Commissioner Koskinen Asked to Resign

Posted by Wetenkamp on with 0 Comment

IRS Commissioner, John Koskinen, has been on the job for only a couple years, but he was brought in at a very difficult time for the agency. He was appointed by Pres. Obama and given the task of cleaning things up at the IRS, particularly in regard to the scandal involving targeting of Tea Party groups. Now he has lawmakers calling for his resignation because of the way he has handled the debacle. I bet there are days he regrets accepting the assignment.

The most outspoken republicans insist that Koskinen lied about the missing emails. Jason Chaffetz (R-Utah) is on record saying that Koskinen was in possession of the emails, and then after they were subpoenaed, his agency destroyed them. Many now want him to resign, and if he doesn’t, they are threatening worse. They are throwing around words like “contempt,” “obstruction of justice,” and “impeachment.”

President Obama claims that there was “not even a smidgen of corruption” within the IRS, but everybody knows this isn’t true. He needs to be a little more careful with his words. The IRS is huge and people are imperfect, arrogant, and greedy. How can he say there isn’t a smidgen of corruption? He doesn’t know that. All that really means is he has had meetings with those that run the agency who say there’s no corruption, who have had meetings with high level management who say there’s no corruption, who have had meetings with lower level management, etc. There is no way any clear-thinking adult could swallow such a broad statement as that.

According to Chaffetz, there are still at least 5 open investigations into the targeting scandal, including that of TIGTA and the Department of Justice. I, for one, must admit that I am a little surprised that the news of this scandal hasn’t fizzled yet. I think it speaks to how passionate we are, as US citizens, about allegations of corruption within our government.

Taxpayer Advocate Says IRS Needs to Shift Focus Away from Collections

Posted by Wetenkamp on with 0 Comment

National Taxpayer Advocate, Nina Olson, recently submitted her mid-year report to Congress.  It is nothing incredibly new, I suppose, except that IRS’ 2015 tax season numbers are completely off the charts (and not in a good way).  Here are some key points:

  • 8.8 million dropped calls due to switchboard overload
  • only 37% of customer service calls were actually answered
  • average hold time was 23 minutes
  • less than 10% of customer service calls answered during peak of tax season

Olson’s preface is a pleasure to read.  Its brilliant, and yet so simple.  She acknowledges the lack of funding that the IRS has had to deal with over the past few years, and she astutely points out that, while difficult, periods of famine (so to speak) can be healthy if they cause you (or an organization such as the IRS) to rethink its priorities and to rethink the way funds are allocated.  The operative phrase here is that it can be healthy.  In her own words:

But from a taxpayer perspective, I am concerned its long-term approach is headed in the wrong direction. First, the IRS continues to view itself as an enforcement agency first and a service agency second. Enforcement is important, of course, but it is a question of emphasis and self-definition. Second, the IRS’s vision of the future rests on a mistaken assumption that it can save dollars and maintain voluntary compliance by automating taxpayer service and issue resolution and getting out of the business of dealing with taxpayers directly in person or by phone.

What the IRS should do during this period of congressional distrust and resulting inadequate funding is examine every one of its underlying principles. In my view, it should transform itself as a tax agency from one that is designed around nabbing the small percentage of the population that actively evades tax to one that aims first and foremost to meet the needs of the overwhelming majority of taxpayers who are trying to comply with the tax laws.

The truth is, most people pay their taxes voluntarily, but the IRS has always been laser focused on collection and enforcement.  Olson is right.  As the IRS continues to put taxpayer service on the back burner, the whole idea of voluntary compliance becomes more tenuous.  And I don’t think Olson is saying that enforcement has no place in our tax system.  There will always be a need for enforcement.  But the focus needs to shift so that it is not the top priority.

One of my mentors taught me how to operate a well-balanced law practice.  He taught me to see it as both a service and a business, and to never lose sight of both.  If you focus too much on the business, then you do your clients a disservice.  And if you fail to give attention to the business aspects, then you won’t earn a decent living.

The IRS is really no different.  As Nina Olson said, they are too focused on the “business” of enforcement and the service side is suffering.  But the great thing about both a law practice and the IRS is, when you give enough attention to the service aspect so that the clients/taxpayers are satisfied, the revenue will come.

