Non-FTB Tax Collectors

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If you live in California, the tax man who comes pounding unexpectedly on your door to collect overdue state taxes might not be a tax man at all.  The California Franchise Tax Board (FTB) hires private collecting agencies (PCAs) to do some of their dirty work for them.  FTB says they keep a close eye on their PCAs to ensure they are treating taxpayers fairly and safeguarding their private information.

The IRS has tried this in the past too with limited success.  My own personal experience with the PCAs hired by the IRS was that they were given so very little authority to actually resolve cases that it seemed a waste of time and resources.  The IRS initiated PCA contracts in 2006, but discontinued the program in early 2009 due to pressure from advocacy groups who said the collection practices were often abusive.  Also, the PCAs weren’t as effective as expected, meaning they didn’t collect as much revenue as their public counterparts.

Nina Olson: "Capable and Dogged"

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I feel like my opinion of the Taxpayer Advocate Service is . . . evolving. Not that I ever had anything against Nina Olson personally, I have just always questioned the independence and effectiveness of the organization that sometimes seems like little more than a mini IRS within the IRS. If TIGTA is IRS’ big brother, then TAS is their only child — a chip off the ol’ block. However, the more I see Olson stating an opposing view (opposing the IRS), the more I grow to trust her and recognize the value of TAS in assisting with real tax relief.

In an interview with Bernie Becker of The Hill Nina Olson recently made the following statements describing the natural tension between her agency and the IRS:

You have to get used to the idea that you’re going to walk into a room, no one is going to want to see you there, they are not going to want you to open your mouth. And when you do open your mouth, they’re all going to will you to shut it as soon as possible. Because what you are going to be saying is, basically, pointing out that they didn’t think of something.

Speaking about the IRS’ failure to recognize when their policies are overly burdensome on the average taxpayer, she added:

When they get their mind on something, they just get hell-bent on something — and you could be talking to a tree and it might be more conversational.

I love that quote!  Very spunky. Rep. Pete Stark (D-Calif.), someone who knows her better than I do, said she is “capable and dogged” and the driving force behind the IRS’ actions. Read full storyhere.

So am I going to stop taking jabs when I see an opportunity? Probably not. Besides, I still think TAS has a long way to go as far as the ideals and advocacy of Olson herself trickling down to the rank and file.

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IRS Accelerates Detection of Fraudulent Refund Returns

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Pursuant to its 2011 audit plan, TIGTA conducted its annual audit of IRS activities during the 2011 filing season. The purpose of the audit was to evaluate whether the IRS timely and accurately processed individual paper and electronically filed tax returns. The final report is dated September 28th, but was just released to the public on November 1st.

One of the highlights of this report was the dramatic increase in fraudulent refund returns. As of April 30, 2011 the IRS had identified 775,723 fraudulent refund returns — $4.6 billion worth — compared to 286,670 identified by the same time last year (a 171% increase). Perhaps even more amazing is the fact that the IRS, through its screening efforts, detected 96% of them, therefore, no refund was issued.

The IRS is clearly increasing its efforts in this area. It is even beefing up its screening of prisoner tax returns, which are often fraudulent. As of April 30, 2011, the IRS reported that it had selected 199,854 tax returns filed by prisoners for screening (a 256% increased compared with the 2010 filing season).

Read full report here.

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Prominent Chinese Artist Hit with Enormous Tax Bill

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The Beijing Local Taxation Bureau says internationally known artist, Mr. Ai Weiwei, owes $2.36 million in back taxes and he has 10 days to pay it.

Weiwei will probably pay the bill in the end (he says he has the means to pay it), but he wants to be sure that the government is applying the law correctly.  Somehow I doubt there is much of an appeal process in China, and I would hate to see what might happen if he doesn’t make good after the 10 days have elapsed.

Weiwei is known for speaking out publicly against the Chinese government and the social problems of his homeland.  He was held by authorities for 81 days earlier this year without any formal charges, which leads Weiwei and others to suspect that the Chinese government wants to silence him one way or another.  Some may see the taxes as a side issue, and just a convenient way for the government to put him away.  We have certainly seen this scenario played out in the Unites States as well.  See full story here.

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