Category: IRS

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]

The TIGTA Manages to Give the IRS Credit for Doing a Decent Job at Taxpayer Assistance Centers

The most nagtastic wing of the Federal Bureaucracy, the Treasury Inspector General of Tax Administration, gave an extremely tepid thumbs-up to the IRS today for satisfying the needs of taxpayers using services at Taxpayer Assistance Centers (“TAC”).

If you look at the TIGTA’s report, you’ll find a fairly neutral title, “Surveys of Taxpayers With Tax Account Issues Indicate They Are Satisfied With the Service They Received at Taxpayer Assistance Centers.”

However, if you read the title of the press release you’ll find things take considerably less enthused turn, “TIGTA Survey Finds Taxpayers Generally Satisfied With Level Of Service Received At Taxpayer Assistance Centers.”


Why the unnecessary adverb TIGTA? If you remove the ‘generally’ the title remains informative, so may we ask what the unspoken element is here? Are you insinuating that the IRS sucks at everything else it does and this particular survey just happens to stray from the narrative?

Hell, even Inspector General/Head IRS nag, J. Russell George, was caught off guard and offered the following “what have you done lately,” statement, “The IRS should continuously ensure it is providing the best available service to all taxpayers, including those with tax account issues who visit their Taxpayer Assistance Centers, and find cost-effective ways to do so.”

When asked, “Overall, I was satisfied with the customer service I received from the IRS during my visit to the IRS walk-in office,” 75% of those surveyed responded “Strongly Agree.” If you can get 3 out of 4 people to say that their experience with the IRS was positive rather than “I was giving strong consideration to strangling one of the employees with my shoelace,” you best recognize a job well done.

TIGTA Survey Finds Taxpayers Generally Satisfied With Level Of Service Received At Taxpayer Assistance Centers [TIGTA]

Local Man Assumes Tagging of Racial Slurs on Building Is Related to an IRS Audit

Because what else could it be?

Police are trying to figure out who sprayed racial slurs in the parking lot of a Hall County building that includes offices for the Internal Revenue Service. The messages invoking the Ku Klux Klan, and obscenities directed at African-Americans were discovered by employees as they arrived to work.


Odds aren’t that bad; approximately 1 in 6. Still doesn’t explain why invoking the Klan was necessary.

The building on Oak Street in Gainesville is home to nearly a half-dozen businesses, including an IRS office. Police told Channel 2’s Diana Davis they had no evidence linking the slurs to one person working in the building.

One employee speculated that the vandals may have a beef with the IRS. “Probably someone was being audited and they were frustrated with the situation and process they were going through. More than likely this is the result of that,” said Christian Saslo.

Racial Slurs Found Outside IRS Office [WSBTV]