IRS

In Case You Missed It: IRS Whistleblower Bradley Birkenfeld Is Fully Aware of His Awesomeness

If you've ever met a whistleblower, or heard one give a speech, you never get the sense that they're too caught up in their 15 minutes, marching around to the beat of their kick ass do-gooderness. Typically, it's more of a matter-of-fact story and less a reflection on the heroic moments that turned an ordinary […]

New IRS Employees Don’t Always Have Someone to Show Them the Ropes

As you know, the primary purpose of Treasury Inspector General for Tax Administration (aka TIGTA) in the enormous fuckshow of our federal bureaucracy is to tell the IRS how awful they are at life. Yep! If there's any chance of IRS the sucking at something, TIGTA has likely investigated and issued a report about it. E-filing isn't […]

Maine Governor Has Had a Chance To Re-Think His ‘Gestapo = IRS’ Comment

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 […]

Just Admit It, Choosing the IRS to Enforce ObamaCare Was Smart

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 […]

IRS to Get Its Act Together on Whistleblower Program

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 […]

Tax Pros Don’t Need to Sweat the IRS Budget Cuts

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 […]

Memo to “I’m-not-a-good-test-taker” Tax Preparers: The IRS Asks That You Take Their Competency Exam Sooner Rather Than Later

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 […]

Sweet Little Old Lady Didn’t Cash Mistaken Refund Check Out of Fear That Alcatraz Would Reopen Just for Her

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 […]

Tormentors of IRS Fresno Location Have Lost Their Sense of Scatological Humor

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 […]

What Other Songs Are on the IRS Commissioner’s Workout Playlist?

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 […]

IRS Employee And Her Boyfriend (Allegedly) Scammed Taxpayers Using TETR Credit

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 […]

The IRS Could Use a Hand Here

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 […]

IRS Gets Half of the Affordable Care Act Implementation Play Money

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 […]

Doug Shulman: Five Years As IRS Commissioner Is Plenty for Me, Thanks

  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 IRS Seems To Have Its Priorities Bassackwards

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 […]

The Distaste for IRS’ Tax Preparer Regulations Has Reached Its Apex

The only question is, why did it took take so long? A nonprofit group plans to sue the Internal Revenue Service and argue that the agency’s effort to regulate tax-return preparers is unlawful. The Institute for Justice, an organization in Arlington, Virginia, that seeks to protect individual liberties, said in a statement it will file the […]

The IRS Gets Soft on Deadbeat Taxpayers

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 IRS’ Latest Scam Warning Is For The Poors and Olds

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 […]

Former IRS Agent Tries To Kill Witnesses In His $11 Million Fraud Case

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 […]

IRS Stopping $1.6 Billion in Mistaken Homebuyer Tax Credits Doesn’t Impress Everyone

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 […]

Any PR Firms Looking for a Challenge Should Contact the IRS

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 […]

Stupid Alabama Man Who Told IRS Agent That He Would Make 9/11 Look Like a Fire Drill Admits He Had a Few Beers Before Picking Up the Phone

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 […]

IRS Doesn’t Seem at All Worried About Overworking Already Overworked Employees

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 […]

This is Your Most Recent Last Chance to Bring That Offshore Money Home and Come Clean with the IRS

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 […]

The IRS Seems Surprised That the Tax Gap Isn’t a Lot Worse

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 […]

These New IRS Competency Exams Are Going To Be a Hoot

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.

[via IRS via NYSSCPA]

IRS Commissioner Doug Shulman Puts Tax Preparers’ Job Security Concerns to Rest

“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]

Did You Know The IRS Is Four Times More Popular Than Congress?

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.

Layoff Watch ’11: The IRS Says Tomato

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]

Note: The IRS Does Not Appreciate You Not Reporting Your Embezzlement Gains

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.

IRS Office of Chief Counsel Not in the Market for Any New Blood

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.

IRS Stops Short of Requiring Tax Preparers to Go Through a Full Rectal Exam to Pass Suitability Check

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.

IRS to Begin Fingerprinting Tax Preparers [AT]

And I’d Have Gotten Away with It if It Weren’t for Those Blasted Accountants!

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.

Cite: RTR Technologies, Inc., Rosalie Berger, and Craig Berger v. Carlton Helming and Helming & Co., PC., ED-Mass., No. 09-cv-30189-MAP.

A Bright Student Would Never Leave Their Backpack at an IRS Office Unattended

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]

Is It Impossible for a Dancing With the Stars Champion to Get A Decent CPA?

I only ask because Kelly Monaco could use one. Robert Snell reports that she owes about $68k to Feds which is odd considering she beat the likes of Evander Holyfield, J. Peterman, and Joey from New Kids on the Block. Can’t someone help the girl out? And not with the tango. [TW]

Look for the IRS on an Upcoming Episode of ‘Hoarders’

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]

Here Are Two Examples of Things Not to Say When You’re at Your Local IRS Office

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]

IRS Criminal Investigation Unit Bringing the A Game

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]

IRS Agent Wants to Know If There’s Life After Government Work

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 advice@goingconcern.com and we’ll come up with something to bring everyone closer together.

Back to the Shulman Soldier:

Dear Career Advice Brain Trust,

I am currently a freshly minted IRS revenue agent in the Northeast right out of school. I’m the guy that audits the tax returns of small business and the self-employed (Schedule C’s and 1120’s). I’ve been at the job for about 10 months, and lately I’ve been starting to wonder: if this whole IRS thing doesn’t pan out, what are my options? Do public accounting firms of any size see any value in the experience gained here? From what I’ve experienced, employment at the IRS is a one-way street, either attracting grads with the ink still wet from their degree, or mid-career public accountants who value personal and family time more than money. Since I’m a young grad with no family to speak of, I feel like a lot of the non-monetary benefits are lost on me.

This job has its pros and cons. It’s probably one of the safest jobs in the country for anyone with an accounting degree, and it’s borderline illegal to work more than 40 hours per week because we’re unionized. Supposedly once you’re in for a few years, you can do “anything you want” within the organization, but I find that hard to believe because due to our reduced FY 2012 budget, we’re the last class to be hired for a while, so who is going to keep doing my job when everyone goes to do “anything they want?” Also, after 3-4 years, the salaries plateau big time, and we definitely make less than our public accounting counterparts throughout our careers. Furthermore, it literally takes an act of Congress to get anything substantial changed.

So my bottom line question to you (and the readers) is this: if I wanted to jump ship and go somewhere that my title carries a little less universal hatred, as well as advance my career prospects, what could I expect for opportunities, particularly in the public accounting sector?

Sincerely,
Agent Curious

Dear Agent Curious,

I’m happy to say that you’re first IRS agent to come to us for advice. Whether that means you value what we have to say or you’re simply desperate isn’t clear but regardless, thanks for reaching out.

Now then. Your problem. Personally, I feel as though the stigma associated with working for the IRS is a little overblown. Just because some of your colleagues chase down loose change and politicians call you names, that doesn’t mean you don’t have skills that aren’t valuable for private employers. The knowledge you are curating about small businesses and their compliance issues are extremely valuable and many CPA firms would gladly talk to you about your experience and how it will work for them and their clients.

Furthermore, with your inside knowledge about the Service and how is picks and chooses returns for audit, you’ll be able to better serve your clients by saying, “I assure you this will result in a Young Buck-esque raid of your business.” This knowledge of the inner workings might even be more valuable than what you actually learn on the job.

Right now, your best opportunities would be with public accounting firms that specialize in tax compliance for small businesses. Just like any other job, if you are able to jump around inside the Service and see various types of returns (partnerships, larger businesses), your skill set will be even more valuable. A few more years doing Doug Shulman’s dirty work could pay big dividends down the road.

Any former/current IRS agents out there with insight? Drop your knowledge in the comments.

About 100,000 Tax Preparers Sorta Forgot Those Identification Number Rules Went into Effect This Year

For those of you that haven’t nailed down the CPA yet, hopefully you’re not amongst those receiving nastygrams from the IRS for not complying with the new ID requirements.

And, on behalf of the thousands of tax preparers who did comply with the new rules, Doug Shulman doesn’t appreciate your apathy, “The vast majority of federal tax return preparers complied with the rules. We owe it to the compliant tax preparers to make sure that everyone is on a level playing field.” [Bloomberg]

IRS Database Security Could Use a Tuneup

Some of the 2,200 databases that the IRS uses to manage and process taxpayer data are not configured securely, are running out-of-date software, and no longer receive security patches.

Nor has the IRS fully implemented its plans to complete vulnerability scans of its databases — although the IRS spent more than $1.1 million in software licenses and support costs for a database vulnerability scanning and compliance assessment tool, it did not fully implement it. TIGTA used database vulnerability assessment software to conduct remote scans of the primary databases for 13 applications supporting critical tax administration business processes. Its review found high and medium risk vulnerabilities, as classified by the scanning tool in each of the 13 databases. [TIGTA via TaxProf]

Some IRS Employees Living by the Motto ‘Do as I Say, Not as I Do’

There’s no shame in asking for help, IRS employees, if that’s what this is about. Don’t forget that the Commish isn’t too proud to ask for help.

In 2008, the year for which most recent data was available, IRS computer programs flagged compliance issues for more than 8,000 of its 109,469 employees and ultimately determined that almost 2.8% had not complied with the law. But those monitoring systems missed 133 additional employees who were potentially not compliant with tax law over a two-year period, according to the audit. The employees were flagged for potentially filing their tax returns late, paying their taxes late, not reporting all of their income and at least one example of a criminal investigation with an additional tax assessment.

