week….

Where Karen Hawkins Disagrees With Me…

Sunday, August 10th, 2014

Karen Hawkins is the Director of the Office of Professional Responsibility (OPR). OPR is the agency within the IRS that is in charge of preparer regulation and oversight; their vision is, “To be the standard-bearer for integrity in tax practice;” their mission is to, “Interpret and apply the standards of practice for tax professionals in a fair and equitable manner.”

I was a little surprised this evening to see that Ms. Hawkins commented on my post of earlier this week titled, “The IRS Apparently Thinks They Won the Loving Case.” Ms. Hawkins stated,

As the “owner” of Form 2848, I’d like to clarify what Loving did and did not say: IRS was enjoined from requiring a test be taken and passed before a PTIN could be obtained, and from requiring annual CPE in order to renew the PTIN. The District court also acknowledged that the IRS could register/license individuals on a voluntary basis. Nothing in the decision addressed the use of the RTRP designation. In fact, those who passed the RTRP exam before the injunction (nearly 75000) are being exempted from the annual federal update requirement put in place by the new voluntary record of completion program (see Rev Proc 2014-42). The President has also put forward a legislative recommendation to amend 31 USC 330 to provide for mandatory regulation of return preparers. This is a difficult issue to address in black and white terms but please don’t assume the IRS can’t figure out what the law says and doesn’t say.

I felt that Director Hawkins’s view on this deserved a wider audience than a comment on a previous blog post. (The comment would not be seen unless someone clicked on the post itself.)

I did not know that, as Ms. Hawkins states, “…those who passed the RTRP exam before the injunction (nearly 75000) are being exempted from the annual federal update requirement put in place by the new voluntary record of completion program (see Rev Proc 2014-42).” Ms. Hawkins is referring to the new “Annual Filing Season Program.” I should point out that it’s unclear whether this program will be in place for next tax season; the AICPA has filed a lawsuit seeking to enjoin the IRS from offering this program.

Here is the actual Court Order that Judge Boasberg issued in Loving v. IRS:

ORDER
For the reasons set forth in the accompanying Memorandum Opinion, the Court ORDERS that:
1. Plaintiffs’ Motion for Summary Judgment is GRANTED;
2. Defendants’ Motion for Summary Judgment is DENIED;
3. Defendants lack statutory authority to promulgate or enforce the new regulatory scheme for “registered tax return preparers” created by 76 Fed. Reg. 32,286;
4. Defendants are permanently enjoined from enforcing such scheme; and
5. Judgment is ENTERED in favor of Plaintiffs.
SO ORDERED. [emphasis in original]

Ms. Hawkins is technically correct that Judge Boasberg’s order says nothing about the use of an RTRP designation. However, the Order specifically states that the IRS has no authority to create such a regulatory scheme. If there isn’t such a regulation, what’s the use of the designation?


I do want to point out that Ms. Hawkins has a sometimes thankless job. As I’ve noted on numerous occasions, there are plenty of bad tax “professionals” out there. (As I frequently state when I comment on such professionals, if it sounds too good to be true it probably is.) Ms. Hawkins and her staff have the task of trying to ensure competency among tax professionals. Unfortunately, her job is never-ending and thankless.

The IRS Apparently Thinks They Won the Loving Case

Tuesday, August 5th, 2014

Yesterday the IRS released a new version of the Power of Attorney form (Form 2848). The IRS has added the ability for a fourth representative for a taxpayer. They also noted two new matters for the POA (the Section 5000A Shared Responsibility Payment and the Section 4980H Shared Responsibility Payment).

Both the taxpayer and the taxpayer’s representative must sign the form (that’s not a change). When the representative signs the form, he or she must note his title. I was quite surprised to see the following as a choice for a representative’s designation:

i Registered Tax Return Preparer—registered as a tax return preparer under the requirements of section 10.4 of Circular 230. Your authority to practice before the Internal Revenue Service is limited. You must have been eligible to sign the return under examination and have prepared and signed the return. See Notice 2011-6 and Special rules for registered tax return preparers and unenrolled return preparers in the instructions (PTIN required for designation i).

In Loving v. IRS, the IRS was permanently enjoined from the Registered Tax Return Preparer designation. One would think that the IRS would realize this and remove the designation from forms. I’ve sent the IRS a note reminding them that there is no such thing as an RTRP and this should be removed from Form 2848.

Overall, the new version of Form 2848 has just minor changes.

Perhaps the Lerner Emails Still Exist (IRS Scandal Update)

Saturday, July 26th, 2014

There has been plenty of news regarding the IRS scandal. The most interesting is that IRS managers testified that it’s possible that Lois Lerner’s emails still exist.

The Washington Post published an article on six questions that IT managers believe should be asked of the IRS.

An IRS manager noted that other employees who are related to the scandal suffered hard drive failures, too. Really?

Finally, Kim Strassel has an excellent piece in the Wall Street Journal on the IRS scandal and ObamaCare. Here’s an excerpt:

Yet rather than engage in a basic legal analysis—a core duty of an agency charged with tax laws—the IRS instead set about obtaining cover for its predetermined political goal. A March 27, 2011, email has IRS employees asking HHS political hires to cover the tax agency’s backside by issuing its own rule deeming HHS-run exchanges to be state-run exchanges. HHS did so in July 2011. One month later the IRS rushed out its own rule—providing subsidies for all.

That proposed rule was criticized by dozens of scholars and congressional members, all telling the IRS it had a big legal problem. Yet again, the IRS did no legal analysis. It instead brought in a former aide to Democratic Rep. Lloyd Doggett, whose job appeared to be to gin up an after-the-fact defense of the IRS’s actions. The agency formalized its rule in May 2012.

I have no doubt that this scandal will be unresolved when I return from my vacation.