by | ARTICLES, BLOG, BUSINESS, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAX TIPS, TAXES
My friend, Nina Olson, has been the long-time Taxpayer Advocate (TA) for the IRS, an independent office within the IRS. The job of the TA is to ensure that every taxpayer is treated fairly and that every taxpayer knows and understand his or her rights. Each year, the TA issues two different reports to Congress. Today, the TA released her 2015 Annual Report to Congress, with a list of the twenty most serious problems facing the IRS today.
Think reaching a human at the Internal Revenue Service last tax filing season was tough? Olson anticipates even less telephone and face-to-face customer service in future years. A planned expansion of IRS online offerings will leave taxpayers who seek help the old-fashioned way “up a creek,” listing it as the No. 1 problem in a report to Congress released Wednesday.”
An overview from Bloomberg noted another serious problem: transparency. “Since 2014 the IRS has spent “several million dollars” working with management consultants to develop a plan for how it will operate over the next five years. The details in the report haven’t been made public or shared with Congress, and the IRS hasn’t solicited comments from a broad pool of constituents, the advocate’s report notes.
Additionally, the IRS has never asserted so many times that data and documents the Taxpayer Advocate planned to include were for “official use only” and couldn’t be made public. That made this year’s report difficult to write, Olson says, “because while the intent to reduce telephone and face-to-face service has been a central assumption in the five-year ‘Future State’ planning process, little about service reductions has been committed to writing.”
Olson is calling for congressional hearings on the IRS plan over the next few months, and will solicit comments at public hearings held across the country. Among groups she plans to invite are those with the greatest need for free help, including the elderly, the disabled, small businesses, low-income taxpayers, and people with limited English proficiency.
The impression the Taxpayer Advocate’s office has, based on discussions with IRS officials, is that the agency’s ultimate goal is “to get out of the business of talking with taxpayers.” It would do that in part by creating online accounts for filers, which Olson sees as a good way to supplement, not replace, existing service—as long as data security concerns are addressed.
While far more people file electronically now, and the IRS has taken many steps to limit the need for taxpayers to phone the IRS, the demand for personal service hasn’t decreased. In fact, over the past decade the number of calls the IRS received on its Accounts Management lines rose from about 64 million for fiscal year 2006 to about 102 million for fiscal year 2015. That’s almost a 60 percent jump. Automating customer service even more, the report says, “will mean only those with the means to pay for it can receive help with their taxes.”
Here are Nina’s Top Twenty Problems:
TAXPAYER SERVICE: The IRS Has Developed a Comprehensive “Future State” Plan That Aims to Transform the Way It Interacts With Taxpayers, But Its Plan May Leave Critical Taxpayer Needs and Preferences Unmet
IRS USER FEES: The IRS May Adopt User Fees to Fill Funding Gaps Without Fully Considering Taxpayer Burden and the Impact on Voluntary Compliance
FORM 1023-EZ: Recognition As a Tax-Exempt Organization Is Now Virtually Automatic for Most Applicants, Which Invites Noncompliance, Diverts Tax Dollars and Taxpayer Donations, and Harms Organizations Later Determined to be Taxable
REVENUE PROTECTION: Hundreds of Thousands of Taxpayers File Legitimate Tax Returns That Are Incorrectly Flagged and Experience Substantial Delays in Receiving Their Refunds Because of an Increasing Rate of “False Positives” Within the IRS’s Pre-Refund Wage Verification Program
TAXPAYER ACCESS TO ONLINE ACCOUNT SYSTEM: As the IRS Develops an Online Account System, It May Do Less to Address the Service Needs of Taxpayers Who Wish to Speak with an IRS Employee Due to Preference or Lack of Internet Access or Who Have Issues That Are Not Conducive to Resolution Online
PREPARER ACCESS TO ONLINE ACCOUNTS: Granting Uncredentialed Preparers Access to an Online Taxpayer Account System Could Create Security Risks and Harm Taxpayers
INTERNATIONAL TAXPAYER SERVICE: The IRS’s Strategy for Service on Demand Fails to Compensate for the Closure of International Tax Attaché Offices and Does Not Sufficiently Address the Unique Needs of International Taxpayers
