At every Internal Revenue Service Nationwide Tax Forum I've attended, the display table that attracts the most attention is the one touting the agency's law enforcement branch.
The IRS Criminal Investigation (CI) unit digs into potential
criminal violations of the Internal Revenue Code and related financial
crimes.
In the fiscal year that ended Sept. 30, 2012, IRS criminal investigators might not have nabbed a crook to rival Scarface, but the tax lawmen did increase their results over actions taken in 2011.
The CI branch initiated 5,125 cases in fiscal 2012.
The number of investigations completed reached 4,937.
That was up 5 percent from the prior fiscal year, according to the CI unit's FY2012 annual report released on May 10.
Convictions in 2012 totaled 2,634. Even better news, the conviction rate
edged up slightly to 93 percent.
The report has lots of other data, including that in the table below comparing the 2010 through 2012 fiscal years.
*Sentence includes confinement to federal prison, halfway house, home
detention or some combination thereof.
But this week'sBy the Numbers honor goes to the smaller, but significant figure of 2.7.
The report notes that the increased 2012 enforcement efforts were accomplished with 2,657 IRS CI special agents on staff, a 2.7 percent decrease in investigators compared to FY 2011 personnel.
You can peruse the 28-page report for details on notable prosecutions in 2012, as well as details on CI actions in other investigative areas including:
The ringleader of a South Florida identity theft ring that filed $11.7 million worth of fraudulent federal income tax refunds was sentenced last week to more than 26 years in prison and $1.9 million in restitution.
At the sentencing of Alci Bonannee, 36, of Fort Lauderdale, federal prosecutors said the scheme was one of the biggest and most successful they've seen. It was so convincing, noted the trial judge, that the
Internal Revenue Service approved some $4.5 million of the requested
refunds.
Why is Florida a hotbed for tax crimes that tend to focus on refundable credits such as the Additional Child Tax Credit and the Earned Income Tax Credit (EITC)?
Many Florida residents either
have low or no earned income because they are retired or transient, meaning most don't file returns. But they have Social Security numbers that when stolen by ID thieves can be used to file false returns.
Florida has a large population of
recently deceased people whose identities are stolen and again repurposed for criminal tax use.
Florida doesn't have a state income tax, which can
cause identity theft to go undetected longer.
I spent six mostly great years in South Florida, but this tax fraud situation makes me glad the hubby and I are no longer living in tax fraud central.
First up was a Treasury Inspector General for Tax Administration (TIGTA) report that the IRS is
still handing out billions that it shouldn't. In fiscal year 2012 alone,
according to TIGTA, the tax agency paid out as
much as $13.6 billion in improper EITC claims.
Then came word, this time at a Congressional hearing on what the Senate Special Committee on Aging calls an epidemic of identity
theft among seniors, that in the ongoing battle between the IRS and identity thieves, the crooks have the edge. For now.
You can check out my new posts at Bankrate Taxes Blog on Tuesdays and Thursdays. If, however, you happen to miss them there, you can find a summary (and links) here the following weekend.
Wesley Snipes signing autographs at Comic-Con 2010. He entered federal prison later that year to serve time for not filing three years' worth of tax returns. (Photo by Athene cunicularia via Wikipedia)
Snipes spent most of that term in the McKean Federal Correctional Institution in northwest Pennsylvania.
House arrest, too: Snipes, however, is not a totally free man.
TMZ says that the
Federal Bureau of Prisons has transferred Snipes' case to the New
York Community Corrections Office, which for the next few months will oversee the home
confinement of inmate #43355-018, as Snipes is officially known on the federal prison system's registry.
The actor, whose wide-ranging roles include action films (Passenger 57 and the Blade vampire trilogy), comedies (White Men Can't Jump and To Wong Foo, Thanks for Everything! Julie Newmar) and dramas (One Night Stand and Mo' Better Blues), reportedly will remain under house arrest until July 19.
While Snipes hasn't been able to make any movies while incarcerated, he no doubt had other streams of income during that period.
I'm sure he and his accountants have made sure he filed the proper paperwork for that money with the Internal Revenue Service.
The IRS assesses a 5 percent penalty, which is calculated on the amount
of tax due, for each month or portion thereof that you don't file a tax return. This can add up after
five months to a maximum
penalty of 25 percent.
If you file but don't pay all the tax you owe, the IRS only charges a 0.5 percent penalty for
each month your tax is not paid in full. There is, however, no maximum for not paying your tax bill.
