Tag: IRS

Are You Saying That An IRS Collection Agent Might Not Be Completely Honest with a Taxpayer?

You know, you’d think with all the challenges the IRS faces – airplanes, llelo/baking powder scares, virtual Tea Partiers – one would think that when on a collection call, agents would apply a spoonful of sugar to help the financial rectal exam go down.

Sadly, we’re informed over at Tax Lawyer’s Blog that it’s typically much more devious than that:

Often, when a taxpayer speaks to a low-level IRS official about a tax issue the official tells him one or more of the following:

• You must pay the debt or you will be criminally prosecuted
• If you don’t pay the debt in full within so many days, your assets will be seized
• It’s a waste of money to hire an attorney

As noted Peter Pappas notes, these three points are, in a word, gobbledygook.

Despite how much you might not want to admit it, attorneys are always useful in legal situations, especially complex ones. You might be able to get out of a traffic ticket on your own but probably not a tax case. An expert is needed (whether it’s a lawyer, CPA or EA). Further, as the post notes, these collectors are not the tax sages that they might present themselves to be, “[T]hese IRS officials are wholly unqualified to give legal advice to taxpayers. They aren’t lawyers, CPAs, or IRS Enrolled Agents and in the great majority of cases lack a substantial background and education in the intricacies of federal tax law.”

And there is the small matter of the agent acting in the best interest of the Federal Government so the modern day Matthew isn’t exactly in the best position to be giving the taxpayer advice.

IRS Collection Officials Intentionally Mislead Taxpayers [Tax Lawyer’s Blog via Tax Update Blog]

Just to Be on the Safe Side, the Dayton, Ohio H&R Block Should Be Prepared for More Trouble

If you figure one H&R Block employee was nearly gunned down because they were being audited, God knows what an indictment would mean for the safety of their employees:

A federal grand jury has indicted West Carrollton club owner and Brookville resident Stanley W. Combs III on the charges of one count of operating an illegal gambling business and four counts of making false statements on federal income tax returns…

…The indictment alleges Combs substantially under-reported the income he received as the owner and operator of Fraternal Order of Orioles, Nest 293 at 842 Watertower Lane in West Carrollton and a related entity at 10955 Lower Valley Pike in Medway, Ohio.

There’s no indication that an H&R Block employee advised this particular alleged tax dodger but better to be prepared.

Related: Did anyone tell these crazies in Ohio that they can get help FOR FREE tomorrow? For crissakes, there’s even one in Dayton at 200 W. Second St. Pull yourself together Buckeye State.

Club owner indicted for illegal gambling, income tax fraud [Dayton Daily News]

Despite the IRS, The Dude Abides

Isn’t it just like the IRS to try and pull a fast one on El Duderino?

Sure, the man’s name is really Jeff Bridges and he wasn’t an awarded for an Oscar for a performance that will certainly transcend the life of cinema but that’s not the point.


The point is that the IRS thought they had another celebrity in their sights. They were going to lump Duder in with Nicolas Cage, Ving Rhames, Nas, etc. etc. etc. and enjoy a little celebrity embarassment.

Well! Turns out they were wrong. Dead wrong:

[Bridges’] Publicist Jean Sievers said the tax issue was resolved in February and resulted in Bridges paying “significantly less” than the amount listed on the lien.

“However, for some reason there was some delay in communication between the department that resolved the tax matter and the collection department,” Sievers said.

Because there was a delay, the lien was filed last month, she added. Yet as of this afternoon, the lien had not been released, according to the Los Angeles County Recorder of Deeds office.

“The IRS screwed it up,” Sievers said. “It’s so funny. The IRS screws it up and he ends up owing less than what was on the lien.”

IRS slaps lien on Oscar-winner Jeff Bridges [Tax Watchdog]

Joe Francis Can’t Land an Attorney Thanks to the IRS, Says Joe Francis

Douche of the Last Decade Joe Francis is having trouble finding a lawyer in North Florida. No, it’s not due to his all around doucheness. And no, it’s not due to his inability to pay his previous attorney, Rick Bateman (who is suing him) $500k. It’s because he claims that the IRS has slapped levies on his hard earned drunk topless girl fortune.


