IRS Workers Who Failed To Pay Taxes Got Bonuses (#GotBitcoin)
It’s not difficult to get a bonus if you work for the Internal Revenue Service — even if you haven’t paid your own taxes. IRS Workers Who Failed To Pay Taxes Got Bonuses (#GotBitcoin)
The IRS handed out a total of nearly $1.1 million in bonuses in a 27-month period to more than 1,146 employees who had been disciplined for failing to pay taxes, according to an inspector general’s report.
“This is outrageous,” said Rep. Sam Johnson (R-Texas). “The IRS is essentially telling its employees: Break the law and we will reward you.”
The employees were among more than 2,800 at the agency who received performance awards within one year of disciplinary action, such as suspensions or written reprimands for drug use, filing fraudulent time sheets or other misconduct, the report found.
Overall, about two-thirds of IRS employees received cash bonuses and other performance awards, such as extra time off, in 2011 and 2012, the report said.
But it was the payments to agency workers who had been disciplined for “substantiated federal tax compliance problems” that drew bipartisan outrage Wednesday.
Those employees also received awards of more than 10,000 hours of extra time off and 69 faster-than-normal pay grade increases from Oct. 1, 2010, to the end of 2012.
“How can we expect the American people — many of whom are struggling to make ends meet — to trust their government when they learn that the very agency charged with collecting their tax dollars is rewarding employees who haven’t paid theirs?” Sen. Joe Manchin III (D-W. Va.) wrote to IRS Commissioner John Koskinen.
The performance awards did not violate the law, said J. Russell George, the Treasury inspector general for tax administration.
The IRS’ contract with the National Treasury Employees Union states that disciplinary action or investigations do not preclude an employee from receiving a bonus or other performance award unless it would damage the integrity of the agency.
But George said that “providing awards to employees who have been disciplined for failing to pay federal taxes appears to create a conflict with the IRS’s charge of ensuring the integrity of the system of tax administration.”
The IRS already has been under intense criticism since agency officials said last year that employees improperly targeted applications from conservative groups seeking tax-exempt status.
The bonuses now add “bad, bad news for the agency’s public image,” said Pete Sepp, executive vice president of the National Taxpayers Union.
IRS employees disciplined for failing to pay back taxes should not be denied bonuses, but the money should be diverted to pay what they owe, Sepp said.
“If we’re assuming that the awards are given out on true merit … then say, ‘Sorry, you owe $800 on a lien and you’ve exhausted all your appeals; your reward is reduced accordingly,’” he said.
Federal workers have been criticized in recent years for failing to pay taxes, which help pay for the agencies that employ them.
As of the end of the 2011 fiscal year, federal employees and retirees combined owed $3.5 billion in delinquent taxes, according to the IRS.
Rep. Jason Chaffetz (R-Utah) has been pushing a bill that would allow the firing of federal employees who are seriously delinquent on their taxes and prohibit the federal government from hiring anyone with such a debt. The legislation passed the House on a bipartisan 263-114 vote in 2012 but was not taken up by the Senate.
In light of the inspector general’s report, Chaffetz renewed his call for the legislation.
“The indiscriminate awarding of bonuses to the very people IRS should be firing is unacceptable,” Chaffetz said.
This isn’t the first time the IRS has had problems with making payments to workers who owe taxes. An inspector general’s report in August found that about 5% of the agency’s contract employees owed a total of nearly $5.4 million in back taxes.
The IRS issued a statement saying that it already was making changes to its bonus policy.
“The IRS takes seriously our unique role as the nation’s tax administrator,” the agency said. “We strive to protect the integrity of the tax system, and we recognize the need for proper personnel policies.”
The IRS said it had developed a policy linking conduct to performance awards for executives and senior-level employees.
Even without such a policy, during the previous four years, “the IRS has not issued awards to any executives that were subject to a disciplinary action,” the agency said.
The IRS said it is considering a similar policy for the rest of the agency’s workforce, but that would have to be negotiated with the National Treasury Employees Union.
The union’s national president, Colleen M. Kelley, defended the bonuses.
She said employees of the Treasury Department, of which the IRS is a part, had a tax delinquency rate of 1.08% in 2011, the most recent data available. That was lower than any other federal agency and well below the public’s 8.2% delinquency rate.
“IRS employees take very seriously their responsibility to pay taxes,” Kelley said. “At times, however, IRS employees can face the same kinds of financial pressures that impact other taxpayers. They may have to deal with the financial aftermath of a serious illness or divorce or an unemployed spouse.”