And if you willfully ignore your tax filing tasks, Uncle Sam will prosecute you on criminal tax evasion charges.
Just ask Wesley Snipes.
So be sure to get a tax return or extension request to the IRS by April 15.
There are lots of excuses reasons for not filing taxes.
There also is a big reason for taking care of your delinquent tax duties: Penalties.
That was a recurring theme when I asked tax professionals via Facebook and Twitter what advice they give folks who've neglected to file returns.
"I make sure they understand the potential seriousness, i.e., criminal
penalties, and emphasize the need to deal with it ASAP since it only gets
worse," says Diane L. Gilabert, aka @GilabertTax on Twitter.
BTH Tax Blog also stresses that the penalty for not filing and owing taxes is much greater than for simply not paying. "The faster you take action, the less
you will be penalized," notes BTH via Facebook.
So what is the deal with non-filing and nonpayment penalties? Glad you asked. Today's Daily Tax Tip has the details.
As the two tax pros point out, the Internal Revenue Service can whack you separately for not filing a return and for not paying what you earn.
And the IRS treats not filing as the more serious transgression.
Why? Good question. My best guess is that the IRS figures that once it gets filing documentation from you, even if you don't pay all or any of what you owe, at least you know that you owe.
And folks who acknowledge their filing responsibility are more likely to try to pay at least part of their tax bills than those who ignore not only the tax debt but also the filing process.
When you don't file, the IRS assesses a 5 percent penalty, which is calculated on the amount of tax due, for each month your return is late. This can add up after five months to the maximum
penalty of 25 percent.
The failure-to-file penalty starts accruing from the deadline, including extensions, of your tax return and runs until the date you get the form to the IRS.
The failure-to-pay penalty also is based on the amount of tax you owe. The IRS charges 0.5 percent for
each month your tax is not paid in full, and there is no maximum for not paying your tax bill.
The nonpayment penalty starts accruing from the April due date because there is no extension to pay, only an extension to file the forms.
Combined penalty calculations: In situations where you don't file a return and don't pay you tax liability, the IRS assesses a 4.5 percent, instead of the usualy 5 percent, for not filing along with a 0.5 percent for not paying.
Sounds like you're getting a bit of a break, right? Wrong, especially if you don't take steps to resolve your taxes.
The total failure-to-file and failure-to-pay penalties can eventually add up to 47.5 percent of what you owe: 22.5 percent for late filing and 25 percent late payment of the tax owed.
Don't forget the interest, which is
compounded daily. Even at today's low rates, that adds up quickly.
If you put off filing for more than 60 days, the IRS can collect a failure-to-file penalty that is the smaller of $135 or 100 percent of the tax
you owe.
More drastic penalties: If you're egregiously delinquent, you can expect the IRS to file a tax lien against you.
Most of the time we hear about liens when celebrities are hit with them, such as Arnold Schwarzenegger, Lindsay Lohan and Nic Cage. But believe me, the IRS goes after regular folks, too, to get unpaid tax money.
But I get an email announcement almost every day from the Justice Department about criminal charges it has filed against nonfamous folks for not filing or paying their taxes. These are often followed by announcements of jail time given to tax scofflaws.
So unless you want to make an unplanned move to sparse federal housing, file and pay your taxes.
And if you're in a nonfiling or nonpaying tax fix, your best first move is to hire a tax professional to help you negotiate the process in the least costly and painful way possible.
No filing, no refund: Of course, if you don't owe any tax, you might think what's the big deal about not filing?
Wendy Cassera says, via Facebook, that she had a client who hadn't filed for six years because he couldn't afford to pay his taxes.
"They caught up with him, of course, and when he brought me his tax returns and I completed them, it turns out he was due a refund every year that he didn't file," says Cassera. It came to an average of about $1,800 a year, but, she notes, he could only collect on the last three years.
"Why give the IRS almost $6,000 more than they are owed? What could you do with that money?" asks Cassera.
Tax season is fraud season. And a large amount of illegal tax returns are being filed by people who are already in jail.
But a provision of the fiscal cliff tax law, officially known as the American Tax Relief Act of 2012, could help the Internal Revenue Service stop or at least slow down fake refund filings by inmates.
Last December, as Congress was fighting about ways to deal with expired and expiring tax laws, the Treasury Inspector General for Tax Administration (TIGTA) released a report on tax fraud by prisoners.
