IRS email scandal worsens

In a congressional hearing this morning, Inspector General, J Russell George testified that the IRS had destroyed over 400 back up tapes in March of 2014 despite an order from congress several months earlier to preserve the records and provide them to congress. The scandal started when Lois Lerner apologized publicly for targeting conservative groups that applied for tax exempt status in both the 2010 and 2012 election cycles. Congress launched an investigation and IRS has been let’s say to be charitable less than forthcoming in responding to congress.
Let’s recap some of the key events in this congressional investigation. When congress originally asked for all of the emails to or from Ms. Lerner relating to the time period of the scandal, they were first told that since Ms. Lerners hard drive had crashed they couldn’t produce any of her emails. Her hard drive allegedly crashed sometime in 2011. An IT technician with IRS had testified that he had looked at the hard drive and there was some scouring at the top of the drive but he believed that information could be recovered from the hard drive. His superiors determined that attempting to retrieve the emails was not worth the cost. The IRS original response to congress in early summer of 2013 was that all of the emails were irretrievable. Upon further pressure from congress their answer gradually changed to there may be back up tapes. Then it changed to there are back up tapes but we don’t have the manpower to search them. Now we find out that in March of 2014, roughly 8 months after they received a subpoena from congress to preserve the records, that over 400 back up tapes were magnetically erased. Mr. George did point out that they had not uncovered evidence that there was a criminal conspiracy to destroy evidence.
Isn’t that comforting? That means that the IRS may not have acted criminally but they either ignored congress or were too incompetent to comply with their requests.
Here’s what Rep. Jason Chaffetz had to say about it:

Imagine if this was all reversed. Imagine if you were on the receiving end of an inquiry from the IRS, and they asked you for documents and they issued you a subpoena, and you destroyed the evidence,” Chaffetz said. “What would happen to you? You would be prosecuted to the fullest. You’d end up in jail. You probably should.”

He also said:

“They have found no evidence that this was done willfully, that this was some purposeful direction from any one person, whether it be the White House or below,” Chaffetz said. “Understood. But the bottom line is, they had the evidence, there was a preservation order in place, there was a subpoena in place, and that evidence was destroyed.”

How does all of this affect my clients? Well, the good news is that if you used efiling, the system worked very well this year so the vast majority of people who used efiling had their returns processed promptly and accurately. But, because  congress had reduced the IRS budget because of their frustration with the lack of answers from them, taxpayer service is currently suffering. Amended returns are taking longer to process. Billing or other inquiries are getting lost or ignored more often. Reaching the IRS by phone or in person at one of their offices is taking longer than before. The bottom line is, if you are having difficulty with the IRS, we are hear to help you solve your IRS issue in these challenging times for IRS customer service.

FBAR reporting deadline is June 30th

Certain holders of foreign financial accounts and other assets are required to file FinCen Report 114 by June 30th or they can be faced with large penalties.  For details on who is required to file and how to file, click here.  Please contact us if you have any questions regarding this matter.

Update on IRS feud

Surprise! Surprise! The IRS failed to comply with the judges deadline last Friday. You can read about their lame excuses as to why here. So much for the most transparent administration in history.

IRS feud with congress continues…

A federal judge has given the IRS until Friday to answer questions regarding the now more than 2 year old scandal which became public when Lois Lerner admitted to unfairly targeting conservative groups who had applied for tax exempt status. Congress has not been satisfied with the less than forthcoming responses received from IRS officials in various hearings and as a result has made cuts to the IRS budget. For a blow by blow account check this site.