A 1998 law requires the IRS to fire employees for certain intentional offenses, including failing to file tax returns on time or understating how much they owe. But if the offenses are not determined to be intentional, they can simply face disciplinary action.
The inspector general’s audit was done because new federal guidelines in 2011 required agencies to reduce spending on bonuses and other awards. And IRS spending on bonuses declined in 2012 compared with 2011.
In 2011, the IRS paid $91.6 million in bonuses and granted almost 520,000 hours of extra time off to a total of 70,500 of the agency’s 104,400 employees, the report said. That amounted to awards for 67.5% of employees.
The following year, spending on cash bonuses dropped to $86.3 million and time-off awards fell to about 490,000 hours. But the percentage of employees receiving performance awards in 2012 increased as the workforce declined. The agency gave awards to 67,870 of its 98,000 employees, amounting to 69.3% of the staff.
Sepp said he had broader concerns about the large percentage of IRS employees receiving bonuses.
“It just doesn’t seem in tune with the reality of any workforce, public or private, that more than half of them would get some kind of merit-based award,” he said.
Apparent IRS Leak Reveals ‘Thousands’ of Wealthy Americans’ Confidential Tax Data
Illegal disclosure comes as Biden admin works to double size of tax agency.
As the Biden administration works to double the size of the IRS and institute new income reporting requirements, an apparent internal leak revealed the confidential tax data of some of the wealthiest Americans.
The data—published Tuesday by ProPublica—covers more than 15 years of tax returns filed by “thousands of the nation’s wealthiest people.” According to the nonprofit news organization, the private information came from an “anonymous source” who provided “large amounts of information on the ultrawealthy,” including taxes, income, and stock trades.
Under federal law, government employees who “willfully” disclose “any return or return information” without authorization are subject to federal charges.
The leak comes as the Biden administration pushes to hire nearly 87,000 new IRS staffers through an $80 billion budget increase. The proposal also includes additional income and transaction reporting requirements, which Sen. Mike Crapo (R., Idaho) said “is of great concern … in light of the ProPublica report we saw today.”
“This information today is very relevant, in my opinion, to some of the proposals that the administration has on the table to expand the IRS’s access to data on people,” Crapo said Tuesday during a Senate Finance Committee hearing. “Not just to their tax filings, but for individuals and companies, to have their data and financial institutions open to access to the IRS. These are issues that are very significant and require resolution.”
IRS commissioner Charles Rettig said the agency has launched “an investigation with respect to the allegations that the source of the information in that article came from the Internal Revenue Service.”
“Upon reviewing the article, the appropriate contacts were made, as you would expect,” Rettig said during the hearing. “The investigators will investigate, and ultimately that will be there.”
IRS Leak Of Wealthy Taxpayer Records Can Be Used To Destroy Any American: Rep Issa
Issa noted the records were ‘either criminally handed over by the IRS or criminally stolen from the IRS’.
Rep. Darrell Issa, R-Calif., is among the GOP lawmakers sounding the alarm about a leak of wealthy taxpayer records to ProPublica earlier this year, which he says is proof that anyone’s sensitive information can be “used to destroy them” if it advances Democrats’ political agenda.
Issa told FOX Business in a statement on Tuesday that there is no getting around the fact that the records, belonging to some of the nation’s wealthiest individuals, were “either criminally handed over by the IRS or criminally stolen from the IRS.”
“It’s proof positive that anyone can have their most private information made public and used to destroy them if it advances the agenda of Democrats or shores up the power of progressive special interests,” Issa said.
The California Republican, who is a member of the House Judiciary Committee, said the situation highlights the fact that the IRS is out of control, “failing its obligation to every American,” and in need of reform before the situation worsens.
Other lawmakers, including Sen. Joe Manchin D-W.Va., have also stressed the urgent need for the IRS to be overhauled.
A spokesperson for the IRS did not immediately return FOX Business’ request for comment.
In June, ProPublica published a report after allegedly obtaining years’ worth of private tax records from several high-profile individuals, including Amazon CEO Jeff Bezos, Tesla CEO Elon Musk and billionaire investor Carl Icahn.
The publication came to the conclusion that these rich individuals are able to pay a low tax rate compared to the growth in their wealth and incomes. In some cases, the “true tax rate” of the nation’s wealthiest individuals was close to nothing, the report said.
The tax data was widely reported and used as a basis for proposals to increase taxes on the wealthiest Americans – an agenda supported by Democrats in Congress and the Biden administration.