Treasury Report: IRS Must Beef Up Oversight Of Its Own Employees [Dow Jones]

Thanks to the IRS, Republican Presidential Candidate Herman Cain Only Made Enough Money to ‘Buy New Golf Clubs and Move to Atlanta’

Soon-to-be failed Presidential candidate Herman Cain is best known for being the former CEO of Godfather’s Pizza. When he took the job in 1986, the Journal reports “Mr. Cain cut costs and closed unprofitable locations and said that he returned the business to profitability in just 14 months.” An impressive feat to be sure and he continued to sling pie as the CEO until 1996 when he presumably figured he could cash in nicely.

Unfortch for Cain things didn’t really work out. And whose fault would that be? The IRS, of course!

Mr. Cain said that in 1996 he struck a deal to sell his stake in Godfather’s to his partners. That’s when the IRS showed up and commenced an audit of his tax return for the year 1994, coincidentally the year he publicly challenged President Clinton on the impact of his health-care reform plan. Simultaneous audits of Godfather’s and Mr. Cain’s partners were quickly concluded, but Mr. Cain said that the audit of his personal finances dragged on until 1999.

When he finally concluded the sale of his Godfather’s stake, Mr. Cain said that its value had fallen by 75% and yielded only enough money for him to “buy new golf clubs and move to Atlanta.” As for the IRS, they claimed he owed $1.8 million in back taxes, but he said that as soon as he appealed this decision, they immediately dropped the claim and asked only for $40,000 to cover interest on “the money I didn’t owe.” Outraged, he nevertheless paid the bill to resolve the matter. He said that such treatment at the hands of the IRS happens all the time.

Godfather vs. Tax Man [WSJ]

Doug Shulman: Cutting the IRS Budget Will Do Nothing to Help the Deficit

“Cuts such as those in the House budget resolution would actually increase the deficit by decreasing revenue,” IRS Commissioner Douglas Shulman said to the Senate Appropriations Subcommittee on Financial Services and General Government.

He said the House proposal would cut $2 billion from the agency’s budget next fiscal year. “Cuts of this magnitude would be substantial and affect all of IRS operations,” from answering taxpayers’ questions on the phone to being able to conduct audits, he said. Shulman said that for every dollar invested in the IRS, the agency collects roughly $200 in revenue. [Dow Jones]

Report: IRS Is Doing More with Less, Still Needs More

[caption id="attachment_23858" align="alignright" width="260" caption="We need to be here."][/caption]

In a report released today, the inspector general said attrition and a heightened workload have combined to leave the IRS understaffed.

The new hires in the agency’s small business and self-employed division resulted in a net gain of just 580 revenue officers by the end of fiscal 2010, according to the report. The IRS watchdog predicted a net gain of 127 revenue officers by the end of fiscal 2012. The study could affect the debate over funding for the agency. It comes two days before IRS Commissioner Douglas Shulman is scheduled to testify before a congressional panel on the agency’s budget. The inspector general warned that, unless the IRS is fully staffed, compliant taxpayers are at a disadvantage. “If the IRS does not have a sufficient number of qualified” revenue officers, the report said, “it could create an unfair burden on the majority of taxpayers who fully pay their taxes on time.” [Bloomberg]

Man Sues IRS for Giving Him a Headache

Before you start ringing up the lawyers, you should know what this guy’s head pain was caused by something that Doug Shulman has very little control over.

A New Orleans resident has filed a lawsuit against the Internal Revenue Service after a portable office wall fell and struck him in the head. Willie B. Jolliff, Jr. filed suit against Internal Revenue Services, East Skelly and Jones, Lang, LaSalle Americas Inc. on May 16 in federal court in New Orleans.

According to the lawsuit, Jolliff was hurt by the wall on May 15, 2010, resulting in headaches and a neck injury.

The IRS is accused of negligence by failing to maintain a safe environment for office visitors, failing to properly maintain and secure the portable office wall and failing to warn of a potentially dangerous condition.

IRS customer claims headaches in personal injury suit [Louisiana Record]

IRS Filings Show This Whole ‘Rapture’ Thing Might Prove Quite Lucrative

According to their most recent IRS filings, Family Radio is almost entirely funded by donations, and brought in $18 million in contributions in 2009 alone. According to those financial documents, accountants put the total worth of Family Radio (referred to as Family Stations on its official forms) at $72 million. With those kind of financials — and controversial beliefs — it’s no wonder skeptics have accused the group of running a scam. [CNN via NetNet]

IRS Not Too Forthcoming with the Success of Wealth Squad

Remember the “Wealth Squad“? They’re the jolly bunch of IRS examiners that focus their audit efforts on the richest of richies because it’s become clear that wealthy people are incapable of being honest on their tax returns (plus, poor people don’t have any money).

This elite group was formed in 2009 and based on the IRS’s count, they’ve been some busy little taxbusters:

According to the agency, audit rates among taxpayers who reported $10 million or more in income in 2010 jumped to 18% from 10% in 2009. Among taxpayers who reported $5 million to $10 million in income, nearly 12% were audited, compared with 6% in 2008.

Seems like a nice little ramp up in activity which means a boost to the Treasury’s piggy bank, right? If that’s the case, the Service isn’t exactly thumping their chests about it:

The IRS has refused to report how much money the “wealth squad” has brought in. This isn’t so difficult. Britain, which set up a similar “rich squad” around the same time, has announced that its squad netted £162 million ($ 263 million) in 2010-11, up from £82 million the year before. Those amounts are on top of the taxes already paid by the rich who are being targeted.

Conventional wisdom tells us that if the IRS were to release these numbers, it would probably make for some nice political fodder and so the Administration is telling them to keep a lid on the results. If you thought the soundbites about new 16,500 IRS agents were bad, imagine if the IRS actually reported how much more money it got rich people to fork over. On the other hand, it could be that the Service is juking the numbers and the Squad has been a complete failure. Either way, it seems that the IRS wouldn’t gain much by shouting these stats from the rooftops.

Is the IRS’s ‘Wealth Squad’ Working? [WSJ]

TIGTA Scolds IRS for Name-calling…Again

The office of the Treasury Inspector General for Tax Administration has released a report showing that IRS employees continue to use now prohibited language like “tax protester” and (our personal favorite) “Constitutionally-challenged” in reference to non-compliant taxpayers, despite being barred from doing so since 1998.

Congress enacted the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98) Section 3707 to prohibit the IRS from labeling taxpayers as “Illegal Tax Protesters” or any similar designations. However, IRS employees continue to refer to taxpayers by these designations in case narratives. Using “Illegal Tax Protester” or other similar designations may stigmatize taxpayers and may cause employee bias in future contacts with these taxpayers.

Prior to enactment of the RRA 98, the IRS used the Illegal Tax Protester Program to identify individuals and businesses that were using methods that were not legally valid to protest the tax laws. Employees identified taxpayers for referral to the program when their tax returns or correspondence contained specific indicators of noncompliance with the tax law, such as the use of arguments that had been repeatedly rejected by the courts. There were tax protester coordinators who were responsible for determining whether a taxpayer should be included in the Illegal Tax Protester Program; if a taxpayer was classified as an Illegal Tax Protester, the taxpayer’s record was coded as such on the Master File. Once a taxpayer’s account was coded, certain tax enforcement actions were accelerated. The designation was also intended to alert employees to be cautious so they would not be drawn into confrontations with taxpayers.

The IRS has not reintroduced past Illegal Tax Protester codes or similar designations on taxpayer accounts. In addition, the Internal Revenue Manual no longer contains any Illegal Tax Protester references. However, TIGTA found that out of approximately 3.6 million records and cases, there were 38 instances in which 34 employees had referred to taxpayers as “Tax Protester,” “Constitutionally Challenged,” or other similar designations in case narratives on the computer systems analyzed.

The TIGTA made no recommendations after their report, as the IRS has continued to use the term “tax protester” in taxpayer case files when it sees fit, despite the fact that the TIGTA feels this is not in compliance with RRA 98 § 3707 for obvious reasons.

It appears they do this once a year:
The TIGTA Would Prefer It if the IRS Could Use a Nicer Term Than “Tax Protester”

Gird Your Loins, Unscrupulous Tax Preparers

The IRS is on you like white on rice.

The Internal Revenue Service is taking steps to stop tax preparers with criminal tax convictions or permanent injunctions from preparing tax returns. This is just one of several recent moves to improve the quality and oversight of the tax preparation industry.

More than 700,000 tax preparers nationwide have registered with the IRS and obtained Preparer Tax Identification Numbers (PTINs). This nine-digit number must be used by paid tax return preparers on all returns or claims for refund. Paid preparers must renew their PTINs annually to legally prepare tax returns.

“We owe it to all taxpayers and the many honest tax return preparers to remove the relatively small number of bad actors from the tax preparation industry,” said Doug Shulman, IRS Commissioner. “Just one unscrupulous tax return preparer can cause a lot of financial damage to both taxpayers and the tax system.”

Nineteen ne’er-do-wells have already gotten word that they’ll be stripped of their PTINs for unseemly behavior of some kind or another. Best get that CPA so you don’t have to mess with the whole thing…until you the IRS lumps them in too.

IRS Begins Enforcement of New Return Preparer Rules [IRS]

Apparently This Is the IRS Being Funny About Taxes

We can’t come up with a better explanation for their Tax Quotes page. Treasury regulations forbid the IRS from implying that inclusion of a quote here means they are at all endorsing tax revolt and/or humor in any form.