The tax watchdog office found that the amount of fraudulent tax returns filed by prisoners and caught by the IRS skyrocketed from just over 18,000 in 2004 to more than
91,000 tax returns in 2010.
The dollars that the felons tried to claim showed an equally impressive and distressing jump. The fake refund requests went from $68 million to nearly $758 million in that six-year span.
Fraudulent Tax Returns Filed by Prisoners for Calendar Years 2004–2010 [3] Refunds Prevented and Refunds Issued may not total the Refunds Claimed for Calendar
Years 2004 through 2010 because Refunds Claimed did not include adjustments
made during tax return processing in those years. Click table for a larger view.
With those numbers, it's no wonder that TIGTA found "refund fraud committed by prisoners remains a significant problem
for tax administration."
The good news, for the IRS and us taxpayers who aren't incarcerated, is that the tax agency stopped the vast majority of fraudulent refunds from
actually getting into the hands of prisoners.
The bad news is that $35 million still managed to make it to Graybar Hotel residents.
More recently, TIGTA found that through three-quarters of fiscal year 2012 (the end of June that year), prisoners had filed more than 170,000 fraud tax returns that were caught. That saved $2.1 billion from going to the criminals who were continuing their illegal tax activity from their cells.
Working with prison officials: TIGTA's reason for the assessment was to determine the reliability of
the IRS Prisoner File. This is the data collected by the Federal Bureau of
Prisoners and State Departments of Corrections on
prisoners.
The IRS' ability to stop illegally filed returns by prisoners depends on the accuracy and reliability
of the Prisoner File.
But the information trade wasn't reciprocal when TIGTA did its study. At that time, the IRS doesn't have the authority to
tell prison officials anything about the fraudulent tax
returns filed by prisoners.
When prison personnel can't curtail tax abuse from the criminals' end, said TIGTA, IRS efforts to identify fraudulent refunds on prisoner tax
returns is not fully effective.
TIGTA recommended that the IRS compare prison and prisoner files. The tax watchdog office also noted that legislation is needed to permanently authorize the IRS
to share data with the prisons.
A prior law gave the IRS authority to inform prison officials about prisoners who filed fraudulent tax returns, but the law expired. Legislation was subsequently introduced to give the IRS the authority to disclose prisoner tax return information to the Federal Bureau of Prisons and the State Departments of Corrections if the prisoner filed or helped in the filing of a fraudulent tax return.
But the proposal didn't go anywhere ... until Jan. 1, 2013.
Share and share alike:Section 209 of ATRA enhances and makes permanent the previous prisoner tax fraud provision that allows
the IRS to disclose certain tax return information
to prison officials to curb tax fraud by inmates.
The measure was part of the tax extenders bill approved by the Senate Finance Committee and rolled into ATRA. The Committee report on the prisoner information exchange noted that "sharing information with prison officials will allow the
prison officials to take appropriate disciplinary and administrative
action to deter prisoners from filing false federal tax returns."
In addition, the report pointed out that since "many state prisons are run on a contract basis, and the
IRS has identified a number of these prisons as sources of false
returns, the Committee believes that equal disclosure authority should
be afforded to such prison officials to address the matter."
So in addition to stopping prisoner tax refund fraud, ATRA also could help ensure that Uncle Sam cut deals with more efficient private prison administrators.
And there's another bonus.
Along with preventing prisoners from filing and sometimes collecting fraudulent refunds, the Senate Finance Committee preliminary estimates indicate that the permanent extension of the prisoner information sharing provision could raise $12 million over ten years.
Americans spent nearly $1.47 billion on Cyber Monday, a 17 percent increase over last year's Monday after Thanksgiving shopping spree. It also was the biggest online spending day in history, according to research by ComScore Inc.
Increasing online taxes, too: More of us each year also are turning to our computers to file our taxes, both with the Internal Revenue Service and state tax departments.
But recent theft of state tax information by computer hackers has put us, and state tax officials, on alert.
It's also cost the head of the South Carolina tax department his job.
Jim Etter, director of the S.C. Department of Revenue, will step down at the
end of the year. His resignation comes after criticism of how the state handled a security breach of its online tax data.
However, the hack and possible identity theft dangers to South Carolina taxpayers wasn't announced until October.
Other state tax departments on guard: The Palmetto State tax hacking has had ramifications beyond its borders.
Now every state that collects or maintains tax information from its citizens electronically, and that basically means every state, is taking another look at its security systems.
