Category: IRS

The IRS Is Sitting on Your Checks

We haven’t come across a single person that is happy about cutting a check to the United States Treasury. In fact, some people would like their CPAs to stick their beard trimmings in with checks and include a note that says, “Here’s my money. Shove it. Oh, and enjoy the scruff.”

You would think that – after washing their hands for 20 minutes – someone at IRS would rip open your letter to find your check and drop everything to make the deposit. “Thank God! Everybody! We’ve got the Johnson check! I’ve got to get to the bank ASAP to make sure we can cover our glorious new pens.”


But this is not the case. No, the IRS doesn’t have a sense of urgency that you might have when you get a check in the mail. The Service’s resident mother-in-law, the TIGTA let’s us know how about their latest disappointment:

TIGTA found that the IRS is generally scanning checks and accurately posting checks to taxpayer accounts. However only 13 percent of the 770,504 payments reviewed by TIGTA payments were deposited the next business day through the Treasury Department’s Financial Management Service. As a result, the IRS lost $695,115 in interest on the payments that were not promptly processed. TIGTA found that the IRS is generally scanning checks and accurately posting checks to taxpayer accounts. However only 13 percent of the 770,504 payments reviewed by TIGTA payments were deposited the next business day through the Treasury Department’s Financial Management Service. As a result, the IRS lost $695,115 in interest on the payments that were not promptly processed.

And that’s your interest, American Taxpayers, sayeth J. Russell George, “When payments are not promptly processed, taxpayers lose the benefit of the interest earned that is credited to the Department of the Treasury.”

The TIGTA obviously understands that it was painful for you to cut that check in the first place, so the quicker it gets cashed, the sooner you will be doing your part – earning interest for every man, woman and child in this great land.

Plus, the sooner the money is out of your account, the less likely you’ll be to continue stewing about the unfairness of it all, only to conclude that quitting your job to attend rallies or participating in virtual marches may be the only way to help you to feel better.

The IRS Needs to Process Paper Checks More Quickly, TIGTA Finds [TIGTA PR]
Full Report [TIGTA]

No, the IRS Will Not Be Cool with Your Request for Bogus Refunds in Order to Pay Your Gambling Debts

If you find yourself in a bit of tax trouble, the IRS is more than happy to work with you. They gave all those UBS tax evaders all the chances one could ask for. They are giving small nonprofits a break on submitting their 990s. Hell, they are opening regularly on Saturdays.

The best thing to do if you find yourself in a pinch is call them, explain the sitch and we’ll bet you dollars to vegan donuts that Doug Shulman and Co. will work it out with you.


Having said all that, it’s extremely unlikely that the Service will work with you if, say, you attempt to obtain a couple million in bogus refunds to pay off your gambling debts. You do this under the assumption that the U.S. Government will gladly take an IOU until you get around to scraping it together. Who hasn’t gotten a little careless during football season a time or two and needed to commit a federal crime to make things, amiright?

Federal authorities this week arrested a former Los Angeles County worker who allegedly used the personal information of more than 150 welfare applicants to file nearly $2 million in fraudulent claims for tax refunds.

Trang Van Dinh, a 62-year-old resident of Glendale, worked for the county for a decade and filed the returns in a desperate attempt to pay gambling debts, county auditors said.

[…]

His arrest comes months after Dinh was fired from his county job after acknowledging wrongdoing in an interview with county investigators, said Guy Zelenski, chief investigator for the county auditor-controller. County officials spoke to Dinh after IRS investigators notified them of their suspicions.

“He thought he could pay the IRS back and he would have no problems,” Zelenski said.

No problems, like facing 220 years in FPMITA prison problems?

Fired L.A. County worker arrested in tax fraud case [Los Angeles Times]

Security Workers at an IRS Building in Atlanta Are Understandably Jumpy

If you’re working security at any building that houses IRS employees, your tendency to be extra cautious is warranted. For example, if you’re X-Raying a suspicious package that just so happens to contain a curiously shaped object that may resemble an explosive device, you may just order the entire evacuation of the building.

Fortunately, it sounds like it was just a fancy-schmancy decorative egg. While it’s comforting that security forces at the Peachtree Summit Federal Building are a vigilant (maybe too vigilant) bunch, anyone brave enough to bring any sensual devices to work might make for some awkward convos.