“Taxes are what we pay for civilized society.” — Oliver Wendell Holmes, Jr., U.S. Supreme Court Justice

“I am proud to be paying taxes in the United States. The only thing is – I could be just as proud for half the money.” — Arthur Godfrey, entertainer

“People who complain about taxes can be divided into two classes: men and women.” — Unknown

“No government can exist without taxation. This money must necessarily be levied on the people; and the grand art consists of levying so as not to oppress.” — Frederick the Great, 18th Century Prussian king

“Like mothers, taxes are often misunderstood, but seldom forgotten.” — Lord Bramwell, 19th Century English jurist

“The best measure of a man’s honesty isn’t his income tax return. It’s the zero adjust on his bathroom scale.” — Arthur C. Clarke, author

“Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” — F. J. Raymond, humorist

A tax loophole is “something that benefits the other guy. If it benefits you, it is tax reform.” — Russell B. Long, U.S. Senator

“The hardest thing in the world to understand is the income tax.” — Albert Einstein, physicist

“Taxation with representation ain’t so hot either.” — Gerald Barzan, humorist

“Income tax has made more liars out of the American people than golf.” — Will Rogers, humorist

A Prison Guard Is Now Equally as Effective at Busting Tax Cheats as the IRS

As we have learned, residents of our prison system have proven to be quite savvy at obtaining tax credits, including those intended for first-time homebuyers, alternative-fuel vehicles as well as filing bogus tax returns in order to receive refunds. These scams go along swimmingly until the IRS gets wind of it (anywhere from months to years later), at which time local (and sometimes national) media have some nice filler.


In the latest case of a prisoner tax schemed sniffed out, Troy Fears – who is enjoying a life’s stay in an Arizona prison for rape – spent 2005 to 2009 filing fake tax returns and obtained $119k in the process. He was using “fake W-2’s and apparently said he was filing other inmates’ taxes. He convinced other prisoners he was applying for grants on their behalf so he could get their Social Security numbers.” According to court papers, the IRS was missing this particular scam because “IRS routes [direct deposits] without making sure the name on the account matches the return.” The jig was up when a prison guard intercepted his mail, presumably figured out the tax returns were fakes, and called the authorities. Fears got four years tacked on to his sentence and the guard responsible for catching him can probably expect a “Deputy IRS Agent” certificate (signed by Doug Shulman, natch) in the mail any day now.

Jailed Rapist Gets $119K From Fake Tax Returns [KPHO via TaxProf]

Cleveland IRS Office Is Getting a Jumpstart on the Shutdown

Feels a little bit like a false start but apparently an IRS office in Cleveland has already said “fuck it” and sent employees home this morning.

WKYC reports, “They told us there was a government shutdown and there was nothing they could do and we should take our taxes to someplace where you pay,” said taxpayer Samantha Beynum. [WKYC]

IRS, DOJ Want a Peek at Some HSBC India Bank Accounts

Back in February, the IRS announced that it would be giving offshore bank account holders another chance to come clean on their tax-avoiding ways. Tax amnesty 1.0 went pretty well and last year, the IRS had a whale of time sticking it to UBS and a number of customers who were holding out. But in all honesty, we all know that picking off a bunch of blondes with above-average chocolatiering skills was some low-hanging fruit. Today the IRS, along with the DOJ, announced their next target of their sniffing-out-offshore-bank-account world tour. HSBC India! – come on down!

The United States is seeking an order from a federal court in San Francisco authorizing the Internal Revenue Service (IRS) to request information from HSBC Bank USA, N.A. about U.S. residents who may be using accounts at The Hong Kong and Shanghai Banking Corporation in India (HSBC India) to evade federal income taxes, the Justice Department announced today.

The government filed a petition with the court to allow the IRS to serve what is known as a “John Doe” summons on the bank. The IRS uses a John Doe summons to obtain information about possible tax fraud by people whose identities are unknown. If approved, the John Doe summons would direct HSBC USA to produce records identifying U.S. taxpayers with accounts at HSBC India, many of whom are believed by the government to have hidden their accounts from the IRS.

And if anyone is getting the idea that this is an HSBC/Hong Kong/India issue, Doug Shulman would like you to know that this is not personal, it’s simply the IRS doing the Treasury’s dirty work, “The IRS continues to focus its attention on international tax evasion,” the Commish said. “This summons request is focused on obtaining more information to help us determine if additional actions are needed. As I’ve said all along, our international efforts are not about just one country or one bank – it’s about our wider effort to ensure compliance with the nation’s tax laws.”

The Treasury isn’t going to fill itself now, is it?

[via WSJ]

The IRS Claims That Wind Broke This Sign

Dan Zak of the Washington Post posted this photo last night wondering how such a thing could happen – wind or some angry taxpayer who felt it necessary to destroy public property:


If you live in the District, you’re probably familiar with them and DZ illustrates:

They look bland and procedural and definitely of the post-Watergate era. And they look and feel sturdy. Like it would take a hurricane to snap one in half. Winds did reach 65 mph on Feb. 25 in the D.C. area, and the IRS says it has security footage of the ensuing decapitation-by-Mother Nature at the southwest corner of 12th Street and Constitution Avenue NW.

They will not show the footage to us.

Okay, so that’s an obvious non-denial denial. Some pointy-headed engineering types from the Universities of Maryland and Virginia that gusty winds can’t be ruled out but come on. They’ve been there since late 70s? What’s the useful life on one of those bad boys? It’s gotta be 40 years, no? Anyhoo, Zak got the opinion of a tourist from Lubbock, Texas who says it’s definitely vandalism, “Because it’s the IRS. [DUH, *eyeroll*]”

Did vandalism or wind claim an IRS sign downtown? [WaPo]

IRS Commish Admits That a Government Shutdown During Tax Season Would Be Kinda Weird

The head of the IRS said Thursday that a government shutdown during tax season would be a challenge the agency has never confronted before — and one that would become more complicated as the April filing deadline draws closer. Doug Shulman, the IRS commissioner, also signaled at a House Ways and Means subcommittee hearing that his agency was discussing how to address a potential shutdown with the Obama administration, though he did not spell out any details of those talks. “We run a $13 billion financial services operation, so the idea of stopping it for a few days or a few weeks is strange,” Shulman said, adding that he was hopeful, based on ongoing negotiations, that a shutdown could be averted. [The Hill]

This Wouldn’t Do Much for the Popularity of IRS Agents

Under a GOP-backed bill expected to sail through the House of Representatives, the Internal Revenue Service would be forced to police how Americans have paid for their abortions. To ensure that taxpayers complied with the law, IRS agents would have to investigate whether certain terminated pregnancies were the result of rape or incest. And one tax expert says that the measure could even lead to questions on tax forms: Have you had an abortion? Did you keep your receipt? [MoJo]

Tim Geithner: Cutting IRS Budget Hurts Taxpayers

FYI to any members of Congress who still think it’s a good idea:

Treasury Secretary Timothy Geithner on Wednesday said potential cuts to the Internal Revenue Service budget would damage the agency’s ability to collect revenues. “Any substantial cuts to the IRS budget will hurt revenue collection and service to taxpayers, resulting in unanswered phone calls and letters,” Geithner said in the text of remarks prepared for a House Appropriations subcommittee hearing.

Never mind the fact that taxpayers are getting a lot of bang for their buck:

“The customer service and enforcement programs at the IRS provide one of the best values in the federal government,” Geithner said.

What else do you need to know?

Geithner: Cuts To IRS Budget Would Hurt Revenue Collection [Dow Jones]

Three Ways to Get on the IRS’s Good Side This Tax Season

All this resentment of the IRS has got to stop. It’s counter-productive, cowardly and most of all, annoying. The gang at Boulder, Colorado-based Webroot understands that you shoo away more IRS flies with honey than with vinegar, so they’ve made a simple suggestion: “This tax season get on the IRS’s good side.”

How does one do that, you ask? Well, Webroot has given you three options to show some love:


1. Send a flower to Doug Shulman – Behind that rough exterior, The Commish is a softee. Sign up for this option and a flower will be added to the bouquet and your name included on a card that will accompany warm his bureaucratic heart. You do have the option of donating a flower anonymously if you’re still not sure Dougie is nothing but a taxborg that gets plugged in every evening.

2. Pro-IRS Stamps – Don’t you just love it when you get unique stamps in the mail? Imagine how good you would feel if the stamp had a tattoo heart with your name in the middle of it. I’ll bet the IRS would like it if you used one to mail in your tax return. Those “Forever” stamps are boring anyway.

3. Like the IRS on Facebook – Seriously, people. Is there a better way to show your appreciation? Besides, I’ve seen what some of you ‘Like’ on FB and quite honestly, it’s far more embarrassing than liking the IRS.

While the IRS Was Collecting Young Buck’s Scarface Poster and Various Other Material Possessions, They Allegedly Found a Gun

Normally, as 2nd Amendment enthusiasts will tell you, this would be NBD but if you were convicted of stabbing someone in 2004, then it’s a big no-no.

According to an indictment unsealed Monday, he’s charged with being a convicted felon in possession of a .40-caliber pistol and ammunition. Federal authorities said all this happened on or about Aug. 3. That was about the same time federal agents raided his Hendersonville home. Records that Channel 4 obtained showed that the 29-year-old owed about $300,000 in taxes dating back to 2006.

YB pleaded not guilty to the charges. As you may recall, the IRS rounded up Royal Copenhagen Bear Figurines, a Tennessee Titans refrigerator, Louis Vuitton gun holster among other things, with the intent to auction them off. Mr Buck didn’t take this very well, got his lawyer to stop the auction and he subsequently sued the Service for his inability make a living. The IRS was not impressed and now they seem to be done playing games; YB faces ten years if convicted.

Nashville Rapper Facing Federal Charges [WSMV]

The Ol’ Send-an-Envelope-Filled-with-White-Powder-to-the-IRS Trick Still Works for Some People

Besides bomb threats, another sign that the traditional tax season is in full swing is when an IRS office receives an envelope containing white powder. Today, the location in Holtsville, NY got the pleasure.

Nearly 60 workers at an Internal Revenue Service office on eastern Long Island were briefly evacuated after an employee opened an envelope containing a suspicious powder. An IRS spokeswoman says the substance was later determined to be baking soda.

