IRS Cleans Up Tax Exempt Application Process

Or so they say.  So here comes the Treasury Secretary for Tax Administration (TIGTA) to check the situation out.

Recall that TIGTA had previously found that ineffective IRS management has resulted in (1) inappropriate criteria being used to identify for review organizations applying for tax exempt status based on names and policy positions instead of indications of political campaign intervention, (2) substantially delayed processing of certain applications, and (3) unnecessary information requests being issued by the Revenooers.

So now TIGTA says IRS has taken significant actions to eliminate the selection of potential political cases and to eliminate unnecessary information requests.  How nice.  We’ll see.

And it seems that our TIGTA friends have been really busy of late – also reporting on its recent review of IRS processes to address willful violations of tax law by IRS’ own employees!  Unfortunately, TIGTA found that IRS mitigated proposed terminations in over 60% of cases involving willful tax noncompliance by IRS employees and did not clearly identify reasons why some employee terminations were mitigated!

Believe it or not, during the period 2003 through 2013, 1,580 IRS employees were found to be willfully tax noncompliant.  Indeed, the law states that the IRS shall terminate employees who willfully violate tax law, though it gives the Commish the sole authority to mitigate cases to a lesser penalty.  Over this ten year period, 39% of these employees with willful tax noncompliance were terminated, resigned, or retired.  But for the other 61%, the proposed terminations were mitigated to lesser penalties such as suspensions, reprimands, or counseling.

The next time the Revenooers find that you made some error, tell them that you’ll settle for a mere “reprimand” – or better yet, just counseling and see how far you get.

The mitigated cases included willful overstatement of expenses, claiming the “First-Time Homebuyer Tax Credit” without buying a home, and repeated failure to file required Federal tax returns timely.

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He can be reached at 831-7288, and welcomes comments at jquinn@ashleyquinncpas.com.

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