As we mentioned earlier, Maine Governor Paul LePage created a bit of a hubbub when he made the following statement about John Roberts' the Supreme Court's decision to uphold the healthcare reform law: "This decision has made America less free. We the people have been told there is no choice. You must buy health insurance […]
One of the many beefs that people have with ObamaCare is that the IRS will be tasked with enforcing the penalty assessed to those that choose not to purchase health insurance. Joe Kristan laments: Maybe the most depressing aspect of the [SCOTUS] decision is the way it seems to endorse using the tax law as the […]
The Service has heard everyone's concerns that whistleblower tips aren't being reviewed in a timely manner, rewards aren't paid, blah blah blah, so just everyone cool it while they sort this out: The IRS will work with “internal and external stakeholders” on a “comprehensive review” of the agency’s guidelines and procedures for handling whistle-blower complaints, Deputy […]
This is the first post from our slew of freelancer candidates. The following is by Jeremy Woodward. The House Appropriations Committee has settled on an IRS budget, and it’s not good news for everyone’s favorite group of suits and ties. The $11.8 billion allocation is $1.2 billion below what they requested. Probably not enough for […]
No one is saying that you can't pass this thing, but if tests aren't your bag, maybe you should move on this. So far, more than 4,800 people have become Registered Tax Return Preparers, according to the IRS. The IRS is urging an estimated 340,000 preparers required to take the test to do so as […]
Ginny Hopkins has waited tables at Johnny's Downtown in Cleveland for 20 years. In that amount of time, it's safe to say, Ginny has wished that a bag of money would fall off an armored truck, landing right at her feet or maybe some other financial miracle that would take her far away from the […]
We managed to get through tax season without any bomb/white powder/crazy man in a plane incidents at IRS locations (that we know of). That's the good news. The bad news is that anti-IRS forces never rest. Why? Because crazy never rests. Yesterday, the Service's Fresno location fell prey to a "white powder scare," which has […]
NPR's attempt to offer up something other than the usual tax day fare includes sharing IRS Commissioner Doug Shulman's workout playlist. Yes, even bureaucrats enjoy music! [I]f you're stressing over getting your taxes done before midnight Tuesday, Shulman has some songs that might inspire you to keep slogging through that return — the same songs that […]
34-year-old IRS employee Patricia Fountain and her 39-year-old boyfriend Larry Ishmael were arrested last Wednesday and charged with defrauding the federal government in a tax refund scam in which Fountain allegedly used her position with the IRS to rip off unsuspecting taxpayers. Patty the bad IRS employee has been charged with conspiring to file false […]
Specifically, because a lot of taxpayers could…uh, use a hand here: A new report from the Treasury Inspector General for Tax Administration found that the combination of the weak economy, and efforts by the IRS to promote its [offer in compromise] program for helping taxpayers pay off a portion of their outstanding tax debts has […]
Doug Shulman's shop is getting $500 million of the $1 billion set aside for implementing ACA: The money is only part of the IRS’s total implementation spending, and it is being provided outside the normal appropriations process. The tax agency is responsible for several key provisions of the new law, including the unpopular individual mandate. Republican […]
Come November, we're going to have a new Commish: Douglas Shulman, commissioner of the Internal Revenue Service, said he doesn’t intend to stay in the job after his five-year term expires in November. “My plan is to leave at the end of my term,” he said during a question-and-answer session today at the National Press […]
The new preparer regulation system is up and running. Accenture, formerly Andersen Consulting, collects millions to process PTINs, while millions more go to Prometric, to administer the “competency exams.” Everyone, I mean, everything, is under control. Except for the little matter of billions of taxpayer dollars going out the door to identity thieves claiming tax […]
Yesterday, the IRS announced a major expansion of its Fresh Start initiative which attempts to help taxpayers unable to cover their tax bills. The Installment Agreement program has also been expanded, making it available for more taxpayers who are behind on their taxes. Under the new provisions, some taxpayers who have been unemployed for 30 […]
The helpful folks at the IRS are warning seniors and other high-risk taxpayers of a new scam that lures those people into filing fraudulent tax returns. Though GC readers are obviously far too sophisticated to fall for any kinds of schemes like this, it's worth sharing anyway. The scheme tempts people with little or no […]
Listen, if you're going to file fraudulent tax returns, try not to kill anyone in the process. A San Diego tax preparer is facing federal charges for filing over $11 million in fraudulent tax returns and has now added a new charge to his ever-growing list of screw ups: witness tampering. You see, when 50-year-old […]
The Service gets an 'A' for effort but also 'D' for "do more with less." The U.S. Internal Revenue Service rejected $1.6 billion in erroneous claims for the first-time homebuyer tax credit, according to a report by the Treasury Inspector General for Tax Administration. The refundable tax credit, worth as much as $8,000, was available to […]
But just know what you're getting yourself into: “Advancing the interests of the North Korean leadership at the moment would be harder than the IRS,” suggested Matthew Harrington, chief executive officer of public relations powerhouse Edelman U.S. The U.S. prison in Guantanamo could prove a harder sell, said [Grover] Norquist. “It’s just a little less scary […]
Just don't tell Doug Shulman.