A computer security firm hired by South Carolina told a special state senate hearing this week that the tax hackers would have been thwarted if a $25,000 dual password system had been in place.
You can bet tax officials in the 49 other states and the District of Columbia are now looking into that double password protocol.
More fearful e-filers? While the South Carolina tax hack wasn't connected to electronic filing, you can bet that some folks will now have second or more thoughts about doing tax business online.
That's probably an over reaction. Even if you send your information to the tax collector on paper, it gets entered into the system's computer database.
So while you might avoid the highly unlikely prospect of theft during transmission of your return, you have no control over what happens once your info is put into the state's electronic tax system.
Still it's worth it to ask your state tax office what kind of cyber security precautions it has in place. I suspect most of them will be much tougher now.
Criminals who target taxpayers do their dirty deeds year round, but some nasty tax crooks are haunting individual filers and state tax officials this Halloween season.
Actually, on the state level, the tax ghouls got an early start.
South Carolina's state law enforcement and tax officials learned earlier this month that an international hacker broke into the Palmetto State's Department of
Revenue computer files and gained access to about 3.6 million tax
returns, along with around 387,000 credit and debit card numbers.
The theft of personal financial information, however, might have started as early as late August.
Most of the information on the South Caroline revenue collection system, which includes state tax filings from 1998 to the present, is encrypted.
But, said
officials, the crooks were able to get their hands on unencrypted Social
Security numbers and around 16,000 unencrypted payment card numbers.
Officials aren't saying from which country the cyber break-in originated, just that the hacker was located outside the United States.
And they acknowledge that he or she had aobut 10 days to pilfer taxpayer data.
The good news is that the hacker(s) failed to access all of the tax information on the South Carolina system.
The S.C. Department of Revenue also has since contracted a private security company to assist in the investigation, help secure the state's computer tax system, install new equipment and software and institute tighter controls on system access.
In the meantime, South Carolina tax officials encourage anyone who has filed a state tax return since 1998 to visit protectmyid.com/scdor or call 1- 866-578-5422 to determine if their information is affected.
If so, affected taxpayers can immediately enroll in one year of identity protection and credit monitoring with Experian. The state will pick up the service's cost.
Tax phishing attempts, too: While folks in South Carolina are dealing with a cyber security tax threat, the Internal Revenue Service this week issued a special reminder to all taxpayers to beware of fake IRS websites.
The agency has recently received reports of a new tax scam that uses a website that mimics the IRS e-Services online registration page.
The actual IRS e-Services page offers Web-based products for tax preparers, not the general public. The phony Web page, says the IRS, looks almost identical to the real one.
The IRS gets many reports of fake tax websites year round. Criminals use them to phish for people who will provide personal and financial information that may be used to steal taxpayer money or identity.
If you get such a mailing, remember that the IRS never sends unsolicited messages to taxpayers.
Also note the website's URL. The address of the official IRS website is www.irs.gov. Fake sites set up by cyber crooks do not use the .gov suffix. Instead they end in .com, .net, .org or other designations.
If you find a suspicious website that claims to be the IRS, email the site's URL to phishing@irs.gov. Put "Suspicious website" in the email subject line.
And you and your tax information stay safe, this Halloween and the other 364 days of the year.
Bradley Birkenfeld, the former UBS banker credited with helping break open Uncle Sam's investigation into secret untaxed Swiss accounts, is about to be $104 million richer.
The Internal Revenue Service has recommended that Birkenfeld, who served around two and a half years in federal prison for a fraud conspiracy conviction related to the case, get that amount of money as a reward.
It's the largest whistleblower amount ever awarded by the IRS.
Birkenfeld's insider info helped the IRS collect more than $5 billion in unpaid
taxes from foreign banks and nearly 15,000 individuals who used their services to avoid paying U.S. taxes, as well as was a motivator in the Swiss government decision to change its tax treaty
with the United States and turn over the names of more than 4,900 U.S. taxpayers who held illegal offshore accounts.
In addition, since the UBS investigation began, more than 35,000 taxpayers have participated in amnesty, or as the IRS prefers to call them offshore voluntary disclosure programs.
Ask and you could receive: The IRS didn't agree to give Birkenfeld the reward out of the goodness of its heart. Rather, Birkenfeld did what any other tax cheat reporting taxpayer would do; he filed a reward claim with the tax agency.
Under federal law, a whistleblower could be entitled to a reward of
between 15 percent and 30 percent of the total previously unpaid tax that is collected. There is no limit on the dollar amount that can be paid out to tax cheat reporters.