APPEALS: The Appeals Judicial Approach and Culture Project Is Reducing the Quality and Extent of Substantive Administrative Appeals Available to Taxpayers
COLLECTION APPEALS PROGRAM (CAP): The CAP Provides Inadequate Review and Insufficient Protections for Taxpayers Facing Collection Actions
LEVIES ON ASSETS IN RETIREMENT ACCOUNTS: Current IRS Guidance Regarding the Levy of Retirement Accounts Does Not Adequately Protect Taxpayer Rights and Conflicts with Retirement Security Public Policy
NOTICES OF FEDERAL TAX LIEN (NFTL): The IRS Files Most NFTLs Based on Arbitrary Dollar Thresholds Rather Than on a Thorough Analysis of a Taxpayer’s Financial Circumstances and the Impact on Future Compliance and Overall Revenue Collection
THIRD PARTY CONTACTS: IRS Third Party Contact Procedures Do Not Follow the Law and May Unnecessarily Damage Taxpayers’ Businesses and Reputations
WHISTLEBLOWER PROGRAM: The IRS Whistleblower Program Does Not Meet Whistleblowers’ Need for Information During Lengthy Processing Times and Does Not Sufficiently Protect Taxpayers’ Confidential Information From Re-Disclosure by Whistleblowers
AFFORDABLE CARE ACT (ACA) – BUSINESS: The IRS Faces Challenges in Implementing the Employer Provisions of the ACA While Protecting Taxpayer Rights and Minimizing Burden
AFFORDABLE CARE ACT (ACA) – INDIVIDUALS: The IRS Is Compromising Taxpayer Rights As It Continues to Administer the Premium Tax Credit and Individual Shared Responsibility Payment Provisions
IDENTITY THEFT (IDT): The IRS’s Procedures for Assisting Victims of IDT, While Improved, Still Impose Excessive Burden and Delay Refunds for Too Long
AUTOMATED SUBSTITUTE FOR RETURN (ASFR) PROGRAM: Current Selection Criteria for Cases in the ASFR Program Create Rework and Impose Undue Taxpayer Burden
INDIVIDUAL TAXPAYER IDENTIFICATION NUMBERS (ITINs): IRS Processes Create Barriers to Filing and Paying for Taxpayers Who Cannot Obtain Social Security Numbers
PRACTITIONER SERVICES: Reductions in the Practitioner Priority Service Phone Line Staffing and Other Services Burden Practitioners and the IRS
IRS COLLECTION EFFECTIVENESS: The IRS’s Failure to Accurately Input Designated Payment Codes for All Payments Compromises Its Ability to Evaluate Which Actions Are Most Effective in Generating Payments
EXEMPT ORGANIZATIONS (EOs): The IRS’s Delay in Updating Publicly Available Lists of EOs Harms Reinstated Organizations and Misleads Taxpayers
EARNED INCOME TAX CREDIT (EITC): The IRS Does Not Do Enough Taxpayer Education in the Pre-Filing Environment to Improve EITC Compliance and Should Establish a Telephone Helpline Dedicated to Answering Pre-Filing Questions From Low Income Taxpayers About Their EITC Eligibility
EARNED INCOME TAX CREDIT (EITC): The IRS Is Not Adequately Using the EITC Examination Process As an Educational Tool and Is Not Auditing Returns With the Greatest Indirect Potential for Improving EITC Compliance
EARNED INCOME TAX CREDIT (EITC): The IRS’s EITC Return Preparer Strategy Does Not Adequately Address the Role of Preparers in EITC Noncompliance.
You can read the report in full by going here.
by | ARTICLES, BLOG, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAXES
Today, the IRS issued a series of questions and answers about health care forms that individuals will receive in the next few months. These forms are the 1095-A, 1095-B, and 1095-C. The information is “intended to educate individual taxpayers and describe the forms, who will provides them, and the purposes they serve. The Q&As also provide information as to when taxpayers can expect the forms and what taxpayers need to do with the forms once they are received.”
The bulletin answers the following questions:
1. Will I receive any new health care tax forms in 2016 to help me complete my tax return?
2. When will I receive these health care tax forms?
3. Must I wait to file until I receive these forms?
4. What are the health care tax forms that I might receive and how do I use them?
5. How will I receive these forms?
6. My employer or health coverage provider has suggested that I opt to receive these forms electronically rather than on paper. Are they allowed to ask me that?
7. Will I get at least one form?
8. Will I get more than one form?
9. Will I get a Form 1095-C from each of my employers?
10. How are the forms similar?
11. How are the forms different?
12. What do I need to do with these forms?
13. What should I do if:
I have a question about the form I received,
I think I should have gotten a form but did not get it,
I need a replacement form, or
I believe the form I received has an error?
