by Brian Mahany
The recent scandal involving the IRS and politically targeted audits has been well covered by mainstream media. I wasn’t even going to write about but for 3 emails from past and present clients. The details of the present scandal are fairly easy to summarize:
1) The IRS targeted conservative and “Tea Party” aligned groups for audit;
2) The IRS lied about the audits when confronted by Congress;
3) People very high up in the IRS knew what was going on; and
4) The Treasury Inspector General still has not figured out who ordered the audits or “special treatment.”
I won’t belabor those points. Look no further than the New York Times for some excellent reporting. What we will try to do, however, is discuss the rest of the story. (Pay attention Senator Warren!)
First, the IRS has software that can track who accessed tax records of the political and social elite. How do I know? I was Maine’s state revenue commissioner between 1995 and 1998 when that technology was first rolled out. A couple key strokes and IRS management can tell what employee accessed the tax return of the Obamas, David Koch, Elizabeth Warren or the Tea Party. In fact, if I were them, I would want to know who was snooping and if the person snooping was directed to do so. (Every search is tied to an employee ID number.)
Misuse of confidential tax information is a crime. Left or right, whatever your political bent, IRS agents snooping in one’s confidential tax records is a no-no. During my 4 year term in Maine, we uncovered employees (agents) snooping through my records, famous celebrities that lived in Maine and even a couple employees doing searches on George H.W. Bush. (Remember that the Bush family had a compound near Kennebunk.)
The Treasury Inspector General’s report concentrated more on the audit end and on processing of non-for-profit applications but a simple search will turn up a lot more dirt. Searching records without a valid reason is grounds for dismissal. If forced to account for their actions, I suspect IRS agents will toss the true culprits under the bus – those that directed their activities.
Next, Obama’s attempt to take credit for the departure of IRS Acting Commissioner Steven Miller is pure “bullshit.” Miller was serving in acting capacity and his term was up anyway. According to a headline in CNN today, “Angry Obama Announces IRS Leader’s Ouster.” While purely true in a technical sense, Miller was already leaving. The president was able to get some political mileage from something that was going to happen anyway.
Speaking of politics, don’t feel too bad for the Tea Party. While screaming “foul” to anyone who will listen, the very groups that were targeted will reap rich rewards from the public’s outrage and free publicity. Whether or not the administration dreamed up this stupid scheme, the Tea Party crowd are the net winners.
Lastly, while the actions of a handful of IRS workers and managers was reprehensible and wrong. This isn’t the first time that the IRS got in trouble for taking political sides. In my lifetime, both John F. Kennedy and Richard Nixon were both pretty open and notorious for using the IRS to extract a political toll on their enemies. Other presidents have tried this and all have failed.
The latest evidence suggests that it was just a handful – a very small handful – of rogue IRS employees that participated in the political targeting. We hope Congress can figure out exactly who ordered or approved of these actions. Remember, however, that there are tens of thousands of honest and hard working IRS employees who don’t allow politics to interfere with their jobs.
The real audit risk today isn’t for Tea Party political action groups and right wing Christian organizations. (Reports say Billy Graham’s group was also targeted – although we would not consider them “right wing.) Instead, IRS’ own statistics show criminal investigations are way up this year as are audits on high net worth individuals. Those are the people who should be most worried.
If you facing an audit, received a knock on the door from IRS criminal division special agents or have something to hide and simply want to come back into compliance before getting caught, give us a call. The tax lawyers at Mahany & Ertl have helped a great number of people with audit defense, collections matters, U.S. Tax Court appeals, criminal investigations or offshore accounts. Whatever the tax problem, we can help.
For more information, contact attorney Bethany Kroes at or by telephone at (414) 223-0464. All inquiries are protected by the attorney – client privilege and kept in strict confidence. Whether you hire or us or not, we will gladly discuss your options at no cost and without obligation.
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