No injuries were reported and it was less than hour before everyone was back to work, which barely enough time to get a bagel and a second cup of coffee. It makes us wonder if any IRS employees secretly wish for a dangerous substance to come in the mail to get out work. Day after day thinking, “God, this is awful. Maybe some anthrax will show up today. Am I that lucky? Probably not. But maybe if I concentrate real hard some will show up. [closes eyes, folds hands] Come on, anthrax. Just this once. Come on anthrax.”

Suspicious powder at NY IRS office is baking soda [AP]

Senators Introduce Bill That Would Require IRS to Produce 310 Million (or so) Receipts

Plenty of horrendous ideas get introduced inside the hallowed walls of Congress but the latest submission from Bill Nelson (D-FL) and Scott Brown (R-MA) ranks right up there:

Sens. Bill Nelson (D-Fla.), chairman of the Senate Finance subcommittee on Fiscal Responsibility and Economic Growth, and Scott Brown (R-Mass.) introduced the measure Wednesday that would require the IRS to provide each taxpayer with an itemized list, similar to a grocery store receipt, that shows where their payroll and income taxes are spent. “Taxpayers have a right to know where their money goes, how much Uncle Sam is borrowing on their behalf, and what they get in return for it,” Nelson said.

Yeah, no problem. New responsibilities under healthcare reform, chasing offshore accounts, not to mention your everyday tax compliance and enforcement. This will be a piece of cake since the the Service’s budget is getting slashed.

Senators introduce bill that would provide detailed tax receipt [The Hill]

Man Arrested for Threatening to Bomb IRS Building Would Erect Monument to Austin Plane-crasher ‘If He Had Any Extra Money’

And what’s the reason 64 year-old Leonard Mackey doesn’t have the dough to put up a statue of domestic terrorist, Joseph Stack? It’s not entirely clear but you can bet the IRS has something to do with it:

Leonard C. Mackey, of 1025 W. Wilkes-Barre St., went to the IRS office at 3 W. Broad St. around 3 p.m. saying he was “sick and tired of the IRS harassing him.” He demanded a copy of a 2008 letter indicating he no longer had money, a news release from police said. […] Mackey went on to say he would erect a monument to the guy who blew up the IRS building in Texas. That is, if he had any extra money. As he left the office, he said to the security guard who had asked him on the way in if he had a firearm that “you didn’t ask me about bombs. We have them downstairs.”

It’s sort of cute that he sabotaged himself like that.

Bethlehem: Tax dispute erupts with bomb threat, evacuation and arrest [The Morning Call]

IRS Eases Up on the Tax Liens for the Little People; Celebrities Not So Lucky

Commissioner Doug Shulman said in a statement today that the agency would make it easier for taxpayers to seek withdrawal of liens when they pay a tax debt or make arrangements to pay in installments for debts of less than $25,000. The agency also raised the dollar thresholds before liens are typically filed. “We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start,” Shulman said in the statement. “These steps are good for people facing tough times, and they reflect a responsible approach for the tax system.” [Bloomberg]

An IRS agent walks into a CFO’s office…

This was sent to me by my 69-year-old landlord who is spending his winter in Florida and we humbly present it to you now for your reading pleasure during this lovely busy season.

At the end of the tax year, the IRS office sent an inspector to audit the books of a local hospital. While the IRS agent was checking the books he turned to the CFO of the hospital and said, “I notice you buy a lot of bandages. What do you do with the end of the roll when there’s too little left to be of any use?”

“Good question,” noted the CFO. “We save them up and send them back to the bandage company and every now and then they send us a free box of bandages.”

“Oh,” replied the auditor, somewhat disappointed that his unusual question had a practical answer. But on he went, in his obnoxious way. “What about all these plaster purchases? What do you do with what’s left over after setting a cast on a patient?”

“Ah, yes,” replied the CFO, realizing that the inspector was trying to trap him with an unanswerable question. “We save it and send it back to the manufacturer, and every now and then they send us a free package of plaster.”

“I see,” replied the auditor, thinking hard about how he could fluster the know-it-all CFO. “Well,” he went on, “What do you do with all the leftover foreskins from the circumcisions you perform?”

“Here, too, we do not waste,” answered the CFO. “What we do is save all the little foreskins and send them to the IRS office, and about once a year they send us a complete dick.”

Congressman Todd Akin Doesn’t Want ‘A goon squad of 5,000 IRS agents tromping around the country’

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AS PREDICTED! Republican Congressman Todd Akin of Missouri could barely wait 48 hours before falsely asserting that the new 5,000 employees at the IRS will all be agents that will be breaking down the doors of every freedom loving American to fleece them for every last dime.

“Don’t call me Clay” Akin was giving Treasury Secretary Geithner a hard time about President Obama’s budget yesterday when he thought it necessary to start calling people – Americans that pay taxes, no less – names:

The back-and-forth began after Akin questioned Geithner about President Obama’s fiscal 2012 budget, which includes spending increases for the IRS that could reportedly lead to thousands of more staffers at the agency. The Missouri congressman said he thought energy might be better spent simplifying the tax code. “Not to mention the fact that it’d make us all look better if we don’t have a goon squad of 5,000 IRS agents tromping around the country with the economy the way it is,” Akin said.

Right. Because you looking good is what’s most important, right Congressman? Geithner, not really impressed with a two-bit fly-over representative giving people in his house shit, tried explaining to him that most of the new employees would work in “customer service or information technology [rather] than enforcement” but this fell on deaf ears:

[T]hat argument did not assuage Akin very much. “’I’m from the IRS. I’m here to help you,’” the congressman said. “That’s hard to sell in the state of Missouri.”

Akin probably didn’t think to ask the employees of the nine IRS locations in Missouri about this. Maybe some of them would be able to explain how, you know, working for the IRS is how they put food on the table, put clothes on their kids, etc. etc. etc. You know, the rhetoric you like to use, Congressman.

Republican calls IRS agents a ‘goon squad’ [The Hill]

Oh, By the Way, There’s Still a New 1099 Reporting Requirement for 2012 in the Proposed Budget

As you know, the bane of small businesses across this great land, the 1099 reporting requirement, was repealed by the Senate earlier this month. Despite some maneuvering amongst Senators to be crowned the biggest champion of small business, it seems that everyone agreed that this little sliver of the healthcare reform bill needed to go.

Now the House has taken up the charge but The Hill reports on a portion of President Obama’s proposed budget that is already annoying the hell out of some:

President Obama’s fiscal year 2012 budget still contains a portion of the 1099 provision while eliminating the requirement for goods but retaining it for services. The proposal is expected to raise about $10 billion over 10 years.

The National Federation of Independent Business blasted the new 1099 proposal as a “bait and switch.”

“We are disappointed that the president has not clearly heard what small businesses are saying,” NFIB senior vice president of Federal Public Policy Susan Eckerly said in a statement. “We at NFIB remain committed to helping the president and Congress understand the needs of small business as the budget process moves forward.”

But before you get your panties in a bunch, the Office of Management and Budget can explain:

“The administration recognizes the burden that this expanded information reporting provision will put on small businesses and proposes to repeal the provision,” the document says. “Instead, the administration proposes that a business be required to file an information return for payments for services or for determinable gains aggregating to $600 or more in a calendar year to a corporation (except a tax-exempt corporation); information returns would not be required for payments for property.”

If you call that an explanation.

Ways and Means schedules mark up of 1099 provision [The Hill]

Be Prepared for a New Flood of GOP ‘IRS Agents Will Be Invading Your Homes’ Rhetoric

President Barack Obama proposed increasing the budget for the Internal Revenue Service by 9.4 percent to hire more than 5,000 new employees, most of whom would pursue tax cheats. The president’s fiscal 2012 budget released today sets funding for the tax-collection agency at $13.3 billion, an increase of $1.1 billion from 2010, the last time a full appropriation was made for the IRS. Almost half of the increase, or $460 million, would support the agency’s tax-enforcement programs. Under the plan, the IRS would focus on fighting tax evasion through the use of offshore accounts and cheating by corporate and high-wealth taxpayers. It also would seek out fraudulent tax preparers. [Bloomberg]

IRS: Okay, Fine, Breast Pumps Are Medical Expenses

Apparently Doug Shulman & Co. have backed off the idea that a mother’s milk simply promotes a baby’s nutrition (which is a necessity not a medical condition) akin to orange juice preventing scurvy.

Breast pumps and other lactation supplies are now tax deductible as medical expenses, the Internal Revenue Service said on Thursday, February 10, reversing a long-held position. The new ruling means that families can use pre-tax funds from their flexible spending accounts and health savings accounts for these supplies. Breast pumps typically cost more than $200 and, along with supplies, can run as high as $1,000 in the first year of a baby’s life.

Breast-feeding supplies deductible, IRS rules [Reuters]

Earlier:
What Does the IRS Have Against Boobs?

IRS Announces New ‘Come Out with Your Hands Up Holding Your Offshore Bank Account Number’ Program

Back in 2009, the IRS ran a relatively successful program that encouraged those with offshore bank accounts to cop to their shady tax evading ways and all would be forgiven…with the exception of a small penalty of the assets stashed out of sight. This particular program was primarily focused on UBS customers and for those not willing to play ball, the IRS and DOJ put the screws on the Swiss bank and got them to name names.

The IRS had been hinting that maybe Offshore Amnesty 2.0 was coming and today, they made it official.

From the Times:

The Internal Revenue Service announced a new initiative on Tuesday intended to lure tax evaders, but with stiffer penalties than those offered by a previous program. Under the initiative, Americans with hidden offshore accounts have until Aug. 31 to come forward voluntarily and report the accounts to the I.R.S. in exchange for penalties that, while below what they would ordinarily pay, are still higher than those offered in an earlier amnesty program.

