The IRS has a new misstep every day – what scandal is next?

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During congressional hearings on the Internal Revenue Service (IRS) scandal, Congressman Hal Rogers (Republican – Kentucky) said, “It seems we have a new misstep every day at the IRS.” This is on the heels of news of lavish spending on conferences by the IRS. This of course was expected after new broke in March about the ridiculous Star Trek Parody Videos.

A report released Tuesday by the Treasury Inspector General for Tax Administration (TIGTA) details frivolous spending by the IRS which included $27,000 on an innovation expert, $10,000 on diversity and inclusion expert, $11,000 on a happiness expert, and $17,000 for something called leadership through art.  Given the overall demeanor of the IRS employees I’ve had the pleasure of dealing with as a tax attorney; I don’t necessarily disagree with the IRS trying to improve their happiness.

TIGTA conducted its audit to identify the IRS’s spending on conferences during fiscal years 2010 through 2012.  The audit’s primary focus was on the IRS Small Business and Self-Employed division’s 2010 conference in Anaheim where it spent $4.1 million for planning trips, outside speakers, video productions, and promotional items and gifts for IRS employees.

“Excessive spending by federal agencies on management conferences has been highlighted by recent Inspectors General reports and in congressional hearings,” said TIGTA Inspector General J. Russell George. “Effective cost management is especially important given the current economic environment and focus on Government efficiency. Certain of the IRS’s expenses associated with the Anaheim conference do not appear to be a good use of taxpayer funds.”

In watching the recent hearings, it seems like members of Congress are out of touch with their constituents and surprised as to the frustrations the public has to endure while dealing with the IRS every day. The surface is just being scratched as to inappropriateness at the IRS as the issues under scrutiny have not even (yet) dealt with IRS collection and audit issues. However, there may be pressure to not bring such issues to light as I suspect the IRS collection and audit practices may scare the public, and as Congressman Mike Kelly (Republican – Pennsylvania) repeatedly lectured during Tuesday’s hearings, “do not be afraid of this government.”

Tax Reform: Is this the Year?

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Lawmakers have, for years now, talked about simplifying the tax code — an enormous project that nobody seems to be committed to tackling.  It would be a difficult task even if lawmakers could agree on the changes, but partisan differences further complicate the task.  Maybe it takes some kind of tragic event to kick them into gear and make it a priority.  Maybe the recent IRS scandal is just the thing.

Two lawmakers hope that’s the case.  David Camp, a Michigan Republican, and Max Baucus, a Democrat from Montana, believe that the IRS scandal puts the complexity of the tax code on center stage once again.  Here’s how:

The complexity of the law didn’t require the IRS to target people for their political beliefs [but] I think giving the IRS less discretion is going to be important, and that’s what a simplified code would do.

~ David Camp, Chairman of the House Ways and Means Committee

Well, first I’m not sure a simplified code would really give the IRS less discretion.  And second, I’m not sure less discretion is always best.  I suppose if we take enough out of the tax code to effectively reduce and minimize the role of the IRS, then that could result in less discretion.  But if a simplification results in less detail where detail is needed, then it may have the opposite effect.  Generally speaking, I think the wordier the law, the less opportunity for discretion.

In my experience with IRS collections and tax relief cases, I would prefer more discretion as long as it is coupled with better training and more highly qualified personnel.  It is that inability to think outside the box and make common sense decisions that gives the IRS a bad name and creates so much frustration on the part of taxpayers and their representatives.

 

 

IRS Scandal Heats up as Lerner Refuses to Testify

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It is normal for the IRS to be all over the news in April, but this year, heading into the last week of May, they remain the talk of the nation.  As you probably know, at the heart of the controversy is the IRS’ unfair targeting of conservative groups applying for tax-exempt status.  Many top-level Internal Revenue Service officials are coming under fire for either failing to detect the practice earlier or for failing to timely report it to Congress.  Former IRS Commissioner, Doug Shulman, has said he didn’t know for sure what was going on.  Steven Miller, the man that replaced him, has also denied any wrongdoing, before being fired by President Obama last week.

Today Lois Lerner was called to testify before Congress but, following the advice of her attorney, plead the 5th and refused to testify.  Lerner is the individual considered to be directly in charge of the branch in Cincinnati that was running afoul of IRS procedures.

I have not broken any laws. I have not violated any IRS rules or regulations, and I have not provided false information to this or any congressional committee.

Because I am asserting my right not to testify, I know that some people will assume that I have done something wrong. I have not.

~ Lois Lerner, speaking before the House Oversight and Government Reform Committee

J. Russell George, the head of TIGTA (Treasury Inspector General for Tax Administration) is also a target, and I think rightly so.  It has always bothered me that TIGTA’s audits, probes, and reports seem to be rather pointless, leaving it up to the IRS to agree or disagree with TIGTA recommendations.  If there was some kind of cover up, people are going to wonder about TIGTA’s involvement.

The next step appears to be appointment of a special prosecutor, which, in the eye of the public, may elevate things to the level of the Bill Clinton scandal and Watergate.  I don’t recall the last time the IRS was in the spotlight like this, much less involving something that could be called a “scandal.”  From the looks of it, it will be a while before they can go back to the processing of amended tax returns, and the bean counting, and whatever else they usually do this time of year.

You’re not paranoid if you think you’re being targeted by the IRS for tax purposes.

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According to CBS and Reuters, the Treasury Inspector General for Tax Administration (TIGTA) is expected to publish an investigative report this week detailing that Internal Revenue Service (IRS) agents specifically targeted conservative groups for review and consideration of their tax exempt status.

According to Reuters, director of exempt organizations for the IRS, Lois Lerner apologized Friday for what she called the “inappropriate” targeting of conservative groups for closer scrutiny, something the agency had long denied. She said the screening practice was confined to an IRS office in Cincinnati; that it was “absolutely not” influenced by the Obama administration; and that none of the targeted groups were denied tax-free status.

The TIGTA findings detail that the names and purposes of groups were used to scrutinize applications. Name scrutiny included organizations such as Tea Party, Patriot, and 9/12. Scrutiny was also being improperly given to references to government spending, government debt, taxes, education of the public via advocacy/lobbying to make America a better place to live; and statements that criticize how the country is being run.

IRS employees are presently prohibited from targeting anyone for their political or religious beliefs. However, under current law such conduct would only be grounds for termination. Wasting no time to ride the coattails of a juicy scandal, Congressman Mike Turner of Ohio already unveiled a bill to make such actions a felony. Considering that nobody seems to know anything in these types of cases, and that the portions of the report available so far appears to be no different, it will be interesting if anyone is ever prosecuted criminally if the bill were to pass.