On Top of Everything Else, the IRS Isn’t Green Enough

The IRS’ nagging mother-in-law, the Treasury Inspector General for Tax Administration (“TIGTA”) has once again managed to come down on the Service for something else it doesn’t do well – conserve energy.

According to TIGTA’s report, the IRS is implementing environmental management systems at 11 facilities, which will increase operating efficiency, improve environmental performance and reduce environmental impacts.

TIGTA also identified several steps the IRS should take to improve energy efficiency in its data centers, including eliminating gaps between computer room floor tiles that allow hot and cold air to mix, spacing servers in rows to maximize the efficiency of air conditioning, and using occupancy sensors to control lights in computer rooms.

The IRS does not have policies and procedures for improving energy efficiency in its data centers or for implementing data-center energy-efficiency best practices, TIGTA found. This affects the IRS’s ability to minimize energy consumption and costs, resulting in the inefficient use of resources and taxpayer funds.

“It is imperative that the IRS become more energy efficient to save taxpayer dollars and reduce the nation’s consumption of oil, coal, and other natural resources,” said J. Russell George, the Treasury Inspector General for Tax Administration.

The details of the improvements that are quite impressive – gaps in the floor tiles; spacing of servers, etc. Impressive in the sense that if your performance coach/manager was giving you those kinds of suggestions for performance improvement, you’d give them an eyeroll that would cause you to fall backwards in your chair.

Despite the endless stream of criticism, Chief Nag, J. Russell George managed to stop short of asking the IRS to help BP get all that oil out of the Gulf of Mexico.

TIGTA: IRS Can Improve Energy Efficiency at Data Centers [TIGTA PR]
Full Report [TIGTA]

IRS Ruling Gives Same-sex Couples Equal Tax Treatment

Specifically, under a feature of California law that recognizes domestic partnerships gay couples must now combine their income and report half of it on each of their respective returns.


The ruling marks the first time that the IRS has recognized same-sex couples as equal to their heterosexual counterparts for tax purposes. Of the community-property states (i.e. all property and debt is owned equally by a couple) Nevada and Washington also recognize domestic partnerships, so couples there may also be affected.

Gay Couples Get Equal Tax Treatment [WSJ]

New Healthcare Tax Credit Should Help Small Businesses, Nonprofits

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

The Internal Revenue Service recently released some information to help companies take advantage of a tax credit provided by the health reform law.

The IRS estimates that about 4 million businesses qualify, and is sending out notices to as many as possible advising them of the tax break. If you haven’t received anything but believe your company may qualify, here’s what you should know:


The credit is available to companies with fewer than 25 employees with average wages of $50,000 or less. The full credit goes to companies with 10 or fewer employees and average annual wages of $25,000 or less. It is not available to self-employed individuals.

The credit covers 35 percent of an employer’s contribution to employee health premiums, so long as that doesn’t exceed 35 percent of the average cost of a health plan in the small group market. For a tax-exempt organization, the credit is 25 percent. Once the health exchanges are set up, the credit increases to 50 percent for businesses and 35 percent for nonprofits. At that time, the credit will only be available to companies purchasing insurance through the exchange.

A company can use the credit to reduce income tax owed and can carry the credit forward 20 years or back one year after 2010. Nonprofits can use the credit against withholding and Medicare taxes owed on behalf of their employees.

A key caveat is that employers must pay for half of the premium. For most workers, especially low-wage employees, a company that does not pay for at least half the premium is offering insurance that is essentially unaffordable. Even 50 percent is most likely not enough to do low-wage workers much good, especially at small companies where health care premiums are more expensive.

The amount of the credit is based on the premiums an employer pays for, so the more generous the coverage, the greater the credit. While premiums paid for owners and their families cannot be counted, those paid for seasonal workers can be. And the IRS has defined “premiums” broadly: not only does it cover premiums for standard medical insurance but it also applies to dental, long-term care and vision insurance-though again, an employer must pay 50 percent of each premium to count it toward the credit.

Calculating the credit probably requires any small employer to consult an accountant to see if the benefits are worth the cost of providing insurance. The tax credit is in effect, allowing employers who are already thinking about health insurance for their employees to factor in the savings as they plan ahead.