The good news is that the IRS swears – SWEARS! – that you’ll come to no harm, in the criminal sense:

The program makes clear that Americans who come forward will not to face prosecution for tax evasion — something tax lawyers say was more of an open question under the previous program. “When a taxpayer truthfully, timely and completely complies with all provisions of the voluntary disclosure practice, the I.R.S will not recommend criminal prosecution to the Department of Justice,” the I.R.S. said.

So unless the possibility of jail time sounds inviting, we suggest you get on this. We’re all dreaming of August right now.

I.R.S. Offers New Amnesty Deal for Offshore Accounts [NYT]

You Know It’s Officially Tax Season When Someone Threatens an IRS Office with a Bomb

Amiright? Apparently, this guy in Sarasota, Florida was just messing with everyone but, of course, that still doesn’t go over very well with the local authorities.

“About 11:45 a.m. a 59-year-old man walked into the center with a briefcase and a box,” said Sarasota County Sheriff’s Office Capt. Paul Richard. “He placed it on what’s been described to me as a counter top and told personnel there that he had a bomb,” Richard said. IRS security personnel at the office managed to subdue the man and then hand him over to deputies. The office houses 60 employees, who were evacuated during the episode. The sheriff’s office bomb squad later confirmed there was no explosive or destructive device in either the box or the briefcase.

Man threatened Sarasota IRS office with bomb [TBO]

Your Creepy IRS Agent of the Day

Another poorly thought out advance by a man on a woman worthy of these pages.

A 60-year-old IRS agent has been ordered to pay $476,000 in damages after a former tenant sued him for invasion of privacy. The ruling was issued during a recent civil trial in Broward County. According to records, 27-year-old Miranda Goldston found a hidden camera in a DVD/VCR player that came with the three-bedroom townhouse she rented from Kenneth Ryals. The tiny camera hidden in the DVD/VCR was pointed a Goldston’s bed.

Earlier:
Accountant Seeking Sexual Favors Rebuffed; Pelted with Flip-flops

Man Who Claimed $23 Worth of Vegetables Triggered an IRS Audit, Explains His Rationale

A couple of weeks ago, we brought you the tale of Don Dunklee, who claimed that he was audited by the IRS for a paltry $23 in vegetables from his garden. At the time, w Mr Dunklee could have come to such a strange conclusion, considering that it’s pretty obvious the IRS’s efforts at closing the tax gap would be spent in better places than the organic vegetable farmer dynamic.

And as it happens from time to time, the subject of our post reached out to us directly (Big 4 CEOs should take a hint) to explain the situation further.


You see, Don – who is a bit of inventor but not when it comes to stories about tax audits – farms as a hobby and a woman who accepted some vegetables from him stuffed a wad of cash in his pocket that he reluctantly accepted:

I work off farm for Walgreens as does my wife. We reported our entire incomes from our employer as well as the $23, and used only the standard deductions provided by the IRS as we do not have enough “expenses” to write off deductions. The $23 was a lady looking at starting her own organic farm who I refused money from. She insisted to the point she would have been offended had I not kept the money she shoved in my pocket. I kept the cash out of respect to her and reported it as additional farm income. I have a 23 acre farm that I have been building for 27 years with the infrastructure so I can have a farm business when I retire in a few years. People visit my farm to see my off grid solar/wind system, my solar charged electric scooter [Ed. note: see above], and my organic vegetable production. I give away any vegetables anyone wants as I grow much more than I can harvest for myself, in part to learn how to produce enough to make a small retirement income later on, and I like to show off my veggies/farm/lifestyle.

Then Don informed us that he fell victim to the Geithner tax malady:

I do my own taxes. I tried TurboTax for the first time (won’t again) and the $23 was reported, rightly so, as farm income. (investigator suggested I can make up to $400.00 and should consider reporting on the other income line rather than farm income during the end of our interview when she agreed our taxes were correct and made no changes). TurboTax created a form F, farm income for the $23, reported. I claimed no expenses for growing, as I do not have a true farm business.

Then Don gets to the crux of the argument behind his belief that the audit was not “random”:

Farming is my passion/hobby. Had our audit been a true random audit I believe we would have had a general agent and general tax officer doing the audit with questions and info requested related to all of my employment reported. I believe this was a targeted audit as the title of the investigator was “small business and self employed” which does not fit the nature of my return. Her questioning was often off topic from the particulars of my return (fishing?). I would not have a problem if the IRS would be honest and say something to the effect, “we would like to audit your return as we see some irregularities we need clarified.” This might help build trust in the IRS. Knowing they have powers that some consider above or outside of the law in how they deal with taxpayers I was worried. The entire process is intimidating. I do not like feeling like a criminal for being honest. I could not afford legal help, which their literature suggested, further intimidating information they provide creates the impression one is in trouble. I hope this helps clear it up a bit for you.

Giving this a little more thought, we aren’t really surprised since the IRS has shown the willingness to shake down taxpayers for a sum that wouldn’t buy you a Hershey bar in a Mad Men episode. Don told us that he doesn’t have any ill will towards the IRS but he wonders if sometimes they can be a tad misguided, “I do have a lot of respect for the IRS and their mandated task, however I wonder if their very task generates a lot of problems.”

Not sure if the IRS is into self-reflection but that’s why we have TIGTA, s’pose. Thanks to Don for reaching out to us and now that his solar-powered scooter is getting a little more exposure, KPMG (and other firms looking to reduce their carbon footprint) may have a decent alternative to the sherpas.

Taxpayer Advocate Nina Olson Would Like the IRS to Quit Slapping Liens on People

Presumably this means celebrities too! That is, until the IRS can show that it’s actually an effective means of collection and not so ‘hard core.’

Olson has accused the agency of relying too heavily on an automated “one-size-fits-all approach.” She said the agency misguidedly files liens against people who have no money and no assets.

“Absent data that show liens make a meaningful contribution to revenue collection and especially in this economy, I find it unacceptable that the IRS continues to torment financially struggling taxpayers in this way,” Olson wrote in a news release accompanying the report.

Perhaps Olson has a point but then Robert Snell over at Tax Watchdog might not have a job and we’d hate to see that happen. The guy is like Raisin Bran™ on the celebrity tax deadbeat.

IRS’s ‘hard-core’ collection tactics needlessly harm taxpayers, report says [WaPo]

Some People Are Bent Out of Shape Over the ‘Compressed’ Tax Season

Earlier in the roundup, we linked to The Hill story that brought the unfortunate news that anyone itemizing expenses their tax return will “have to wait until mid- to late February to file their returns.”

The IRS is acutely aware of the problem but lucky for all of you, Emancipation Day falls on April 15th this year (and is effectively a national holiday for tax purposes), so the Service extended filing deadline is Monday, April 18th:

The Internal Revenue Service today opened the 2011 tax filing season by announcing that taxpayers have until April 18 to file their tax returns. The IRS reminded taxpayers impacted by recent tax law changes that using e-file is the best way to ensure accurate tax returns and get faster refunds.

Taxpayers will have until Monday, April 18 to file their 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15. By law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have three extra days to file this year. Taxpayers requesting an extension will have until Oct. 17 to file their 2010 tax returns.

The IRS expects to receive more than 140 million individual tax returns this year, with most of those being filed by the April 18 deadline.

Despite the extra 72 hours of fun, some people would rather focus on this “mid- to late February” business, namely, John Ams of the National Society of Accountants, as reported by NPR:

“What this has done is effectively compress the tax season from three months to just six weeks,” says John Ams, executive vice president of the National Society of Accountants.

Now, we don’t know Mr Ams backgound but his bio over at the NSA states that he is a Chief Audit Executive and we have no doubt that he’s a more than capable accountant. But most abacus wielders we know are pretty familiar with deadlines snafus, doing more work in less time and waiting on additional information. In fact, any accountant worth their salt has plenty of stories of pulling emergency all-nighters for week(s) to make sure a project gets accomplished on time only to get the very last piece of data needed at the 11th hour. NOW, when the IRS explains that Congress – who is only reliable for being unreliable – has forced their hand into this less-than ideal predicament, apparently it’s okay to get all huffy about it. [breathe] Look, the majority of the work on these tax returns can simply be done and then the 1040 jockeys will just wait for the rest of the information. It isn’t – as it’s popular to say – rocket science.

But forget about the shrinking tax season, Mr Ams wants you to think about the Luddites!

Some of the changes to the tax code will be a headache for tax preparers and their clients at the busiest time of the year, Ams says. One rule, for example, requires anyone preparing more than 100 returns per year to file them electronically, while the other forces tax preparers to get an identification number.

“Electronic filing is great and most accounts [sic] love it. But there are many clients out there, in particular the elderly, who still believe computers are the work of the devil,” Ams says. “They don’t want sensitive data like tax information going over the Internet.”

If people don’t want to e-file, Ams says, “we’re supposed to say: ‘Here’s your form. See ya.'”

Christ. We know grandmothers that use text messaging. Plus, CPAs have been saying “Here are your forms. Sign here, here, here and here. Oh, and here. See ya next year (but only if you pay),” for decades and people have made due. Can anyone explain how this is still a problem?

IRS Kicks Off 2011 Tax Season with Deadline Extended to April 18 [IRS]
The Tax Man Cometh, But This Year He’ll Be Late [NPR]

Another Last Minute Gift Idea for That Special Tax Nerd in Your Life

Just make sure they have a French cuff shirt.