A judge is set to enter a default judgment against J Fran for in a case where four women are suing him for taping them while they were underage. Since Fran can’t find counsel, he had to personally write a motion to request Judge Richard Smoak for leniency.


This is interesting not only because we didn’t know Joe could write but also because we thought the IRS had given up on old Joe after it was reported that his $30 million+ lien was reportedly dropped:

“My efforts to obtain new counsel have been hampered by levies upon my companies’ financial accounts by the Internal Revenue Service,” Francis wrote. “Prospective counsel that have agreed to entertain engagement as counsel in the case require large retainers which could not be facilitated in the time permitted by this Court’s Order of March 12, 2010.”

Joe is confident he’ll bag some representation before the June 10 deadline, saying that barring “unforeseen developments” (i.e. douchiness) he’ll no longer be forced to write words.

Joe Francis blames IRS for attorney-finding troubles [Panama City News Herald]

The TIGTA’s Nagging of the IRS Delves into Phone Etiquette

In case you’re not up to speed on the federal bureaucracy org chart, the Treasury Inspector General for Tax Administration’s expressed purpose is to tell the IRS what it is they suck at doing and what they can do to quit sucking at it.

The latest bad report card for the IRS is that of protecting the identity of taxpayers who call the Service for help. The epic fail is due to customer reps not being inquisitive enough when identifying callers and not their inability to use their inside voices. The TIGTA presents its displeasure with the phone “assistors” in its latest report:

From our statistical sample of 180 contact recordings, we determined that assistors did not properly follow procedures when authenticating 29 (16 percent) callers, increasing the risk of unauthorized disclosures. Based on these results, the projected number of callers with increased risk of unauthorized disclosures is 44,067 for 1 week.

So, you figure 2.2 million unauthorized disclosures a year. Maybe that’s a legitimate concern but in the grand scheme of things, is it really that bad? If you consider the fact that 22.4 million people aren’t even getting help, that seems like a pretty good number. Regardless of our realistic standards, the TIGTA has more harping to do:

During our review of 48 (27 percent) of the 180 sampled calls, we were able to overhear other assistors discussing other callers’ Personally Identifiable Information. For 10 calls (6 percent), we were able to clearly hear parts of conversations with other callers. For 38 calls (21 percent), other assistors’ interactions with callers were overheard, but we could not clearly understand the conversations. This happened because assistors did not put callers on hold when they were researching the taxpayers’ accounts. Also, the physical layout of employee workstations at call centers allows other conversations to be easily overheard.

So in this particular case it sounds like the IRS has two choices 1) force everybody to become low talkers or 2) spring for a larger cube farm so people aren’t up in each other’s shit.

The real question her is, can we realistically expect an error rate of zero from the IRS? When did “good enough for government work” no longer apply?

Telephone Authentication Practices Need Improvements to Better Prevent Unauthorized Disclosures [TIGTA via TaxProf]

Reminder to Nonprofits: 990s are Due By May 17th

Nonprofits don’t need the reminder but we’re going to remind them anyway: May 17th is the new deadline to file your Form 990s (it would have been the 15th but that happens to fall on a weekend, consider yourselves fortunate, procrastinators).

The Boys and Girls Clubs and Goodwills of America have probably already filed their 990s but what about the tiny, grassroots organizations that didn’t get the memo when Service rules changed to require even small non profits under $25,000 to file 990s?


The guess is that up to 1/4 of all non profits could inadvertently lose their tax exempt status by missing the May 17th deadline without even realizing they were supposed to file anything at all. It costs $750 to refile after losing said status, so blowing it could be a costly alternative to hiring a professional to get the 990 in order for a small, simple nonprofit.

This isn’t merely busywork presented to nonprofits for shits and giggles, as we all know the Service would never EVER waste anyone’s time with bureaucracy and paperwork just for kicks. The IRS is seeking to clean up tax exempt status claims to exclude agencies that exist in name only or simply for the tax break. In its view, leaving NFP organizations that take in less than $25,000 a year largely unchecked left the fraud door swinging wide open. And as we all know, the Service has a duty to the taxpayer to collect everyone’s fair share.

The Pension Protection Act of 2006 mandates that all nonprofits must file a 990 for three consecutive years, making 2009 (and thus May 17th) the 3rd year. Orgs that have not filed 990s will automatically lose federal tax exempt status.