14. Can I file my tax return if I have not received any or all of these forms?
15. Am I required to file a tax return if I receive one of these forms?
16. Should I attach Form 1095-A, 1095-B or 1095-C to my tax return?
If you have these or similar questions, you should read the IRS bulletin. You can see the full questions and answers here.
by | BLOG, ELECTIONS, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAXES
The State Department, in tandem with the IRS, will soon have the ability to “block Americans with ‘seriously delinquent’ tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category.” This new law will likely begin in January 2016.
The roots of this new law began back in 2012, a report issued by the GAO suggested the possibility of tying tax collection to passport issuance, in an effort to collect revenue. Soon thereafter, Senator Harry Reid introduced a bill in Congress that did just that, with a threshold of $50,000 in delinquency. The bill been attempted several times in Congress over the last few years.
Most recently, the new rule proposal is tucked into a highway-funding bill (HR22) that currently sits in committee and is likely to be voted on sometime in December.
Though there will be exceptions to the rule (emergency and humanitarian travel, for instance), valid criticisms of the rule were raised earlier this year in Forbes. For instance the proposal “isn’t limited to criminal tax cases or even situations where the government fears you are fleeing a tax debt. In fact, if the bill is passed you could have your passport revoked merely because you owe more than $50,000 and the IRS has filed a notice of lien.
A $50,000 tax debt is easy to amass today. In addition, tax liens are pretty standard. The IRS files tax liens routinely when you owe taxes. It’s the IRS way of putting creditors on notice so the IRS eventually gets paid. In that sense, the you-can’t-travel idea seems extreme. Some commentators noted that a far smaller sum of unpaid child support can trigger similar passport action. Others attack the proposal as potentially unconstitutional.”
The Joint Committee on Taxation has estimated that the new law would raise about $400 million over the next decade.
A serious problem, however, looms for millions of U.S. citizens living abroad. Passports, obviously, are essential for travel, residency permits, banking, school, and work visas; yet, the IRS has documented trouble with getting mail properly to ex-pats.
The Wall Street Journal mentioned noted that ” a report issued in September by the Treasury Inspector General for Tax Administration, or Tigta, a watchdog agency, found that the IRS sent 855,000 notices to U.S. citizens abroad in 2014. According to the report, ‘IRS data systems aren’t designed to accommodate the different styles of international addresses, which can cause notices to be undeliverable.’
The Tigta report said that ‘current IRS processes for addressing international mail issues are ineffective or nonexistent.’ In response, the IRS said that Tigta’s recommendations wouldn’t overcome the agency’s ‘budgetary, statutory, and operational constraints.’ ”
The implementation of this new law will be worthwhile to watch in the coming months, especially as it will likely affect those living abroad.
by | ARTICLES, BLOG, ELECTIONS, FREEDOM, OBAMA, POLITICS, TAXES
During Congressional testimony on Tuesday, John Koskinen defended his tenure as Commissioner of the IRS against stirrings of impeachment among some elected officials. Koskinen maintained that there has been an ample turnover of personnel, as well as disciplinary reviews within the IRS, so that the IRS has been positively rehabilitated since the scandal erupted in 2013.
While the accusation of charges against Koskinen — accused of “misleading the public and destroying documents that were being sought under a congressional subpoena” — was newsworthy, another portion of his testimony was just as important, but went largely unreported by the the media: the future role of 501c4s.
Koskinen framed part of the reason for the IRS targeting scandal on confusing rules, “leaving the nonprofit groups and IRS auditors uncertain about what activity was allowed.” However, this assertion is utterly nonsensical, as the rules that govern 501c4 activity have been in place since 1959. So why the sudden interest in the last couple of years to create (or “clarify”) rules that limit activities by nonprofit organizations? Because of the 2016 election.
Don’t forget — the IRS tried to do a major rewrite in 2014 ahead of midterm elections, but received an unprecedented amount of comments during the IRS rulemaking comment period. If you added together all of the comments on all Treasury and IRS draft proposals from the seven prior years and doubled that you came close to the number of responses received, which was more than 150,000. In light of the overwhelming response on the proposed changes, the IRS decided to delay any rules changes.
So here we are on the threshold of another major election cycle, and we have the IRS announcing it will be stirring the pot. The Washington Times reported that Koskinen hopes, “that we’d be able to provide these proposed new rules early enough next year so that they could — the work on them can be completed well in advance of the election so there wouldn’t be any confusion.” And more: “But I would stress that the work that we’re doing now is focused on clarifying — not changing — but clarifying the rules under which organizations operate.”