[via TaxProf]

Boston Scientific Corp. Will Gladly Spend ‘Several Years’ Taking Issue with the IRS’s Notion That They Owe $525 Million

It’s not that they don’t have the money; it’s the principle of the matter:

The Natick, Mass., medical-device company, which purchased Guidant in 2006, said it received a “notice of deficiency” from the IRS on Dec. 17 relating to the 2001 through 2003 tax years for Guidant and subsidiary businesses. “The incremental tax liability asserted by the IRS with regard to the Guidant claim is $525.1 million plus interest,” Boston Scientific said in a filing with the Securities and Exchange Commission.


Besides, the issue is related to transfer pricing which isn’t exactly cut and dry, so the company figured they’ll explore the differences they have. Besides there’s no rush to pay up:

The company said the main issue under dispute is transfer pricing linked to technology license agreements between certain domestic and foreign Guidant subsidiaries.

“We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment,” the company said.

It noted that no payments on this assessment are required until the dispute is definitively resolved, which could take “several years” based on experiences of other companies.

Boston Scientific Says IRS Seeks $525.1 Million in Taxes [WSJ]

Area Man Under the Assumption That Firing an IRS Examiner Was Within His Powers as an American Citizen

Mining obscure tax court cases for blog posts during this slow time of year, Joe Kristan discovered this little gem:

In the April 4, 2008, letter petitioner stated that respondent [IRS] had repeatedly refused to answer his questions regarding Code sections that define income and property received as income and establish respondent’s “Delegated Constitutional and Legislated Lawful authority”. The letter contained meaningless language, for example: “I do hereby give you notice that you, and all you are, are Fired from any and all representation of my private affairs without recourse“.

CPAs: Start Your Stimulus Engines

Apparently this video is from last year but whatevs. Since the new year is creeping up fast, it serves as a friendly reminder that all the tax jockeys out there carry some heavy responsibility, stimulating the economy year after year.


Okay, let’s forget about the refunds for two. What’s really worth noting is all the CPAs out there scarfing bagels and guzzling coffee from January until March/mid-April because their time is far to valuable to bother going to the grocery store to buy a piece of fruit. Then think about all the late night take-out. The profession is single-handedly keeping bagel shops, pizza joints and various Asian restaurants in business year after year.

Then Joe Kristan makes the following point:

Never mind that the refunds are a result of overwithholding, or anti-stimulus, the rest of the year. Actually, in a way, it underlines how all “stimulus” spending really works: it takes our money all year, and we’re supposed to feel stimulated when they give a little of it back.

So in reality, the only stimulus is CPAs giving a boost to various segments of the restaurant industry. It’s not ideal but it’s an annual boost they can rely upon, nonetheless.

[via Tax Update Blog via Tax Lawyer’s Blog]

The IRS May Want to Stock Up on Shotguns

The IRS is not the most popular government agency. This is not news. What is a developing problem is more and more people feel that reacting to the Service through with violence is somehow an acceptable option. Can we expect another lunatic to fly a plane into a building? Hard to say. But Joe Kristan did warn us about this.

And now the Treasury Inspector General has informed Tim Geithner that this will be one of the “challenges” the Service can expect in the new year:

In addition to safeguarding a vast amount of sensitive financial and personal data, the IRS must also protect approximately 100,000 employees and more than 700 facilities throughout the country. Attacks and threats against IRS employees and facilities have risen steadily in recent years.

The February 2010 attack on an IRS facility in Austin, Texas, is a stark reminder of the dangers that IRS employees face every day in trying to perform their jobs. Animosity towards the tax collection process is nothing new, but the Austin incident and other recent events point to a surge of hostility towards the Federal Government. According to the Anti-Defamation League, the militia movement has almost quadrupled in size in the past two years, growing to more than 200 groups across the country. The Southern Poverty Law Center has reported that anti-government and hate groups have grown from 149 groups in 2008 to 512 groups in 2009, a 244 percent increase. The ongoing public debate regarding the recently enacted health care legislation may also lead to increased threats against IRS employees and facilities, underscoring the need for continuing vigilance in the area of physical security.

It’s good to know that our country is filled with so many level-headed folks that creating hate groups has become a relatively popular thing to do.

IRS Commish: There’s a Big Difference Between Hiding Money Offshore and Sophisticated International Tax Planning

In a speech before the 23rd Annual Institute on Current Issues in International Taxation, Washington, DC, Doug Shulman (link not yet available on the website) explained how rich dudes schlepping money to Switzerland (but not any more!) or Hong Kong is not even close to the same thing as “Google’s Irrationally Exuberant Tax Strategy.”

As I have said before, I draw a sharp distinction between rooting out individuals hiding their money in foreign tax havens and the IRS and Treasury creating ground rules for multinational corporations operating in a global environment.

It’s no secret that multinational corporations engage in sophisticated international tax planning. We recognize that much of this is perfectly legal and many businesses are trying to get it right. Of course, some are pushing the envelope too far and it’s here that we have issues. Our goal is to differentiate between the two; to be on top of our game in this analysis; and to ensure corporations are compliant with the tax law and stay compliant.

Wesley Snipes’s Prison Sentence Seems Pretty Fair

After suffering in tax and appellate court purgatory for several years, Wesley Snipes is finally reporting to prison today for his conviction of willful failure to file tax returns. There’s a whole slew of stories out there on the subject because a celebrity is going to prison, in case you weren’t aware, is important news.

However, as we told you about last week, some people aren’t convinced that the sentence is fair.

Responding to a post by Tim Cavanagh at Reason, rather than embrace mostly inflammatory nonsense, our friend Joe Kristan writes an objective analysis to get to the bottom of the debate:

Mr. Snipes was convicted of three counts of willfully failing to file tax returns for three years. The federal guidelines for prison sentences on tax crimes are largely based on the “tax loss” determined for the crime. Mr. Snipes’ “tax loss” was determined to be over $40 million, which would by itself indicate a sentence of at least 78 months – 6 1/2 years — under the guidelines. Since the maximum sentence for three counts of failure to file is the three years he got, the sentence is actually smaller than the guidelines would indicate.

Now, you may be saying to yourself, “The sentence is longer because a nasty judge is making an example out of one of the most important American artists in vampire cinema!” Joe checked into that too:

But Mr. Snipes still has a legitimate complaint if he’s the only person getting jailed for criminal failure to file, or he’s getting a much longer sentence than others. Is his sentence exceptional?

I don’t know of any statistical study of tax sentences, so we’ll go to the Google. (prison failure to file -snipes). The first page of results includes:

Anthony Kevin Slicker: $265,477 tax loss, 12 month sentence for failing to file for 1 year.

Steven A. Roebuck, Dentist: unknown tax loss, two-year sentence for failing to file for two years.

Arlan Turley, Dentist: 18 months, unknown tax loss, failure to file for two years.

Contrary to Tim Cavenaugh, then, other people get the maximum sentence 12-month per-year for willful failure to file, even with much lower tax losses.

Will the culture suffer? That’s up for debate. But willful failure to file taxes still happens to be a crime with punishment guidelines. If Wes was really saving all of us from vampires maybe the judge would have a good reason to make an exception. Although, that could make for a decent screenplay (straight to video, natch). Three years should be enough time to nail it down.

IRS Says Area Man Owes Taxes from His Prepubescent Years

He’s thinking it’s a mix-up and rather than doing something insane (like you might expect), he simply reported it to the local authorities.

A man told Elmhurst police that he owes the Internal Revenue Service $7,000 in back taxes from 1999 to 2000. He suspects identity theft because he was 10 years old and unemployed at the time.

The incident was reported at 11:57 a.m. Nov. 29 at Elmhurst Police Station, police said.

According to the report, the victim received the IRS letter notifying him of back taxes after he filed for 2009. The victim suspects someone used his Social Security number to claim wages in 1999 to 2000, police said.

We didn’t say his reaction wasn’t boring.

IRS Commish Reminds Congress That If They Blow Off Tax Policy, We’ll Have a Giant Mess on Our Hands

There’s a small part of us that hopes the lame-o Congress just throws their hands up and lets all the outstanding tax policy issues expire, just to see what the fallout would be.

While we wish no harm to our practitioner friends like Joe Kristan, watching the pols in Congress squirm from the wrath of the American populace would be rather enjoyable.

Doug Shulman, on the other hand, does not share our impish impulses and wrote a letter to Congressional members on the Senate Finance and House Ways & Mean Committees, reminding them that if they let this one get away, his agency will have one hell of a mess on their hands.


Reuters has some excerpts:

“Of course, if legislation has not passed by the end of this year, our computers will have been programed incorrectly and we will need to delay filing for these individuals,” he said in a letter to the top lawmakers on the congressional committees charged with tax policy.

Realizing that the members might not quite understand what all this crazy-talk means, the Commish gave some details:

“It would be an unprecedented and daunting operational challenge to open the tax filing season under one set of tax laws with respect to AMT and extenders, begin accepting tax returns, and then have the law change,” Shulman wrote.

So essentially, re-doing a bunch of work. Nobody wants that. Luckily for everyone involved, Shulman appears to understand that while dysfunction is standard operating procedure on the Hill, most CPAs prefer providing above average client service.

Just So You’re Aware: Your Experience with IRS Can Now Be Rated on a Scale of One to Five Dog Bones

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight — everything you need to help you prosper and enjoy the accounting profession.

Consumers with a bone to pick with the Internal Revenue Service have the opportunity to share their experiences. Originally designed as an IRS profile database, IRSDoghouse.com has evolved into a free and anonymous Web site where anyone can rate – negatively or positively – their personal and professional experiences with IRS employees.

The IRS certainly holds the tax-paying public to task and now is the time for practitioners and other tax-paying individuals to reward or bite back, according to the site’s creators. Ratings are based on dog bones, with a single dog bone rating as the least favorable; five dog bones is the best rating.


People share personal experiences and can post information about the IRS employee, including whether the employee was helpful, clueless, difficult to work with, or knowledgeable. Reviews allow for character descriptions and other details. In the characteristic section, one reviewer explained that this IRS employee has been a government employee too long. She was clueless, difficult to work with, and would be fired if she worked in the private sector. The IRS employee received one dog bone.