Birkenfeld's lawyers released a redacted IRS summary award report that praised the former banker for providing comprehensive information that was "exceptional in both its
breadth and depth."
"While the IRS was aware of tax compliance issues related to secret bank accounts in Switzerland and elsewhere, the information provided by the whistleblower formed the basis for unprecedented actions against UBS AG, with collateral impact on other enforcement activities and a continuing impact on future compliance by UBS AG," said the award recommendation
Birkenfeld was not in Washington, D.C., for today's announcement of his award. He's still serving three years' probation under home confinement. His attorneys are seeking a presidential pardon for Birkenfeld.
In his place, Birkenfeld's brother Douglas read a statement from the newly wealthy whistleblower that said, in part, that he plans to "identify several humanitarian ways to give back in a meaningful and productive fashion."
Birkenfeld's fate: I hope Birkenfeld is pardoned. Law enforcement makes deals with crime participants all the time, many of which include full immunity.
And as Birkenfeld said in his statement, and a point that was repeated by several attorneys and representatives of the National Whistleblowers Center at the press conference, future financial whistleblowers deserve to be praised and protected, not prosecuted.
If Birkenfeld's original attorneys had used the whistleblower statutes, that might have been his fate instead of time in Club Fed.
Today's IRS award announcement shows that the agency believes he was key to its massive and continuing effort to end offshore tax evasion. Birkenfeld should get his life back for his part in that success.
Ratting out tax cheats: If you have information about someone or some company that is ingoing tax responsibilities, follow Birkenfeld's lead. Well, at least the part about reporting the tax misdeeds.
If you suspect or know of an
individual or company that is not complying with the tax laws, you may
report this activity by completing Form 3949-A.
You may fill out the form online, print it and mail it to the Internal
Revenue Service in Fresno, CA 93888. (No street address necessary. The
Post Office knows where to find the Fresno IRS office.)
If you prefer, you may send a letter
instead of the form to the Fresno address. In that case, the IRS would
like you to include, where possible, the following information:
Name and address of the person you are reporting,
The taxpayer identification number (Social Security number for an individual or employer identification number for a business),
A brief description of the alleged violation, including how you became aware of or obtained the information,
The years involved,
The estimated dollar amount of any unreported income, and
Your name, address and daytime telephone number.
About that last bullet point. The IRS
says you don't have to reveal your identity. But if information on a
tax cheat entitles you to a reward, giving your name and contact info is
the only way the IRS will know where to send the money.
Also check out the IRS memo on what to expect when providing the agency with information about tax evasion.
That system has improved over the years, but it still takes a while and requires the actual collection of substantial unpaid taxes before the IRS Whistleblower Office says thanks to tax tattletales with cash.
Still, under the right circumstances, the tax cheat reporting and wait can be very rewarding. Just ask Bradley Birkenfeld.
The National Football League kicks off its 2012 season tonight, so naturally I'm thinking about taxes.
Hey,
it's my Dallas Cowboys against the New York Giants. Given the Pokes
recent history with their NFC East rival, I'll be much less angry and
frustrated dealing with taxes than what probably will happen on
the field tonight.
Photo my ME! at Cowboys vs. Detroit game in Jerry's World. We won!
The good tax news is that current NFL players apparently are meeting their tax responsibilities.
But for some former NFLers, it's a different story.
K.R.
Hoffman & Co., LLC, a tax advisory firm in Plantation, Fla.,
reports in its blog that Plaxico Burress, late of the New York Giants
and still hoping to catch on with another team this season; Jamal "Dirty
Bird" Anderson, a running back for eight seasons for the Atlanta
Falcons; William James, a journeyman cornerback for six NFL teams; and,
for all you old-time football fans, former Oakland Raiders quarterback
Kenny Stabler are all in trouble with the Internal Revenue Service.
These
former NFL players allegedly made millions from their on-field days and
post-football careers but either didn't bother to file returns or
shortchanged Uncle Sam.
Uh-oh O.J.: And everyone's favorite football felon also is in trouble again, this time with the IRS.
The
celebrity gossip website TMZ says the IRS last month filed a tax lien against O.J. Simpson for allegedly failing to pay nearly $180,000 in
federal taxes from 2007 through 2010.
This alleged tax debt accrued
while Simpson was serving time in a Nevada jail for his conviction on robbery
and kidnapping charges after a confrontation in a Las Vegas casino hotel room
in September 2007 over some of his sports memorabilia.