Yet this is onerous and unnecessary. These are your social welfare organizations, for which advocacy for “the common good and general welfare” is their primary purpose. They differ from 501c3, which are your charitable organizations; 501c5s, your labor unions; and 501c6s, your trade organizations. The one thing all of these organizations do have in common is that they are all tax-exempt organizations.
501c4s are not tax-deductible precisely because they are not political organizations. They serve to educate by being issue-based. This is protected under free speech; so long as the 501c4 sticks to an issue and not advocate for a particular candidate, it is not considered political speech and therefore it cannot be curbed. They can talk about policies and positions, not people.
These social welfare groups can therefore participate in the political arena as long as they maintain education as their primary purpose. Some examples of 501c4s would be the National Rifle Association (NRA), American Association of Retired Persons (AARP), Americans for Tax Reform (ATR), and the Sierra Club. 501c4s themselves have been around for nearly 100 years, and the regulations that currently govern them have been in place since 1959.
And yet the IRS has been increasingly adamant about clarifying the rules for social welfare organizations that have been in place for more than 50 years. And why only the social welfare organizations — not the unions or trade organizations?
It is well known that on issue-based advocacy, the Republicans have made much better use of 501c4s than the Democrats. So of course, the Democrats want to find a way to disrupt this. Dozens of articles in recent years have documented how this conservative group and that conservative group spent money on political ads, more than the liberal groups — as if that is somehow unfair. It’s perfectly fair and perfectly legal, except when the Democrats are on the losing/receiving end.
This situation is reminiscent of the repeated attempts to implement the “Fairness Doctrine” for talk radio, pushing to give conservative and liberal talk radio shows “equal air time” — because the conservatives dominate that market as well.
The IRS tried reforming 501c4s in 2014 because they knew the Democrats were vulnerable. It didn’t get done then, and 2014 was a disaster year for Democrats. What better way to stifle the ability for conservatives to message than by attacking the methodology? The Democrats, in cahoots with the Obama Administration, are working in tandem with the IRS to change to the way social welfare organizations function by introducing very specific and onerous rule “clarifications”.
By trying to redefine some activities as “political” instead of advocacy, they would be opened to being limited or even banned — activities which serve to provide education for the common good, as they always have.
Critics of the way 501c4s operate, which allow their donors to remain protected, suggest that the 501c4s are somehow gaming the system — using phrases like “secret donors” and “secret activity” to inflame the public against 501c4s. But this is patently untrue.
Political donors are required to be disclosed under campaign finance, but since 501c4s are specifically not political organizations, the donor names do not need to be made public. Their anonymity is protected under the Right of Free Association. Those who are on the receiving end of 501c4 activities to educate the populace during the election cycle, however, are now pushing for this to change in order to reveal citizens identities.
Therefore turning a simple and known definition of a 501c4 into a new and incomprehensible one, has the effect of stifling speech. Even the mere presence of such a proposal will have detrimental affect. Why? The possibility of new regulations becoming permanent rules will have 501c4s worried about potential infractions — especially as we are recovering from the 2013 IRS targeting scandal, especially since the IRS has been known to issue rules that are effective immediately, and even retroactively.
The most egregious part is that we probably won’t have the ability to comment on proposed changes this time around. According to the IRS bulletin (last revised April 2015), the IRS states, “Given the diversity of views expressed and the volume of substantive input, we have concluded that it would be more efficient and useful to hold a public hearing after we publish the revised proposed regulation. Treasury and the IRS remain committed to providing updated standards for tax-exemption that are fair, clear, and easier to administer.”
In other words, they don’t want to hear feedback this time around. What good is a “public hearing?” It’s not, of course, at least for the public. But from the vantage point of the 2016 presidential elections, the effect of curbing or scaring the activity of 501c4s during the upcoming election cycle is beneficial. What organization would risk the potential for increased scrutiny and possible violation from the IRS, knowing that the IRS has been operating in an unjust and partisan matter? They wouldn’t. So the 501c4s would have to be more careful for at least the time being, which plays right into the timing of the important 2016 election cycle activity.
The IRS continues to act in an incompetent manner. That they are targeting 501c4s, and not c5s and c6s, show that there is an inherent bias internally within the IRS. No one can look at the situation and not think that this isn’t being done to have an affect on our political cycles. This is not how the IRS is supposed to function in our country.
by | ARTICLES, BLOG, ELECTIONS, FREEDOM, GOVERNMENT, HYPOCRISY, OBAMA, POLITICS
The cynic in me was wholly unsurprised when the Associated Press reported the Department of Justice (DoJ) concluded that no formal charges would be filed against any of the IRS officials embroiled in the IRS scandal of 2013. In a letter to Congress, the DoJ announced that they found “no evidence that any IRS official acted based on political, discriminatory, corrupt or other inappropriate motives that would support a criminal prosecution.”