Mastermind of IRS Phone Scam Gets 14 Year Prison Sentence

Posted by Wetenkamp on with 0 Comment

You would have to be living under a rock if you’re not aware of the pervasive IRS impersonation phone scams going around.  These scammers prey on the least-informed, most vulnerable people in society, convincing them that the IRS is on the brink of throwing them into prison for unpaid taxes when, in many cases, no taxes are owed.  Now at least one of the masterminds behind this, Sahil Patel (36), is going to be put away for 14 years.  Patel was sentenced a couple days ago in a U.S. District Court in New York for conspiring to extort, to impersonate government officials, and to commit wire fraud.

The government considers Patel one of the ringleaders in a scam that duped nearly 4,000 people out of a combined $20 million over the past two years.  However, this criminal group is obviously run by more than just Patel as the phone calls have not stopped since his conviction.

Maybe 14 years seems like a long time to you for a crime that doesn’t involve taking a life, but this is what the district judge had to say about it:

The nature of this crime robbed people of their identities and their money in a way that causes people to fee that they have been almost destroyed.

He definitely wanted to “ensure adequate deterrence.”  Plus I don’t think it helped that Patel came across as an “unfriendly” witness.  He reportedly made some sexist comments about the women he hired to do the dirty work and how they were ignorant and gullible.  I know that 14 years seems like a heavy penalty, and you can’t really expect a higher level of severity, but I wonder if this will really deter the co-conspirators who appear to be keeping the scheme operational.  The rewards are so incredibly high for them and, at this point at least, the risks seem to be just low enough.

We can increase the risk by finding more of these guys, and I think the IRS, in cooperation with law enforcement, is doing the best they can.  We can reduce the reward by informing the public — and this is where I think they can improve.  I started this article by saying that one would have to be living under a rock to not be aware of these phone scams, but I don’t know if that is true.  As a tax attorney, I hear about this kind of thing all the time because I am dialed into tax news and events.  But is the average taxpayer getting the message?  I think IRS public service messages are focused on tax professionals.  Maybe there should be a broader kind of outreach through TV and radio.  I suppose there is a reason why they haven’t gone there; maybe they don’t want to freak everyone out.

The first step in taxing space starts tomorrow in Sacramento

Posted by Montgomery on with 0 Comment

Have you ever thought about space travel? Or even being one of the first human colonists to Mars? If you have, you should also be prepared to pay a tax. Seriously. That’s right, with the developments in space exploration, the Franchise Tax Board (FTB) is preparing to develop a tax strategy for space travel and commerce.

Taxation strategy of the final frontier begins tomorrow in Sacramento during an interested parties meeting at the FTB’s mother ship. If you didn’t book your tax space voyage in time, you can still attend by phone by calling (877) 923-3149 at 10:00 a.m. Enter the participant pass code 2233420, followed by the # sign.

The official captain’s log for the meeting is to discuss possible regulatory efforts for the apportionment and allocation of income derived from space transportation activities, including the transportation of people or cargo into and from Space. I didn’t think it would be possible, but even the FTB can make this meeting sound boring.

According the news release issued by the FTB, during the upcoming initial meeting, FTB staff members will solicit input from industry and practitioners on issues that may arise in the application of a regulation on such space activities, including, but not limited to:

– How should space transportation activities be defined in a regulation?

– At what point should aircraft or space vehicles be considered as traveling into space?

– How should unsuccessful missions be treated?

– What apportionment factors should be used to apportion and allocate income from space transportation activities? How many apportionment factors should there be, and how should they be weighted? Launch factor, recovery factor, mileage factor, or some other factor?

– Should a regulatory effort address the potential for “nowhere income,” and if so, how should it be addressed?

– What issues might be encountered with combining space transportation activities with a taxpayer’s other trade or business activities?

– Should a regulatory effort distinguish between transporting cargo and people?

– Any other issues that industry believes FTB staff should consider.

Isn’t this exciting!? I do wonder however if a Foreign Bank and Financial Account Report (FBAR) will be required if life is found on Mars, and a human opens a bank account there? I suppose that’s a federal question and the July meeting, I further suppose, is limited California state tax matters.