The Internal Revenue Service inappropriately flagged conservative political groups for additional reviews during the 2012 election to see if they were violating their tax-exempt status, a top IRS official said Friday. Organizations were singled out because they included the words "tea party" or "patriot" in their applications for tax-exempt status, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups. In some cases, groups were asked for their list of donors, which violates IRS policy in most cases, she said. "That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate. That's not how we go about selecting cases for further review," Lerner said at a conference sponsored by the American Bar Association. "The IRS would like to apologize for that," she added. Lerner said the practice was initiated by low-level workers in Cincinnati and was not motivated by political bias. [AP]
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Things That You Should Not, Under Any Circumstances, Do If You’re Audited by the IRS
In case you’re illiterate or generally ignorant about the reputation of our government, you know that there’s a ginormous deficit that our Congressional representatives like to crow about ad nauseam. And because squawking will only get you so many votes, many in Congress have decided that tasking the IRS (and thus setting up an easy scapegoat) with scraping together more revenues.
Accordingly, the IRS is not only hassling people for their milk money but they are also ramping up the number of audits of wealthy individuals.
The Journal warns us about this increasing number of financial DREs, noting that many rubes get the notice in the mail, freak the hell out and cut a check to the Treasury. However, if you’ve got a solid case against the Service or balls of concrete, than there are some tips that you would be wise to heed:
“Hire the wrong tax preparer” – If your tax pro had the unfortunate luck to get swept up in Operation Brass Tax, then you’re obviously in bad shape. If you’ve got the means, don’t cheap out on the Mom & Pop (sorry Moms and Pops out there) tax prep shop and find a qualified CPA, attorney or enrolled agent to guide you through this nightmare.
“The Ostrich approach” – The strategy of simply ignoring the IRS will work about as well as bulldozing your house.
“Frivolity” – In other words, the Irwin Schiff method. Arguing that the 16th Amendment to the Constitution is a one big joke never impresses the IRS or judges.
“Automatic Surrender” – You may be surprised to learn that the IRS is not the omnipotent federal agency that it may implicitly claim to be in its letter. Long story short, don’t just take them at their word, unless you’re the type that wants to pay more taxes.
Of course there are several other strategies that the Journal omits that you should want to avoid, including:
Violent Retaliation – No one wins here.
Claiming to be a celebrity – Fame has yet to prove an effective deterrent to IRS nagging.
Cry about it – The IRS, while sympathetic, will not be swayed by tears.
While everything listed above is tempting, we advise getting professional help and it probably won’t hurt to keep the proceedings cordial.
How to Fight the IRS [WSJ]
Report: IRS Is Doing More with Less, Still Needs More
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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]
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