Never mind the fact that computer hard drives and emails disappeared, secret email accounts were maintained, interoffice messaging systems were used to avoid written records, only one conservative group received approval under Lerner in three years, and some groups remain unapproved after 5 years — all while Obama’s brother received retroactive tax-exempt approval in less than 30 days.
According to the DoJ letter, such actions were merely, “mismanagement, poor judgment and institutional inertia.” That is utter nonsense.
Stephen Dinan at the Washington Times did a decent round up of the news and reactions to the decision.
“The IRS did mishandle tea party and conservative groups’ nonprofit applications, but their behavior didn’t break any laws, the Justice Department said in a letter to Congress Friday that cleared the tax agency and former senior executive Lois G. Lerner of any crimes.
“Ineffective management is not a crime,” Assistant Attorney General Peter J. Kadzik said in a letter to the House Ways and Means Committee. “The Department of Justice’s exhaustive probe revealed no evidence that would support a criminal prosecution. What occurred is disquieting and may necessitate corrective action — but it does not warrant criminal prosecution.”
The decision comes more than two years after the IRS’s internal watchdog reported that auditors singled out tea party groups’ applications for special scrutiny and delayed those applications beyond reasonable timelines, preventing the groups from being able to say they were officially recognized nonprofits.
The agency initially admitted its bad behavior, and President Obama vowed an investigation — but he later said, in the middle of the probe, that there was no evidence of corruption.
Some Republicans have questioned the validity of the probe from the beginning, after learning that one of the Justice Department lawyers assigned to the investigation was a contributor to Mr. Obama’s political campaigns.
In its letter Friday the Justice Department specifically cleared Ms. Lerner, a senior executive in charge of approving the groups’ applications, who had authored a number of emails that suggested a bias against the tea party movement.
Investigators said none of the witnesses they interviewed believed Ms. Lerner acted out of political motives, and said that Ms. Lerner seemed to try to correct the inappropriate scrutiny once she “recognized that it was wrong.”
“In fact, Ms. Lerner was the first IRS official to recognize the magnitude of the problem and to take concerted steps to fix it,” Mr. Kadzik wrote.
Congressional Democrats said the decision confirmed what they’d figured out years ago — that there was no underhanded political dealing at the agency.
“Over the past five years, Republicans in the House of Representatives have squandered literally tens of millions of dollars going down all kinds of investigative rabbit holes — IRS, Planned Parenthood, Benghazi — with absolutely no evidence of illegal activity,” said Rep. Elijah E. Cummings of Maryland, the top Democrat on the Benghazi investigation and ranking member of the House Oversight Committee.
The House Ways and Means Committee conducted its own investigation into the IRS’s tea party targeting, as did the Senate Finance Committee. The House panel was the one that voted to refer Ms. Lerner’s behavior to the Justice Department for criminal investigation.
Rep. Paul Ryan, the chairman of the Ways and Means Committee, called the Friday letter “deeply disappointing,” but said it wasn’t a surprise given the bent of the Obama administration.
He said his committee’s probe did find “serious and unprecedented actions” by Ms. Lerner that deprived tea party groups of their rights.
“The American people deserve better than this. Despite the DOJ closing its investigation, the Ways and Means Committee will continue to find answers and hold the IRS accountable for its actions,” he said.
Ms. Lerner’s lawyers, in a statement, said they were “gratified but not surprised” by the announcement.
“Anyone who takes a serious and impartial look at the facts would reach the same conclusion as the Justice Department,” they said, adding that she cooperated with the investigators and answered their questions.
That stands in contrast to her interaction with Congress, where she refused to answer questions, invoking her Fifth Amendment right to remain silent — but only after she delivered a statement declaring her innocence.
The House Oversight Committee concluded that she was not, in fact, able to invoke the Fifth Amendment at that point, and when she refused to answer questions, the House voted to hold her in contempt of Congress.
The Justice Department declined to pursue that case, too, arguing that her claim of Fifth Amendment rights was likely to succeed.
Groups that faced targeting by the IRS were infuriated by Friday’s decision.
“To say there is no evidence of discrimination makes a mockery of all we witnessed in the last two years,” said Catherine Engelbrecht, founder of True the Vote, which had its application for nonprofit status delayed as it and another group she was involved in faced scrutiny by everyone from the FBI to federal occupational health authorities.“