Sens. Elizabeth Warren, D-Mass., and Sheldon Whitehouse, D-R.I., called for an investigation into tax avoidance schemes following the report’s release. At the time Warren also plugged her wealth tax, called the ultra-millionaire’s tax, of which Whitehouse was an original cosponsor.
Issa and Rep. Jim Jordan, R-Ohio, sent a letter to the Inspector General for Tax Administration on Tuesday expressing concern about the leak of wealthy taxpayer data. The pair noted that the disclosures were made in violation of the law and requested a staff-level briefing by Aug. 10.
35 Million: The Total Backlog Of Tax Returns The IRS Had At The End Of Tax Season
The Internal Revenue Service has released a midyear report to Congress that details a significant backlog of tax returns dating back to the end of tax filing season, and many of those returns have yet to be processed.
While backlogs are not unusual, this year’s is far greater than in previous years.
That’s bad news for those taxpayers who are eagerly waiting for tax refunds. For tax year 2020, roughly 70 percent of the individual returns that have already been processed have resulted in refunds being paid.
Those refunds have averaged $2,827.00, but there were still more than 35 million returns for last year that had not yet been addressed by mid-May. An independent advocacy group within the IRS says that at the same point in time the previous year, there were a third the number of backlogged returns as now.
In writing the report, national taxpayer advocate Erin M. Collins said, “For taxpayers who can afford to wait, the best advice is to be patient and give the I.R.S. time to work through its processing backlog. But particularly for low-income taxpayers and small businesses operating on the margin, refund delays can impose significant financial hardships.”
The agency issued a statement indicating that by June 18th, two months after the official filing deadline, almost seven million individual tax returns had been processed. Their work is ongoing continuously, addressing both current returns, those from previous years, and amended returns. More than twice that many are currently being processed.
Backlogs have been a problem in the past, but an evacuation order issued as a result of the pandemic kept IRS employees out of processing facilities, and that and the need to incorporate new tax legislation passed for the 2021 filing season has made things far worse.
The agency was also responsible for sending out the third stimulus payment, bringing the total value of payments to $807 billion and the number processed over a 15-month period to 475 million.
While 2019 saw a backlog of 7.4 million returns at the close of tax filing season and 2020’s backlog reached 10.7 million, 2021’s 35 million return backlog has led to several recommendations and objectives being issued to improve things in the future.
A large number of tax returns were processed before the tax filing deadline, and of those 136 million returns, 96 million required that refunds totaling about $270 billion be paid. Both individual returns and business returns are included in the 35.3 million that still need to be processed, and those in the backlog all require additional intervention from an IRS employee in order to be processed.
Yellen Urges House To Include IRS Reporting Provision In Budget Package
Treasury Secretary Janet Yellen urged the chairman of the House Ways and Means Committee to include a provision requiring banks to report customer transaction data to the Internal Revenue Service amid negotiations over the $3.5 trillion budget reconciliation bill.
The IRS reporting measure, which has come under fire from the banking industry, would mandate that banks and other financial institutions report transaction data to the government for all accounts with more than $600 in inflows or outflows.
Last week, American Banker reported that the provision was under Senate consideration as one of many revenue offset intended to help offset the costs of the $3.5 trillion package making its way through Congress. But a list of House “pay-fors” did not include the IRS reporting requirement.
Yellen argued in a letter dated Tuesday to House Ways and Means Chairman Richard Neal, D-Mass., that the impact of the reporting measure on reducing tax avoidance would be “substantial.”
“I write in enthusiastic support of the financial institution reporting provisions advanced in the President’s tax compliance agenda,” said Treasury Secretary Janet Yellen.
“I write in enthusiastic support of the financial institution reporting provisions advanced in the President’s tax compliance agenda,” Yellen wrote. “These information reporting provisions will make use of information financial institutions already know to help shed light on taxpayers who evade their tax obligations.”
Yellen said the account reporting framework proposal, introduced by the Treasury Department last spring, was “designed to ensure that there will be no increase in taxpayer burden associated with this regime.”
“For already compliant taxpayers, the only effect is a distinct benefit — a lowered likelihood of costly and burdensome audits,” Yellen said.
Instead, the primary goal of the government’s tax reporting push was “to help the IRS pursue high-end noncompliance by providing some information about opaque income streams that disproportionately accrue to the top,” she said.
Yellen’s letter also came attached with a memorandum authored by Mark Mazur, the Treasury Department’s acting assistant secretary for tax policy. In it, Mazur shared a ballpark estimate for how much money the information reporting requirement could help the government collect, even if Congress settled on a reporting threshold higher than $600.