The good news is that if you are trying to claim a tax deduction for a donation to one of these little bitty nonprofits that will be losing their exemption, you can still do so up until the date the Service notifies the charity that it can no longer claim tax exempt status.

All is not lost, of course, as those familiar with IRS tactics presume that “offenders” will be offered a chance to redeem themselves (after steep penalties and late fees, of course).

More on the 990 Filing Deadline:
When a Tax Time Bomb Goes Off: Repurcussions Await Some Small Nonprofits

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

IRS Accused of Being Sneaky Double-Crossing Tricksters

Who would have guessed that the IRS was capable of pulling the old switcheroo on confessed tax dodgers?

Apparently not some “former high-ranking tax officials” who are all bent out of shape because the IRS decided to prosecute their clients even though they came out of offshore tax haven land with their hands up.

A letter dated March 30 and signed by 32 lawyers, many of them former high-ranking tax officials now in private practice, said the IRS actions “smack of trickery.” They said that because the taxpayers had turned themselves in, they shouldn’t be prosecuted. The letter said heavy-handed treatment of some account holders could cause taxpayer confessions to “grind to a halt.”
…
The letter acknowledged the government’s long-held right to reject confessors if it already has their names or has opened an audit. But it argued that subjecting these taxpayers to rare public prosecutions would look like a double-cross. The writers also warned that if the government went ahead with prosecutions, it would radically change the “risk assessment” they offer their clients and lead to fewer voluntary disclosures.

So you acknowledge the right of the Feds to say ixnay on confessions of known tax scofflaws, plus one of Dougie’s deputies is quoted saying this: “The Service has been clear and consistent. We said that people already known to us were not good candidates,” and then you write a letter? The IRS has been attacked from the air, had suspicious packages dropped on their doorsteps and been blamed for suicides and you think a stern letter is going to sway them?

IRS Faulted for Prosecuting Confessed Evaders of Taxes [WSJ]

TRAC’s Susan Long: IRS Increasing Efforts Towards More Small Business Audits in a Perverse Fashion

Last month we mentioned a study that was done by the Transactional Records Access Clearinghouse (“TRAC”) of Syracuse University that was critical of the IRS’ trend of auditing fewer large corporations and focusing smaller business. A major concern for not only small business owners and managers but also taxpayers since they pay for the audits that are occurring.

We recently spoke to Dr. Susan Long, co-director of TRAC and AssociaSyracuse’s Whitman School of Management about the study.


Going Concern: What’s the biggest takeaway from the findings on the report?

Dr. Susan Long: The report really does two things: 1) Presents a tool [link to tool] that users can use to look up all sorts of statistics about IRS audits for any size corporation. From very small to very large, you can look at trends over a long time so that you can see how things have changed.

2) The focus of our report was to look at the continuing large drop in corporate audits even though this is a time of rising deficits. The IRS has been given more budget for agent staffing but they have not chosen to focus on the largest corporations even though that’s where, historically, the IRS gets the biggest bang for the buck.

GC: One section of the report discusses the politics of tax collection and deficits. Is the IRS and Treasury taking the wrong approach into obtaining more revenue for the Federal Government?

SL: Our role was not to judge them but to lay out what they do and look for some kind of rationale. We could not find any rationale apart from some kind of a perverse quota system. It certainly does not appear to be at all consistent with focusing where tax dollars are underreported based on their own statistics.

GC: Do you have suggestions or opinions about what the IRS can do better? Is there a way that the Service can improve the quota system or do they need to reassess their strategy altogether?

SL: The role of TRAC is not the typical policy research organization. Our role, as we see it, is to present a picture of what the government, in this case what the IRS, is doing with respect to tax audits and to leave it up to the reader to decide what makes sense.

What we did find is that IRS sets performance goals, as all agencies do, and it sets group targets, not individual targets for agents. But nonetheless they are based on how many total audits of corporations take place for the large and mid-sized industry group (“LMSB”) and then separately for the small and self-employed business unit (“SBSE”). We noticed that there was a peculiar reversal in audit rates when you got to the margin of those companies at say, with the bigger companies for SBSE audits versus what would then be larger companies but represent the small guy for the LMSB auditors. It just showed quite clearly that there was a tendency for each branch to shy away from its biggest audits and put increased efforts on its smaller guys within its unit in a very perverse fashion.