Thomas Sitzler swears that he didn't mean any harm, can't even make a bomb, and this is all came about due to a little liquid courage. A Birmingham area man, charged with making a phone threat to blow up an Internal Revenue Service building in Austin, Texas, has entered a plea agreement with federal prosecutors […]
Earlier this week, National Taxpayer Advocate Nina Olson gave her annual report to Congress. It's always a hoot as Ms. Olson's job is pretty much to tell the IRS why they suck. This year's report was critical to be sure, but Ms. Olson surprisingly seemed to take up the torch for the Service: The agency’s […]
Doug Shulman believes in third chances: IRS Commissioner Douglas Shulman, who announced the program’s renewal Monday, said previous efforts in 2009 and 2011 resulted in the collection so far of $4.4 billion from 33,000 people. He said the government could gain several times that amount, as a result of both the newest initiative plus people […]
Your efforts to keep the increase in the tax gap under $100 billion is greatly appreciated. The Internal Revenue Service estimates that U.S. companies and individuals failed to pay $385 billion in taxes they owed in 2006, an increase from $290 billion five years earlier. The agency said the rate of compliance remained almost unchanged at […]
Our resident tax nerd, Joe Kristan, touched on the IRS competency exam a couple of weeks ago but yesterday the IRS officially rolled out the red carpet. So, if you prepare tax returns but aren’t a CPA, lawyer, or enrolled agent, you now have the distinct pleasure of spending $116 to spend a few hours with everyone’s favorite test vendor – Prometric – whose proctors will keep a watchful eye on you to make sure your ostomy bag isn’t a secret answer bank, that you aren’t packing heat and your gum is appropriately disposed of. What’s the point of all this, you ask? IRS Commish Doug Shulman can answer that:
“This is another major step forward in our effort to enhance tax preparation service to millions of taxpayers. People should feel assured that the person they hire to prepare their federal tax returns has a working knowledge of the tax code,” said Doug Shulman, IRS Commissioner. “The majority of tax return preparers are reputable professionals but the few bad apples cause great harm to taxpayers and the industry.”
Got it? It’s for the good of the country. Just make sure you don’t have a runny nose on the day of your test. That’ll get you in trouble.
“Perhaps the most telling indicator of taxpayer confusion over the code’s complexity is that today, 90% of individual taxpayers pay for professional tax preparation or tax software to prepare their tax returns. IRS research estimates that, over the past 10 years, the burden for the typical taxpayer has increased by about 20% and would likely be even more if they had to prepare returns themselves without any aids or tools. Moreover, we estimate individual taxpayers and businesses spend more than 7 [billion] hours each year complying with filing requirements.” [Tax-News via Tax Foundation]
It’s a pretty sad reflection of the current state of affairs in my homebase of Washington, DC if the IRS, Paris Hilton, Nixon circa Watergate and the BP oil spill have a higher approval rating than the 112th Congress.
According to Chris Cillizza in WaPo, the only thing less popular than Congress is Fidel Castro.
And as we already know, the Fed is less popular than the IRS too.
You may have heard some carefully coiffed pols shouting about the need for our government to “cut spending.” If you’re a Republican, this means everything is fair game with the exception of the defense budget. For Dems, it’s entitlements. Since these two sacred cows of the federal budget dare not be touched, all the stuff in between is on the chopping block. One of the easier areas of government for pols to offer up for sacrifice is the Treasury Department, specifically the IRS. Because GOD KNOWS we don’t need “a goon squad 5,000 IRS agents tromping around the country.”
It appears that all the budget thumping has worked and the IRS is looking for volunteers to help move this along:
The Internal Revenue Service has offered buyouts to 5,400 employees as it begins preparing for a likely budget cut of more than 3 percent.
The agency, which had 94,711 workers in fiscal 2010, plans to accept no more than 1,600 buyout applications. A second round of buyouts could follow. The Obama administration has said that as many as 4,000 IRS jobs could be cut over the next year, including some that would reduce tax enforcement and collections.
“This is really focused on trying to deal with the current budget situation and the uncertainty that we’re facing at this point in time,” Beth Tucker, deputy IRS commissioner for operations support, said in an interview today.
IRS officials directed the first round of buyout offers to back-office employees who don’t interact with taxpayers. A potential second set of cuts would affect “a wider range of employees who deal directly with taxpayers in service and enforcement matters,” commissioner Douglas Shulman wrote in a Nov. 4 memo to employees.