Apparently
while O.J. has been cooling his heels in government housing, his money
has been working but, says the IRS, not paying its fair share of taxes.
Simpson's yearly tax debt breakdown by the IRS per TMZ is:
2007 - $15,927.89
2008 - $105,119.71
2009 - $49,490.27
2010 - $8,897.20
High-paid
players are taxpayers, too: It's always a good idea to get tax and
financial advice when you find yourself making a more money than you
ever imagined, be it from an unexpected windfall or starting out your
career as a professional athlete.
Sink, Gillmore & Gordon, LLP, a
Manhattan, Kan. (not N.Y.), is one of the many firms that specializes
in financial services for pro athletes. Its Pro Sports Tax division
created a handout with Tax Information for the NFL Rookie.
But the basics on deductions still looks to be good advice.
And
the firm points out the jock tax that states collect on athletes and
other performers who stop by their states to put on a show. It's not an
issue for NFL players playing out of town games in Texas, Washington,
Florida and Tennessee because those states don't tax wage income.
At
other NFL stadiums, however, the players (and coaches) could face jock
tax rates ranging from 3 percent in Illinois (Da Bears) to 10.3 percent
when they visit California to play the Oakland Raiders, San Francisco
49ers or San Diego Chargers.
Speaking of stadiums: While players,
current or former, who don't pay their taxes get lots of attention, we
can't ignore how we fans also pay some of our hard-earned money even
when we don't buy tickets to the actual games.
Every time a stadium
is built with help from tax-free municipal bonds, which is almost every
stadium for every sport built in the United States, our taxpayer money
helps pay in part for facilities that benefit primarily the wealthy team
owners.
I'm not trying to get into the class warfare of funding
stadiums. Heck, I voted for such funding for the Ravens home when I was a
Maryland resident. Sometimes fan craziness trumps tax savvy. And I'm
not alone.
Bloomberg reports that 64 major-league teams, including
baseball, hockey and basketball and 22 NFL teams that call stadiums
built or renovated in the past quarter-century, are paid for in part by
municipal debt.
The taxpayer cost? Bloomberg says:
Tax exemptions
on interest paid by muni bonds that were issued for sports structures
cost the U.S. Treasury $146 million a year, based on data compiled by
Bloomberg on 2,700 securities. Over the life of the $17 billion of
exempt debt issued to build stadiums since 1986, the last of which
matures in 2047, taxpayer subsidies to bondholders will total $4
billion, the data show.
Those estimates are based on what the
Treasury could have collected on interest from the same amount of
taxable bonds sold at the same time to investors in the 25 percent
income-tax bracket, the rate many government agencies assume. In fact,
more than half the owners of tax-exempt bonds pay top rates of at least
30 percent, according to the Congressional Budget Office. So they save
even more on their income taxes, a system that U.S. lawmakers of both
parties and President Barack Obama have described as inefficient and
unfair.
You might want to consider that the next time you're at the
game and about to buy a $10 beer. Perhaps a cheaper beverage might be a
better choice since you've already paid so much in taxes for the game.
One Congressman has an idea about what should happen in the wake of confirmation that the Internal Revenue Service purposely overlooked fake tax identity number applications.
The "ITIN" mentioned in the snippet of Johnson's letter pictured above stands for Individual Taxpayer Identification Number.
These numbers are used instead of Social Security numbers by individuals who must file tax returns but who don't qualify for the standard nine-digit numerical ID. ITINs generally are used by non-U.S. citizens.
After receiving complaints about the issuance of some ITINs, the Treasury Inspector General for Tax Administration (TIGTA) looked into the matter and found the allegations were true.
TIGTA's discovery of, as Johnson put it in his Aug. 8 letter to Shulman, such "indefensible and scandalous findings…leave me with the conclusion that through its actions the IRS, in effect, is a willing accomplice to tax fraud."
"In light of the report's findings, I ask that you and any other IRS officials who had direct oversight, knowledge or involvement with the ITIN program resign immediately in order to help restore the American taxpayer's trust in the IRS," Johnson said.
Part of continuing effort: Johnson has long objected to the use of ITINs as acceptable identification for taxpayers who apply for refundable tax credits, particularly the popular $1,000 per child tax credit.