GC: Since you used the IRS’ own data to compile your study does it appear that the statistics could be the result of the flawed goals or quota system?

SL: Right. We’re all human and we respond to what we’re measured on. If those measurements are not in accord with what the priorities are [i.e. where the largest underreporting occurs], you’ll work to the measure rather than to the overall priority. This is not the first report where we’ve noticed this. In this case, what was interesting was that for a long period of time, Congress had been cutting the IRS’ budget and it’s really tough when you have more and more returns and fewer and fewer agents to cover them. You’ve really got hard choices there.

So we were very interested to see, now that we’ve entered a new era, Congress has been giving the IRS more budget for hiring more revenue agents. Therefore they have more discretion about where they will put these additional resources and they are certainly not putting them in the large corporate area.

GC: What about the IRS’ contentions that they audit 100% of companies of $20 billion in assets or more?

SL: According to their figures, the IRS audits more than 100% of all the corporations of that size. These particular figures we took from the IRS databook that is put out annually. There has only been three years where there has been a breakout with these categories.

The first time it came out the IRS said, “yes it’s over 100% but that’s because you can audit more than one year’s return in the same year” and that’s true. But then in the second year it’s over 100% and they make the same excuse. Now this is third year and it’s still over 100% [see footnote at the bottom of the study].

They’re not doing a very good job of accurately measuring that [the number of companies audited] so we presented figures that give the IRS the benefit of the doubt. They’re not measuring the size of the returns vs. the size of the audits in a consistent way, so we just grouped it with the next largest category and saw exactly the same trends in terms of the hours spent auditing the biggest companies.

Simply, there’s a tendency to spend less time on less complicated returns. As companies get bigger their businesses get more complex. When you see that sort of thing in an organization, you look at what are the goals being measured against. If they’re being measured just on quantity and there isn’t any distinguishing between that workload that takes longer to do, it’s easier to up your numbers by choosing workload that you can churn out faster. It’s human nature.

DOJ: You Bet Your A$$ We’re Going After More Offshore Tax Evaders

It appears that the offshore bank account crackdown tour is going straight through Asia, where DOJ senior tax attorney Kevin Downing gave a speech saying, “We expect over the next couple of years, in addition to the UBS cases, to have somewhere between 4,000 and 7,000 more cases coming to us with. These are from banks and governments cooperating.”

Obviously the UBS flogging was such a huge success that the DOJ/IRS figures they might as well keep a good thing going and is making a nice little swing through Asia to give them fair warning that they could be traipsing through their backyard very soon:

Singapore was one stop in a tour of Asian cities also including Hong Kong, Beijing and Shanghai by Downing and his U.S. Justice Department team. The tour featured meetings with financial and tax regulatory bodies and bankers discussing cross-border tax prosecutions.

He said that since the start of the U.S. crackdown on tax evasion, money has moved from the Caribbean to Switzerland and Asia.

Of course Mr Downing doesn’t want to get ugly saying, “he hoped the U.S. authorities would not have to conduct “UBS-style” probes,” but obviously that option is always on the table.

U.S. to probe thousands more offshore tax evaders [Reuters]

The Big 4 Continue to Impress College Students, Dominate Latest Universum List

It’s been far too long since we had a Big 4 dominated list to share with you. The last that we can dig up was PwC’s three-peat for Training 125. We were starting to get the shakes…

Thankfully the drought has ended with the latest list from Universum, who we last hear from in the fall with their 50 Most Attractive Employers.

This time around, it’s the Top 100 IDEAL Employers, that is described as “annual employer image survey…based on more than 163,246 employer evaluations, reflecting the opinions of approximately 56,900 Undergraduate students.” In the “Business” field of study, the Big 4 have, once again, landed high on the list:


Ernst & Young – #2
PricewaterhouseCoopers – #3
Deloitte – #4
KPMG – #6

Big 4 domination on a college student list is nothing new. Their recruiting strategy is aggressive and any company getting bested by Google in anything is exactly a surprise. Some other notables:

FBI – #11
IRS – #23 (IRS 2, Sarah Palin 0)
Grant Thornton – #30
Accenture – #66

Frankly, the number beside the firm name is irrelevant. The firms will boast the latest ranking in press releases and on campus visits per standard operating procedure. This continues to demonstrate that the firms are impressing college recruits effectively. They are presenting the image they want to present and they are doing so with an ever increasing online presence. We will continue to see them high on these lists.