As an observer, I think the key issue is whether the credit is enough to offset the rising cost of health insurance. Those costs have hit small employers the hardest. We’ll see if the tax credit makes a difference in reversing the trend among small employers of dropping health insurance for their employees altogether.

One IRS Agent Needs to Work on His Bribery Technique

An Internal Revenue Service agent is charged with accepting a bribe from two business owners in exchange for lowering their taxes.

The U.S. Attorney’s Office says 40-year-old Roger Anthony Coombs met with the two owners on May 8 to discuss an IRS audit of their businesses. Prosecutors say Coombs offered to reduce the $60,000 the business owners owed in taxes to $11,000 if they would pay him $9,700.

Coombs was arrested Wednesday after the business owners reported the offer to law enforcement officers.


How does a $49k reduction in taxes equate to a $9,700 pay off? Were these business owners more interested in greasing him $9,700 for a $0 tax liability? Because if that was the case, this happened in Minnesota, not the South, where that sort of thing could go unnoticed.

Or maybe they got pissed after he turned down their offer to seal the deal with a Starbucks?

IRS agent charged with soliciting bribe [AP]

IRS, SEC Put a Stop to the Latest Money Manager Ripping Off the Most Important People in the World

What the hell is gonna to take for a celebrity to get an honest money manager around these parts?

IRS agents arrested Kenneth Starr (not this guy) today who has managed money for celebrities including Martin Scorsese, Uma Thurman and financial shitshows Annie Leibovitz and Wesley Snipes.


The SEC has frozen his assets alleging that Starr “made unauthorized transfers of money in client accounts that ultimately wound up in Starr’s personal accounts.” But it was for a good reason – the man needs roof over his head, according to the complaint “Starr and his companies transferred $7 million from the accounts of three clients between April 13 and April 16, 2010, without any authorization. The transferred funds were ultimately used to purchase a $7.6 million apartment on the Upper East Side in Manhattan on April 16.”

Former New York City Council President Andrew Stein was also named in the complaint, and “is charged with lying to the IRS and federal agents about his involvement with Wind River.” Wind River being a company that Starr allegedly syphoned money to, that Stein used for personal expenses. However we’re mostly shocked to learn that Stein briefly dated Ann Coulter – shudder.

Financial whiz busted for duping celebs clients Wesley Snipes, Martin Scorsese in $30M Ponzi scheme [NYDN]
Celebrity Investment Adviser Charged With Ponzi Scheme [Gawker]
SEC Files Emergency Charges Against New York-Based Financial Advisor for Defrauding Clients [SEC Press Release]

Memo to Rich People: Gird Your Loins for the IRS ‘Wealth Squads’

For those of you keeping score, the ballpark figure of “wealth” is “in the neighborhood of tens of million of dollars,” according to IRS Commish Doug Shulman’s best guess. So if this is you, the time is nigh. You peasants whose net worth falls into the seven figure range probably can rest easy but don’t get too comfortable, you’re still at risk.

And don’t think that this will be a friendly visit between you, your CPA and an IRS representative. No, this will likely be a financial strip search that will be topped off with a latex surgical glove moseying around your nether regions.

This will not be a kick-the-tires type of exam. Instead, think in terms of a major overhaul. Global High Wealth taxpayers and their representatives should expect to confront teams of revenue agents, partnership experts, and international examiners prepared to scrub not only the Forms 1040 and the attached schedules but also any and all related returns. In the background will be specialists in such areas as financial instruments; exempt organizations; retirement plans (whether individually maintained or employer sponsored) and insurance and annuity arrangements.

Granted this is just how Don Rocen, the article’s author (and former deputy chief counsel at the IRS) pictures it but…yeeesh. If you want to come out with your hands up, think they’ll go easy on you?

IRS ‘Wealth Squads’ On The Way [Forbes]

Dear Small Nonprofits, the IRS Still Wants Your 990s

In a show of understanding for nonprofits who may have been completely unaware of the Form 990 requirement in place for the last three years, IRS commissioner Doug Shulman sent out a really sweet letter encouraging smaller NFPs to go ahead and file anyway even though the deadline has come and gone.