In May 2011, the Texas Republican introduced H.R. 1956, which would allow only taxpayers who have Social Security numbers to claim the refundable portion of the child tax credit. Other members of Congress also have introduced similar tax credit/SSN measures over the years. A version of Johnson's tax credit limitation was included in a budget bill passed by the House this spring.
More Congressional questions: Johnson's letter also was the second formal written communication that Shulman received from House tax writers after TIGTA released its report this week.
Rep. Charles W. Boustany, Jr. (R-La.), chairman of the Ways and Means Oversight Subcommittee, didn't go as far as to ask Shulman to pack up his office, but he did send the IRS commish a letter demanding that the IRS "immediately account for the findings."
Allowable early IRA withdrawals -- You've done a good job saving for your retirement, but sometimes life just happens. And that could mean that you need to pull some money out of your IRA. But because of the tax advantages afforded these accounts, both traditional and Roth accounts, you need to be careful. The good news is that sometimes it's OK to tap your IRA. Two key instances when IRA withdrawals aren't penalized involve using the retirement funds to pay some schooling costs or to buy a first-home. There also are hardship situations where early IRA distributions are allowed. Remember, though, that even if you don't have to pay a 10 percent penalty for taking out your retirement money before you turn 59½, you still could face tax on withdrawal amounts where the tax was deferred. (May 15, 2013)
Check out all of the 2013 post-April 15 hints at Weekly Tax Tips.
You also can get a refresher of the Daily Tax Tips posted earlier this year on their respective monthly collection pages: January, February, March and April.
Sponsored Links
Time for Tax Tasks
May 1: Happy May Day! This international holiday celebrating workers is a perfect time for employers of household help to review their tax responsibilities. You don't want to end up with facing nanny tax trouble!
May 10: Does your job include tips? If so and you received $20 in tips in April, use Form 4070 to report them today to your employer.
May 12: Happy Mother's Day! Make sure today is a special one for your mom. And if you're a mother, or about to be, be sure to check out the tax joys of parenthood.
May 16: With the arrival of warmer spring weather come home improvement projects, such as the planting of May flowers and bird-friendly plants.
May 22:Improving your home's energy efficiency also could get you up to $500 in dollar-for-dollar tax credit savings. Tax credits for a variety of relatively easy improvements were extended through 2013. More extensive (and expensive) upgrades employing solar, wind energy and geothermal systems could provide even more tax savings.
May 27: If you're hitting the road on the Memorial Day holiday to kick off summer, be on the lookout for bargain gasoline. State, local and federal fuel excise taxes can really ramp up pump prices.
Regardless of how you travel, if part of your trip is business related, Uncle Sam might be willing to pick up some of those costs when you file your tax return.
May 31: Was this the last filing season you want to go it alone at tax time? Then start searching for a tax professional now. You have more time to thoroughly investigate and pick the perfect tax pro.
If you filed for an extension, he or she could help you finish up this 2012 tax year task. And hiring a tax pro now will definitely help you get a head start on your 2013 return.
Forty-three states and D.C. collect personal income taxes. But even if you live in of the seven states without an income levy, you still face other state (and local) taxes.
State Tax Departments provides links to your state's Web page. The companion page, Tax Tidbits, is the compilation of blurbs about each state's tax laws. And for more state tax news, check out all our state tax bloggings.
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The Truth About Paying Fewer Taxes
Are you a tax geek? Got tax geek friends? Do you or they just want to make sure you don't overpay the IRS? Then my book, "The Truth About Paying Fewer Taxes," is for all y'all.
It's no wonder Uncle Sam is not very happy here. His vault is empty. Don't Mess With Taxes aims to keep him cranky by providing tax and personal finance tips and advice that will put more money in your bank account, not the government treasury.
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I gotta tell ya ...
AKA Disclaimer:
I am a professional journalist who has been covering tax issues since 1999. I am not a professional tax preparer. The content on Don't Mess With Taxes is my personal opinion based on my study and understanding of tax laws, policies and regulations. It’s provided for your private, noncommercial, educational and informational purposes only. It’s not a recommendation or endorsement of any company or product. I strongly suggest that when it comes to filing your taxes, you get additional, professional, paid-for guidance from your accountant and other financial advisers who are familiar with your individual circumstances. In other words, don't blame me!
Note 1: Some of the links on this site are affiliate links. That means that if you click through from a Don't Mess With Taxes link and then buy the product, I receive a commission.
Note 2: Links to outside content might become inactive due to changes at the content's originating Web page. If you discover dead links, please e-mail me the details. Thanks.