The Universum American Student Survey [Universum]
Universum USA Presents the 2010 Top IDEAL Employers [Press Release]

The IRS Is Ruining Its Weekend Plans for the Sake of the American Taxpayer Again

The April 15th deadline has come and gone but that does not mean the IRS’ work is done. In fact, getting money in the Treasury Department’s door is a 24/7/365 sorta deal and in case you didn’t notice, there’s a bit of a deficit problem.

Accordingly, the IRS has decided to host open houses at 200 facilities in all 50 states, DC, and Puerto Rico on May 15th from 9 am to 2 pm local time (locations here). IRS staff will be there to help individuals and small businesses sort out any issues they may have (See? Filing that extension was a good idea).


This marks the second time in 2010 that the IRS has opened its arms to public on the Sabbath, having done so on March 27th. According to the Service, that particular National Day of IRS Friendliness was a resounding success, with 88% of taxpayers getting their issues resolved that day.

Doug Shulman all but assures your satisfcation in the press release, “Our goal is to resolve issues on the spot so small businesses and individuals can put any issues they have with the IRS behind them. If you have a problem filing or paying your taxes or resolving a tough tax issue, we encourage you to come in and work with us.”

Okay, maybe it’s not exactly a 100% money-back guarantee but the Service is going to work their cans off to get you in compliance and cutting a check that day. Unless of course you’re a Tea Party type trying to get on the six o’clock news, in which case you’ll be dealt with in a swift and decisive manner.

Open House on Saturday May 15 to Help Small Businesses, Individuals Solve Tax Problems [IRS.gov]

The IRS Would Like to Remind You That They are Not Spammers

With tax season over, scam season has begun and the IRS wants to be sure that you know they will never send you unsolicited e-mails or request identifying information about you a la PayPal scams. Because, you know, they’re helpful like that. Since many of you are waiting patiently by your mailbox (or bank statement if you E-filed for direct deposit) for your refund checks, it’s all that much more important to be on the lookout for these kinds of tricks hitting your inbox.

Protect yourself, little taxpayer, and know that the IRS is here to help make sure you don’t get scammed by unscrupulous impersonators:

The IRS does not send taxpayers unsolicited e-mails about their tax accounts, tax situations or personal tax issues. If you receive such an e-mail, most likely it’s a scam.

IRS impersonation schemes flourish during filing season. These schemes may take place via phone, fax, Internet sites, social networking sites and particularly e-mail.

Many impersonations are identity theft scams that try to trick victims into revealing personal and financial information that can be used to access their financial accounts. Some e-mail scams contain attachments or links that, when clicked, download malicous code (virus) that infects your computer or direct you to a bogus form or site posing as a genuine IRS form or Web site.

Some impersonations may be commercial Internet sites that consumers unknowingly visit, thinking they’re accessing the genuine IRS Web site, IRS.gov. However, such sites have no connection to the IRS.

IRS Spokesperson Jennifer Henrie-Brown gave us a few tips for avoiding scams and reporting sketchy e-mails to the Service to combat the spamming problem: “The IRS does not initiate taxpayer communications through e-mail and does not request detailed personal or financial information through email. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site, you should not reply. Do not open any attachments or click on any links. Doing so may download malware that can damage your computer or allow remote access to your hard drive,” she told us.

What do you do if you get one of these weird, misspelled, bad-grammar-infested fake e-mails claiming to be from the IRS? “If you receive a suspicious email claiming to be from the IRS, or Web addresses that do not begin with http://www.irs.gov, you can relay that email to IRS mailbox phishing@irs.gov. IRS can use the information URLs and links in the suspcious emails you sent to trace the hosting Web site and alert authorities to help shut down the fraudulent sites.”

Suggested reading: Online Scams that Impersonate the IRS [IRS]