“We do not know the exact parameters of Congressional proposals, but we expect that they are likely to incorporate a narrower reporting regime than was the basis of the Administration’s information reporting proposal scored by Treasury,” Mazur wrote. “Although we have not scored any particular proposal, we suspect the revenue potential of a narrower reporting regime would be lower, perhaps in the range of $200-250 billion over the ten-year budget window.”
Banks Are Wrong to Fight Proposed New IRS Disclosure Rule
Collecting more information about taxpayers’ accounts is more effective in getting people to pay what they owe and far less intrusive than conducting more audits.
Few among us want the Internal Revenue Service to conduct more audits. So what’s the best way for the IRS to shrink the tax gap — taxes owed but not paid? The key is better targeted audits, not just more of them. And the key to more effective audits is information.
The Biden administration budget now being considered by Congress calls for $80 billion in new funding over 10 years for the IRS to hire the staff and adopt the 21st century technology necessary to begin closing the $600 billion annual tax gap.
A critical component of the administration’s plan would enable the IRS to evaluate the amount of deposits and withdrawals flowing through bank accounts above a $10,000 threshold. This reporting is important for two reasons.
First, knowing that the IRS will have information that could highlight the underreporting of revenue on a tax return will make taxpayers more mindful of the perils of tax evasion and encourage honest reporting.
Second, knowing how much money flowed through an account will enable the IRS to better target which tax returns should be examined and possibly audited by comparing the cash coming into accounts with the amounts reported on returns. If there was a significant discrepancy the IRS would ask the taxpayer for more information.
Without this additional deposit and withdrawal reporting, shrinking the tax gap will have to rely solely on an expanded audit program, which will take many years to implement and wouldn’t be anywhere near as effective or desirable.
Curiously, the banking industry is fighting the proposed increased reporting on a variety of grounds such as “privacy concerns”, technical issues and, revealingly, “putting our customers in an untenable position.” None of these reasons withstand scrutiny.
First, expanding the use of IRS form 1099, which reports miscellaneous income such as bank account interest, won’t reveal any personal or proprietary information, and is far less intrusive than an audit.
Taxpayers and the IRS already receive a 1099 on any bank account that earns more than $10 interest in a year. This new requirement would simply add two line items to this form: aggregate deposits and withdrawals.
Second, industry experts, such as the Chief Information Officer of a large bank that worked with one of us, tell us that the proposed new form 1099 would be simple to enact and virtually cost-free because the underlying data is already in bank computers; taxpayers wouldn’t have to do anything.
Finally, putting the bank’s customers in an “untenable” position is only an issue if the customer is willfully evading taxes.
The banking industry and their lobbyists are making a strategic mistake in opposing the Biden administration’s tax-compliance initiatives, especially the added reporting requirements. Banks benefit enormously from their close association with government.
Here are three examples: A strong regulatory regime fosters the industry’s safety and soundness; the Federal Reserve provides liquidity in emergencies; and the Federal Home Loan Bank supports residential mortgage lending.
In return, the banking industry helps government shoulder the burden of compliance with a variety of laws and regulations. In addition to banks providing taxpayers and the IRS with billions of form 1099s on interest earned, banks with securities activities report all dividends earned as well as the aggregate revenue of securities sold during a year so that gains or losses can be appropriately reported on the taxpayer’s return.
Also, banks report large cash transactions and a variety of other “suspicious activities” to the appropriate government department for investigation.
Given this longstanding record of cooperation between government and the financial services industry, all with the intent of ensuring compliance with laws and regulations, it’s puzzling that the banking lobbyists are so aggressively fighting the administration’s efforts to add a minor level of additional reporting that could dramatically reduce the massive tax cheating by mostly upper-income earners in the U.S. each year.
Yes, $80 billion is a big increase for the IRS, but the IRS’s workload is way up and staffing is way down. Incredibly, the IRS’s budget today relative to GDP is around 50% of what it is was in 1993.
Further, the Biden administration says its $80 billion investment would raise $780 billion in the first 10 years, a return on investment of more than 9 to 1. More than half of that return comes from this new information reporting requirement.
People love to hate the IRS, but it’s in everyone’s interest for the IRS to be efficient and effective, which today it is not. The Biden plan to properly fund the IRS and close the tax gap is desperately needed. Shouldn’t we collect taxes that are owed before we raise new taxes on people who already pay what they owe?