First off, putting 4,000 people out of work won’t make for a balanced budget. Secondly, I’m not saying these “buyouts” are actually “layoffs” but if you consider the fact that these “buyouts” include current employees will receive money and not be required to report to their cubicles EVER AGAIN sounds pretty similar to how “layoffs” work. Maybe it’s just me.
IRS Offers Buyouts to 5,400 Employees [Bloomberg]
Let this serve as a warning to any would-be embezzlers out there, if you steal, you better report it to the IRS.
42-year-old Collette Snyder of Timonium, MD pleaded guilty earlier this month to filing false tax returns in 2007 and 2008 after she neglected to claim over $382,000 embezzled from her former employer, Towson, MD-based Maple Leaf Title.
As part of her duties at the title company, Snyder had signature authority over the company’s operating, settlement and recording accounts, which allowed her to begin embezzling money from MLT accounts starting in 2007. She deposited company checks directly into her personal bank account, as well as made checks payable to her husband without his knowledge, forging his signature to deposit those checks in an account he was not aware of. At that point, Snyder had been an employee of MLT for two years.
Snyder took around $149,560 in 2007 and $232,968 in 2008. These embezzled funds were used to purchase jewelry, a BMW, trips, home improvements and private school tuition.
Because reporting this money to the IRS without it clearly declared on her W-2 (despite her writing “payroll” in the memo section of company checks she wrote out to herself) would have alerted authorities to the fraud, Snyder neglected to mention the ill-gotten gains. This resulted in an estimated tax loss of $115,529.37 for her 2007 and 2008 returns.
Due to the embezzlement by Snyder and MLT President Anthony Weis, MLT was unable to perform its duties as a provider of settlement services. With MLT’s escrow account drained, existing mortgage notes could not be paid off by MLT, meaning clear and free title could not be passed to the new lender and borrower of those notes. An insurance company that had issued title insurance policies to the borrowers guaranteeing clear title ultimately paid out $3.9 million to financial institutions that held mortgage notes.
Weis pleaded guilty to wire fraud, was sentenced to 78 months in prison and was ordered to pay restitution of $4,007,705, which includes the loss to the title insurance company and the expenses of the individual victims. He began his sentence in May of this year. The interesting part of this story is that Weis stole money intended for his clients’ real estate closings. And then Snyder stole from the company. Birds of a feather…
Snyder faces a maximum sentence of three years in prison and a fine of $250,000. U.S. District Judge Catherine C. Blake has scheduled her sentencing for February 3 , 2012 at 11:00 am.
“Mortgage fraud adds to the underground economy that erodes the integrity of our tax system and threatens the financial health of our communities. IRS Criminal Investigation is committed to ‘following the money trail’ to ensure that those who engage in these illegal activities are vigorously investigated and brought to justice,” said IRS – Criminal Investigation Special Agent in Charge Jeannine A. Hammett.
After just telling you why an accounting career path may be a little more secure than law, a friend of GC passed along this little bit of news from the IRS’s Office of Chief Counsel:
From: [IRS Office of Chief Counsel]
Date: Mon, Oct 17, 2011 at 12:55 PM
Subject: RE: Chief Counsel Honors Program
To: [IRS Counsel Hopeful]
Thank you for applying to the Office of Chief Counsel. Unfortunately, we will not be hiring under the Honors Program for fall 2012. We appreciate your interest and hope that you will consider us in the future. Thank you.
Attorney Recruitment & Retention Office
Office of Chief Counsel, Internal Revenue Service
On the other hand, if you’re interested in running a IRS garage sale, they do have some extra junk on their hands.
But fingerprints, on the other hand, those will be necessary.
Certain tax return preparers who must pass a suitability check will have to provide their fingerprints so that a Federal Bureau of Investigation database search can be conducted. Generally, the fingerprint requirement will affect those preparers who currently have provisional PTINs.
Under the current proposed regulations, any participant in the PTIN, acceptance agent, or authorized e-file provider programs who resides and is employed outside of the U.S. will not have to be fingerprinted to participate in these programs. Those preparers, however, must comply with all the other elements of the suitability check. In addition, the Treasury Department and the IRS are continuing to study which additional requirements should apply to people outside the U.S. Any additional requirements will be set forth in future guidance.
Attorneys, CPAs, enrolled agents, enrolled retirement plan agent and enrolled actuaries also are expected to be exempt from the fingerprinting requirement at this time. However, they are still required to answer all the suitability questions on the PTIN application, such as whether they have been convicted of a felony in the previous 10 years. Individuals participating in the PTIN, acceptance agent, or authorized e-file provider programs also are required to meet any other requirements of the programs in which they are participating.
If you’re weren’t sufficiently annoyed with the IRS’s new oversight regulations. This might do the trick.