Now that the May 17 filing deadline has passed, it appears that many small tax-exempt organizations have not filed the required information return in time. These organizations are vital to communities across the United States, and I understand their concerns about possibly losing their tax-exempt status.

The IRS has conducted an unprecedented outreach effort in the tax-exempt sector on the 2006 law’s new filing requirements, but many of these smaller organizations are just now learning of the May 17 deadline. I want to reassure these small organizations that the IRS will do what it can to help them avoid losing their tax-exempt status.

The IRS will be providing additional guidance in the near future on how it will help these organizations maintain their important tax-exempt status — even if they missed the May 17 deadline. The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact.

So I urge these organizations to go ahead and file — even though the May 17 deadline has passed.

The Service assures us that the 990 e-Postcard is simple and easy to fill out, no need to drag your CPA into this mess.

Though the IRS sent friendly reminders to 600,000 charities over the 3 years this new rule has been effect, up to 215,000 charities may have missed the May 17th deadline. Seriously, it isn’t too late. Someone get on that.

There were complaints that the IRS was swamped with last-minute 990 filers (go figure) rushing to meet last week’s deadline so we’re going to guess that when Shulman says it’s okay to send those forms in anyway, he kind of means it. And perhaps that will teach everyone to file on time next year.

Adrienne Gonzalez is the founder of Jr. Deputy Accountant, a former CPA wrangler and a Going Concern contributor . You can see more of her posts here.

Just So You’re Aware: An Ex-IRS Agent Has a Reality TV Show

A taste of the June 6th premiere of The IRS (+) Hitman:

And if you think that’s interesting, there’s more:

Is there a complete sentence in there somewhere? Try the next one.


You hear that? How can you live with yourselves IRS? Stealing money from this Jonas Brothers wannabe family that won’t be able to stand around the kitchen eating cheese whiz out of the jar with their hands! No mercy indeed. If you have an IRS injustice story, you better get in touch with this Hitman character.

Wanted by America, the IRS (+) Hitman Reality TV Show is Here [PR]

IRS Asked to Crack Down on Church’s ‘Troubling Tweets’

You house of worship types are probably used to hearing politically toned sermons coming from your clergy(wo)man but a nonprofit holy house flat out telling its congregation, “Get out there and vote for [candidate soon-to-be caught up in a lurid sex scandal]!” would be venturing into some tricky waters.

Well, the Americans United for Separation of Church and State seems to have caught wind of a church who ventured. The AU claims that the Oasis Church in Los Angeles was openly supporting its Director of Social Justice’s, Alex Jones-Moreno run for reelection to the Greater Wilshire Neighborhood City Council on its website and on Twitter:


Americans United was not amused by this, sending a complaint to the IRS and putting out a press release:

“Oasis Church’s appeals might have been innovative, but they still violate the law,” said the Rev. Barry W. Lynn, executive director of Americans United. “Federal law bars churches and other tax-exempt non-profits from electioneering. The IRS should crack down on these troubling tweets.”

We called the IRS in Los Angeles, who was not aware of the story and we were told the usual yarn of “we can’t comment on individual tax cases,” which we were expecting but the IRS PR folks are always nice people and we like a pleasant voice every now and again.

Anyhoo, we did stumble across the IRS Tax Guide for Churches and Religious Organizations, that says the following on page 5 (our bolding):

Churches and religious organizations, like many other charitable organizations, qualify for exemption from federal income tax under IRC section 501(c)(3) and are generally eligible to receive tax-deductible contributions. To qualify for tax-exempt status, such an organization must meet the following requirements (covered in greater detail throughout this publication):

• the organization must be organized and operated exclusively for religious, educational, scientific, or other
charitable purposes,
• net earnings may not inure to the benefit of any private individual or shareholder,
• no substantial part of its activity may be attempting to influence legislation,
• the organization may not intervene in political campaigns, and
• the organization’s purposes and activities may not
be illegal or violate fundamental public policy.

Now whether Tweeting = “intervene” we’re not sure but Americans United certainly seems to think so. We’d invite any tax-exempt experts to weigh in.

A message left at Mr Jones-Moreno’s Oasis office was not immediately returned.

Americans United Asks IRS to Investigate Los Angeles Church That ‘Tweeted’ Candidate to Victory [AU]