On the other hand, a positive review of five bones reported that the IRS employee was able to negotiate, was fair, helpful, intelligent, and interacted with him in a kind, courteous, and professional manner. This IRS employee demonstrated positive communication skills and a pleasant attitude. He was a pleasure to work with and gave the benefit of the doubt to the practitioner/taxpayer. He also allowed ample time to comply with requests. “This is one of the good guys in the IRS,” the rater said.

The Web site provides people with IRS complaints a safe and anonymous place to vent or to share feel-good stories. And, if people don’t wish to post any comments at all, they can still read about practitioners’ and other tax payer experiences to know what they might be up against.

The site is free to use and is monitored for extreme profanity, hateful comments, and threats, which are removed. The administrator of this site has the authority to remove any posting that is not deemed appropriate.

IRS Commish: Gird Your Loins, Offshore Bank Havens

Yesterday we mentioned that the IRS’s new Global High Wealth Industry Group was putting the screws to the rich via “Audits from Hell.” Today, the Service announced that they were withdrawing the federal court summons against UBS since the Swiss Bank provide 4,000 more names of American clients who had parked funds offshore.

With the announcement, IRS Commish Doug Shulman put those 4k lucky ducks on notice that they should prepare for their personal audit inferno:

The IRS on Tuesday withdrew its Miami federal court summons seeking identities of suspected U.S. tax dodgers at UBS after receiving more than 4,000 names as required under an August 2009 agreement that also included the Swiss government. Each of those people expect what Shulman called a “full-blown audit” and many are likely to be charged criminally.

But that’s not all! Clearly, not satisfied with the example made of UBS, the Commish made a promise to everyone that the Service’s offshore bank raids were just getting started.

This is the close of what I call the first chapter,” IRS chief Doug Shulman told The Associated Press in a telephone interview. “We are actively pursuing a number of other banks and promoters and advisers.”

Shulman declined to get into specifics about ongoing offshore tax investigations, but said: “It’s not just about Switzerland, this is about multiple countries and multiple institutions.”

IRS Unit Fully Intends to Make Rich People’s Audit Experience as Unpleasant as Possible

As you my have heard, being mega-rich these days has its disadvantages, including but not limited to – 1) governments getting overly reliant on the wealthy pitching in with revenues; 2) people giving you a hard time when you buy new toys; 3) your own kind selling you out.

Because times are tough and elected officials are having difficulty convincing anyone that higher taxes for the middle class are a good idea, the affluent are having the unfortunate luck to experience the rigor of the Global High Wealth Industry Group – a new unit within the IRS designed to perform the financial equivalent of a full rectal exam:

The reviews performed so far have been particularly harsh, say attorneys. Investors are being asked to turn over numerous hard-to-get documents in short order. These are “the audits from hell that your grandfather warned you about,” says Charles P. Rettig, a partner at Hochman, Salkin, Rettig, Toscher & Perez in Beverly Hills, Calif.

And don’t think for a second that the Service is putting scrubs on these assignments. Extra-special auditees deserve extra-special auditors:

Miriam L. Fisher, a tax attorney and partner at law firm Morgan Lewis in Washington, says the audit teams comprise “A-list examiners” drawn from around the country who are knowledgeable and experienced with various financial products and industries. The audits are so intensive that each team is handling only a few right now and they aren’t far along in the process, she says.

IRS spokeswoman Michelle Eldridge says the group is looking at “individuals who have a complex set of situations, and looking at the complete financial set up.” She acknowledged that “these cases are full audits.”

Although you would never expect an IRS audit to be as delightful as, say, your average weekend in the Hamptons but haven’t rich people suffered enough? The least the IRS examiners could do is bring something from Maison du Chocolat to bring the tension down a notch.

[via TaxProf]

The IRS Thinks That Young Buck Is a No-Talent Hack with or without the Royal Copenhagen Bear Figurines

The IRS also doesn’t buy the rapper’s attempt to tie the success of his work to the missing assets, questioning the necessity of having “Royal Copenhagen bear figurines” and the afore-mentioned soda machine [Titans!] and games around in order to write hip-hop tunes. [WSJ]

Young Buck Not Satisfied with Keeping Personal Possessions, Suing IRS

If you’re like us, you were crushed by the news of the IRS canceling the auction of Young Buck’s treasures. Whether it was the ‘marijuana leaf picture‘ or the Titans Fridge, the auction really had a lot to offer and it’s a shame – a damn shame – that Mr. Buck’s attorney put a stop to it.

But having your home raided by IRS Agents wielding shotguns (our vision) is enough to get the most passive citizen upset. So if you’re Young Buck, simply getting to keep your material possessions won’t suffice:

Officials said Young Buck is suing the IRS over the raid, saying the government’s response to his tax problems has hurt his ability to make money and pay off his debts.

Got it? The IRS kicked down the doors, made off with all the man’s goods and now his records won’t sell. It has nothing to do with his music sucking.

What Does the IRS Have Against Boobs?

We’re asking this question in a collective sense. Call it a hunch but we’re pretty sure that Doug Shulman votes “T” on the T&A question.

To clarify, we’re talking about breast feeding. More specifically about breast pumps for nursing mothers.

You see, the IRS isn’t convinced that breast-feeding has enough health benefits to qualify as a form of medical care, thus, the pumps are not covered. From a tax/health policy standpoint, the Service is more concerned with teeth (false), skin (clear) and noses (not stuffy).

Denture wearers will get a tax break on the cost of adhesives to keep their false teeth in place. So will acne sufferers who buy pimple creams.

People whose children have severe allergies might even be allowed the break for replacing grass with artificial turf since it could be considered a medical expense.

But nursing mothers will not be allowed to use their tax-sheltered health care accounts to pay for breast pumps and other supplies.

That is because the Internal Revenue Service has ruled that breast-feeding does not have enough health benefits to quality as a form of medical care.

The Times explains that under the healthcare overhaul, “preventive procedures” were going to be encouraged to control costs. Despite the mounting evidence to the contrary, the IRS isn’t budging on the issue:

I.R.S. officials say they consider breast milk a food that can promote good health, the same way that eating citrus fruit can prevent scurvy. But because the I.R.S. code considers nutrition a necessity rather than a medical condition, the agency’s analysts view the cost of breast pumps, bottles and pads as no more deserving of a tax break than an orange juicer.

Because tools that will help a mother feed a new-born human being natural food is exactly the same thing as the Omega 4000. Got it.

Acne Cream? Tax-Sheltered. Breast Pump? No. [NYT]

Max Baucus Promises to Monitor the IRS Until the Tax Gap Is Closed ‘Once and For All’

As soon as you catch your breath from laughing hysterically, feel free to continue.

Max Baucus turns 59 69 on December 11th, so even if you assume that he will have the life expectancy of Robert Byrd that means he’s got 32 22 years of watching the IRS’s every move. Sure, we’re making the assumption that the IRS has a snowflake’s chance in Hell of closing the tax gap but that’s an assumption we’re comfortable making.

The General Accounting Office recently stated that the IRS was using “antiquated techniques” to fight tax evasion and Baucus feels compelled to be on top of the situation until the tax gap is a distant memory.

“This report makes clear the IRS needs to develop a comprehensive strategy to fight complex tax evasion schemes and that more work is needed to close the tax gap,” Baucus said in prepared remarks. “I intend to closely monitor the IRS’ progress to make sure they have an effective strategy to root out this tax evasions and close the tax gap once and for all.”

You may now resume laughing until you soil yourself.

Baucus urges new strategy for IRS to combat evasion [On the Money]

Vast Improvement in Volunteer-prepared Tax Returns Proves That the TIGTA’s Nagging Pays Off

Last year the Treasury Inspector General for Tax Administration came down pretty hard on volunteer tax preparers, noting that 41% of the returns contained errors. As is the IG’s wont, they scolded the IRS to improve this shameless display by volunteers and made some suggestions to help them suck less.

And it worked! Ninety percent of the tax returns prepared by volunteers were accurate thus earning praise from the IG:

Ninety percent of the 39 tax returns volunteers prepared for TIGTA auditors were prepared correctly, a sharp increase from the 59 percent accuracy rate reported by TIGTA in its 2009 review. TIGTA attributed the improvement to an increase in volunteers’ use of the IRS’s Intake/Interview and Quality Review Sheet (Form 13614-C), improved training, and enhanced oversight. Only 5 percent of the 39 tax returns were prepared without use of the Form 13164-C, versus 33 percent in TIGTA’s 2008 Filing Season review, and 22 percent in its 2009 Filing Season review.

“This report is a positive indication of the good work that the IRS is doing for America’s taxpayers,” stated J. Russell George, the Treasury Inspector General for Tax Administration. “I commend the IRS on the progress it has made in helping volunteers accurately fulfill the very important task they assumed.”

This isn’t the first time that the TIGTA has managed to give the IRS credit for doing a decent job. Last month J. Russell George managed to give tepid kudos to the Service for providing satisfactory service at assistance centers but also reminded everyone that a mind-numbingly complex government bureaucracy can always get better. They’re blowing off the deaf and mute, after all.

Jacques Cousteau’s Son Owes IRS $3 Million

Robert Snell over at the Tax Watchdog has another tax delinquent scoop and for the first time – as far as we can remember – it involves a dashing adventurous type as opposed to your run-of-the-mill hip-hop artist or Nicolas Cage.


