New IRS Commissioner, Charles Rettig

Earlier this month the Senate confirmed Charles P. Rettig as the 49th Commissioner of the IRS. Rettig was managing principal of the Beverly Hills law firm, Hochman, Salkin, Rettig, Toscher & Perez, a firm specializing in high profile tax controversy cases. The biggest challenges he’ll face as commissioner are the same ones that have existed for years, namely improving the effectiveness of an agency that doesn’t get the funding it really wants or needs, improving public perception & confidence, and now implementing a whole host of new tax laws. Rettig has spent basically his entire career with the same law firm and his peers definitely think highly of him.

With each new commissioner, the question that always comes to mind for me is, will he be sympathetic to the common taxpayer? I am definitely encouraged by the fact that he has real hands-on experience representing taxpayers seeking tax relief and going up against the agency that he now runs. Also, he’s a California attorney, so he is intimately familiar with the unique struggles of local people like our own clients. I’m sure many of his clients are from the Los Angeles area, but there’s no reason to think he has not also assisted taxpayers in Northern California towns like Sacramento, Modesto, or Fresno. The commissioner is usually someone with vast amounts of experience in administration, but limited knowledge of taxes. However, Rettig is well versed in all aspects of tax controversy, including (according to the practice areas listed on his firm’s website) audits, appeals, offshore accounts, penalty abatement – surely almost anything related to IRS collections. We don’t know if Rettig will be that champion of taxpayer rights that we always hope for; he actually seems middle-of-the-road politically. But he at least knows the point of view of the taxpayer and knows from experience what it means to go face-to-face with the IRS. In my book, that’s a fantastic start.

Any comments or questions? Please, contact us today. We’d love to hear from you!

IRS Role Model Dies at Age 94

I’m going to warn you: if you are prone to crying during movies like Forrest Gump or Old Yeller, you may want to skip this blog post.  If you don’t believe me, read on.  Read all the links too and you’ll probably agree that this story is up around 8 or 9 on the “feel-good” scale.

We lost a good man this week, and he used to work for the IRS.  I know, that sounds like an oxymoron these days.  Johnnie M. Walters, former IRS commissioner during Watergate, died on Tuesday at the age of 94.  In 1971 Nixon needed a “yes man” to fill the top post at the IRS, and after he fired the previous commissioner, Nixon made this statement about his replacement (recorded on White House tapes):

I want to be sure he is a ruthless son of a bitch, that he will do what he’s told, that every income-tax return I want to see I see, that he will go after our enemies and not go after our friends.

How easy it would be to find this kind of guy in 2014!  But in the early 1970s I guess there were people in positions of power who didn’t let it get to their heads.  There was still a little integrity and courage in the White House.  Needless to say, Walters did not measure up to Nixon’s prerequisites; not even close.  He refused to take action on Nixon’s “enemies list,” instead locking it up in a safe.

The story gets even a little sappier if you go back to Walters’ early years.  He grew up in humble circumstances on a farm in South Carolina.  He put himself through law school, served in the military and earned a Purple Heart.  He was married for 66 years to his wife and they had 4 children.  He seems like the kind of guy that everyone admired.  Walters wrote a memoir in 2011 called “Our Journey.”  Maybe this should be required reading for IRS employees

At the End of Shulman's Term

photo via topnews.net.nz

With Doug Shulman concluding his service as Commissioner of the Internal Revenue Service early next month, I thought it might be nice to look at some of the details of the office itself and look back at some prior Commissioners.

The Office of Commissioner was created by Congress on July 1, 1862 even though the modern history of the IRS really began in 1913, ten years after the income tax was abolished.  IRS Commissioners are appointed by the President of the United States with the approval of Congress.  There was no set term prior to 1998.  For example, Guy T. Helvering was “sentenced” to over 10 years of service (from 1933 to 1943).  He holds the record for the longest term as Commissioner.  The shortest term was just over 3 months by Robert E. Hannegan which, coincidentally, was immediately following Helvering’s term in 1943.

Shulman came very close to serving a full 5-year term as he got his start back in March 2008.  Shulman took over after Mark W. Everson, who also served a 4-year term.  IRS has a complete list of all past Commissioners, in case you’re curious.

According to Shulman’s bio, his emphasis has been to strike a balance between providing excellent service to taxpayers (hopefully offering tax relief where appropriate) and enforcement of tax laws (i.e., collection back tax debt).  Has Shulman succeeded?

The Commish on “Risk and Uncertainty”

One attribute of our tax system that adds uncertainty is its impermanence.  Short term provisions, that sunset but are then often extended, have an unsettling effect on both clarity and stability.

In 2010, the Joint Committee on Taxation identified more than 130 tax provisions that were set to expire at the end of 2010, with approximately another 70 to sunset at the end of 2011. And 40 more tax provisions are set to expire at the end of 2012. This year, we actually had a tax provision that was set to expire in two months.

 A perfect example of uncertainty for business taxpayers caused by expiring provisions is the Research and Experimentation tax credit. Its purpose is to foster innovation and technological development while spurring economic growth and competitiveness.

However, for the past 30 years, it has been extended 14 times, many of those retroactively, for periods ranging from six months to five years. Such persistent uncertainty about the future availability of the R&E credit diminishes its incentive effect as taxpayers often do not know if they can depend on the credit when making decisions on future investments in research and development.

~ IRS Commissioner Douglas Shulman, February 15, 2012