If you can get away with tax cheating, is it malpractice for your CPA to make you stop?
A Massachusetts CPA firm found out a new client was using a lame old trick. The S corporation had paid out $1 million to its owner over the years without putting it on a W-2 or treating it as a distribution from the company. Instead, the company every year booked it as a “loan” to the owners – a loan with no note, no interest rate, no security, and no repayments.
This is a time-dishonored way for people who carelessly suck cash out of a corporation to try to avoid the tax consequences – though it is less common in S corporations. It normally fails if the IRS figures it out.
The CPAs told the client that the “loan” should be reclassed as “wages” on the 2002 return to clean it up. The client owner was not excited, and talked to a lawyer to see if there was another way. After the first lawyer failed to satisfy, she talked to a second lawyer, who agreed with the CPA. The client reluctantly filed an amended return, and the owner found herself with a $500,000 tax lien.
At a national firm where I once worked, an audit partner would go from one tax person to another until he found one who told him what he wanted to hear. The client here took that approach, eventually finding a practitioner willing to prepare the 2002 return the old way. That was enough to get the client to file another amended return claiming a refund and to sue the old CPA for malpractice. That might have been a bad decision, in light of this reaction from the astonished judge:
It is surprising that Plaintiffs had the temerity to bring this lawsuit. The complaint was clearly filed too late. The record, mainly as a result of Plaintiffs’ failure to file long-overdue tax returns, is utterly insufficient to demonstrate damages. Most importantly, it is clear that Plaintiffs for many years enjoyed over $1,000,000 in income without paying any taxes on it, and they accomplished this by filing a tax return that improperly characterized the monies they received as a loan. It is close to ludicrous to claim that, by advising Plaintiffs to amend the 2002 tax return to conform with what the law and good accounting practice required, Defendants were being negligent. On the contrary, they were serving their clients ethically and well.
The judge also implied that the client might have been unwise in calling attention to the matter by filing the suit:
As a result of behaving professionally, Defendants have found themselves slapped with this expensive lawsuit. That undeserved headache, at least, is now over. The court can only hope that the IRS and the state authorities will make sure that Plaintiffs now proceed to do what everyone who enjoys the privilege of living in our beloved country is required to do: pay their fair share of taxes.
In other words: come and get ‘em, IRS!
In a world full of charlatans, it can be tough out there for CPAs who try to do the right thing. When you do, it’s nice to know at least one judge has your back.
A suspicious backpack was found at an IRS office Ocala, Florida yesterday that resulted in the 100 employees being evacuated from the building and also business in the surrounding area. In this day and age of misplaced IRS hating, authorities always approach these situations with caution and swiftly destroyed the pack after viewing the X-rays noting notebooks and “an electronic device with wires.” The contents turned out to be nothing more than someone’s psychology textbook, notebooks and a tape recorder, among other school-y items. This will be the best excuse that psych prof will ever hear. [Ocala]
As of September 2010, the tax agency had 80,606 items in storage, of which 28% — or 22,486 items — had been there for at least a year and a half without being used or moved, according to [a TIGTA] report. Those items took up 34,194 square feet of warehouse space costing about $862,000 in rent annually. [WSJ]
Let’s open with, “If I don’t see [so and so], I will blow this place up.” That’s a definite no-no. Also to be avoided would be statements such as, “You’re gone. You’re all [redacted but I’m guessing it was “fucking”] gone. You’re gonners.” And yet that’s what 48 year-old Paul Weber did in La Crosse, Wisconsin. What’s especially odd is that Weber didn’t make these statements in immediate succession. He first asked for “Kevin” then made the threat, bolted the office only to return and make the second threat. I guess Weber felt like returning in order to take a stand. Which is more than we can say for the Democrats in Madison.
[via La Crosse Tribune]
You’ve been warned, scofflaws.
The inspector general audit found that the criminal unit closed 4,325 cases in fiscal 2010, well above its goal of 3,900, a mark the unit did not hit in 2009.
The average investigation, meanwhile, took exactly one year, a roughly 9 percent improvement over 2009, and the number of convictions in legal source tax cases also rose 7 percent from 2009 to 2010, and has jumped close to 23 percent since fiscal 2006.
As the audit points out, the unit’s performance also improved even as its staffing numbers decreased by roughly 2 percent since 2006.
And they probably all carry shotguns.
IRS hitting criminal investigation targets [OTM/The Hill]
Welcome to the when-do-the-blackouts-start edition of Accounting Career Emergencies. In today’s edition, an IRS revenue agent is thinking about the future and wonders if there is anything to look forward to after a stretch inside the House of Shulman. Will he be greeted with contempt or disdain by potential employers outside of the Treasury Department?
Trapped in your job? Not sure if you can bottle up your rage during your upcoming compensation discussion? Need ideas for your next