Jean-Michel Cousteau (whose beard has to be the inspiration for Steve Zissou, even though the film is a parody of the old man) owes the IRS and the State of California around $3 million from a slew of liens:

• The IRS filed a $109,768 lien against him July 20.
• The IRS filed a $480,061 lien June 22.
• The IRS filed a $600,076 lien June 15.
• The state of California filed a $60,198 lien against him April 29.
• The IRS filed a $212,748 lien Dec. 16, 2009.
• The IRS filed a $238,852 lien Oct. 15, 2009.
• The state of California filed a $41,860 lien Oct. 8, 2009.
• The IRS filed a $193,496 lien April 14, 2009.
• The IRS filed a $187,423 lien April 14, 2009.
• The IRS filed a $518,227 lien April 6, 2009.
• The IRS filed a $396,586 lien Feb. 1, 2008.

Jesus, man. No room for a CPA on your boats? We realize that some have weight issues which could cause a problem but just throw them in the water regularly and they’ll shed the extra pounds in no time.

Ocean explorer underwater on taxes [Tax Watchdog]

Deadline Watch ’10: Happy October 15th!

Along with AG’s friendly reminder about the drop-dead deadline for nonprofits today, we’d be remiss if we didn’t call attention to the significance of October 15th deadline.

Maybe you finished things up earlier in the week and today is simply a formality but for many, today is a frantic mishmash of signatures, phone slamming, desperate, last minute emails and – for the holdouts on electronic filing – trips to the post office.


Sure you’re not getting the attention bestowed on April 15th or Chilean miners but – hey! – we remembered you and that should count for something.

So whether you’re finishing up a 1040, a benefit plan’s Form 5500 or converting some poor sap’s IRA, finish up ASAP and go blow off some steam. Another year down.

Earlier:
Deadline Watch ‘10: Happy September 15th!
See also:
Don’t miss these Oct. 15 tax deadlines! [DMWT]
Extended 1040s and Individual NOL Carryback Elections Are Due Today! [Tax Update Blog]

Rest Easy: The IRS Is Preparing for IFRS

For the first times since we started paying attention, the TIGTA is simply putting everyone on notice that the IRS is on top of this IFRS thing. No “You suck at this IRS” or “Here’s a list of things you should considering doing if you are interested in not sucking any more, IRS.” Simply, “Here’s what they’re doing. Have a nice day.”

The IRS began developing plans for strategic and operational activities related to the adoption of the IFRS in 2009.

TIGTA found that the IRS: is training employees about IFRS concepts and potential issues; working with the tax preparer community to identify and outline IFRS implementation concerns; and developing procedures to address issues related to IFRS conversion efforts.

“The IRS is appropriately laying the groundwork for its increased oversight of international taxation by gaining an understanding of the International Financial Reporting Standards,” said J. Russell George, the Treasury Inspector General for Tax Administration.

TIGTA did not make any recommendations in this audit and the IRS did not provide any comments on a draft of the report.

Doesn’t quite feel right, does it?

The IRS Is Taking Action to Address the Impact That International Financial Reporting Standards Will Have on Tax Administration [TIGTA]

TIGTA Concerned That IRS Is Blowing Off Deaf, Mutes (and Presumably Deaf-Mutes)

The IRS sucks at a lot of things. Given.

Thankfully we have Treasury Inspector General of Tax Administration to inform us about said failures opportunities for improvement.

But today’s news that the IRS isn’t doing enough to help our hearing and speech-impaired friends is especially disheartening to the TIGTA overlords. They can (somewhat) understand providing crappy service to regular Americans (try reading the instructions people) but if you’re unfortunate enough to be without speech or hearing, the IG felt obligated to point out the IRS’s shortcomings:

TIGTA performed an audit to evaluate both the IRS’s customer service toll-free telephone access during the 2010 Filing Season and the access and service it provided to hearing and speech-impaired taxpayers. TIGTA found that the IRS exceeded its overall performance measurement goals by 2.3 percent. However, the Level of Service for the TTY/TDD toll-free telephone line for the 2010 Filing Season was just 8.8 percent, meaning that only 8.8 percent of calls placed using the TTY/TTD successfully reached an IRS assistor. The total dialed attempts for the TTY/TDD product line during the 2010 Filing Season were more than 350,000; however, IRS assistors answered only 339 of those calls.

“Our report found that far too few hearing and speech-impaired taxpayers successfully reached an IRS assistor,” said J. Russell George, the Treasury Inspector General for Tax Administration. “The IRS must do a better job of ensuring that all Americans have equal access to its services,” he said.

Actually, that is pretty shitty service. Even by IRS standards.

The IRS Could Improve Toll-Free Telephone Assistance For Hearing and Speech-Impaired Taxpayers [TIGTA]

The IRS Isn’t Interested in Delaying the Issuance of Potentially Bogus Refund Checks

The Treasury Inspector General of Tax Administration sole purpose is giving the IRS shit about anything and everything under the sun. This is known.

We here at Going Concern have a tendency to find the more ridiculous feedback that IG digs up and share it with you. Today however, the TIGTA might be on to something:

WASHINGTON- The Internal Revenue Service (IRS) should make better use of the third-party data it receives from employers, government agencies and financial institutions to reduce erroneous refunds, increase revenues and promote voluntary compliance, according to a new audit report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA found that the IRS:

• Could make better use of available third-party data to identify and prevent more than $1 billion in potentially erroneous refunds;
• Does not have a centralized control point for third-party data requested or received from outside sources; and,
• Lacks a standardized procedure for validating data.
• The report also found that additional validation of taxpayer information using third-party data is needed to validate claims for the Earned Income Tax Credit (EITC) and other credits.

“These problems allow a substantial number of erroneous refunds and credits to be granted that are not allowable by law,” said J. Russell George, the Treasury Inspector General for Tax Administration. “For example, I am troubled that we found a lack of adequate corrective action by the IRS to address improper claims in the EITC Program, which is particularly vulnerable to fraud.”

TIGTA recommended that the IRS freeze refunds for those taxpayers with potentially invalid EITC claims, require valid responses before allowing the EITC claims, and adjust the returns if taxpayers do not respond within a specific time period.

The IRS disagreed with TIGTA’s recommendations to freeze potentially invalid refunds and to create a centralized control point for all third-party data.

Apparently the IRS can’t handle the flood of angry calls from washed up models, degenerate gamblers and dead people demanding their refunds RFN.

Full Report [TIGTA]
TIGTA: IRS Refuses to Stop Issuing $1 Billion in Erroneous Refund Checks [TaxProf Blog]

IRS’s Employment Tax National Research Project Just Getting Started

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

About 2,000 firms around the US have received audit letters from the IRS as part of the agency’s Employment Tax National Research Project (NRP). If your firm isn’t one of them, you can’t breathe easy just yet – the agency has indicated that it include a total of 6,000 firms over three years. What’s more, the “examinations will be comprehensive in scope,” and “employers should have all of their records available to expedite these examinations,” the IRS saidhe project last November.

While similar to an audit, an NRP is designed to “take a snapshot of a given taxpayer population in order to determine the compliance (with tax regulations) within that population,” according to this article by Kevin Packman of Holland & Knight. In addition, the companies studied are chosen at random.

The NRP is the first the IRS has undertaken in 25 years. During that time, the agency noted, business practices regarding employment taxes may have changed significantly, prompting the need for study. In particular, the IRS is looking for data that will allow for a better understanding of just how well corporate tax filers comply with regulations. That way, they can focus their efforts on areas of greatest non-compliance.


Equally important, the agency is looking to boost its knowledge of the “employment tax gap.” The tax gap is the difference between the amounts that taxpayers should pay, and the amounts they actually pay on a timely basis. A gap can come about in several ways: non-filing or failure to file a return; underreporting income or overstating deductions; and underpaying the amounts actually owed.

In 2006, the IRS estimated a gap of $290 billion for the year 2001. The bulk of the gap — 80 percent — was due to under-reporting income, the IRS said.

In an effort to close the gap, the National Research Project will focus on several subject areas, noted the law firm of Morgan Lewis:

Worker Classification: The question of whether a worker is an employee or an independent contractor keeps rearing its head. From the IRS’ point of view, that’s probably because they see a fair amount of misclassification of employees at contractors – which means lost tax revenue. An August 2009 GAO report on the topic referred to a DOL study in 2000 which found that between 10 and 30 percent of firms audited in nine states misclassified at least a portion of their employees. In 1984, the IRS estimated that the misclassification of employees meant a revenue loss of $1.6 billion.

Executive compensation: This includes non-salary compensation, like loans, travel, deferred comp, stock-based compensation and more.

Fringe benefits: The fun stuff some execs get, like the use of company aircraft or cars, club dues, and housing, among other perks, will be under the microscope. The audits may even include benefits like gift cards, employer cafeterias and athletic facilities, Morgan Lewis notes.

Payroll taxes: The agents will examine Forms 941, Employer’s Quarterly Federal Tax Return. As part of this, they will look at backup withholding, next-day deposit requirements and Form 1099/W-2 compliance, among other issues.

What can a firm do to prepare in case it receives notice that it will be part of the NRP? As a starting point, management should conduct an internal compliance review. That way, they’ll have a better idea of potential weak points, and to take steps to resolve issues that could prove to be sticking points during an audit, Packman says.

In addition, all CFOs need to recognize that this project “is the beginning of a long-term emphasis by the IRS on employment tax issues,” Packman writes. Once the NRP is wrapped up, the IRS will use the data it has gathered to focus on areas that were shown to have higher rates of noncompliance.

An IRS agent walks into a bar…

…which is never good.

IRS agents searched Vic’s Food and Spirits, which is owned by Vic Center, at about 9 a.m. Tuesday as well as two other properties owned by Center, said an employee.

“We had a visit,” said Warren Oliver, the tavern’s bartender. “They took all of our lists, numbers and papers — everything, with them.”

Young Buck feels your pain, Warren Oliver.

IRS agents search area tavern [Dayton Daily News]