Another Day, Another Impeachment Hearing for IRS Commish

Although it has been demonstrated that numerous things Commissioner Koskinen testified to congress have proven to be false, he will likely not face any consequences for his actions.  Regarding the attempts to comply with a 2013 congressional subpoena to turn over to congress all communications from Lois Lerner during the time period of the targeting scandal, he told congress in the summer of 2014 that thousands of employee hours and millions of dollars had been spent in the effort to comply with the subpoena.  When in fact, virtually nothing was done to comply with it.  The IT technology chief issued a preservation order to preserve all emails, but that direction never went to those responsible for recycling (erasing) old hard drives and back up tapes.  When the Inspector General drove to that office in Martinsburg Virginia and requested related information, they received some back up tapes with roughly 1,000 emails from Lois Lerner.  They told the IG that they had never received any communication from anyone regarding the need to preserve anything related to the targeting scandal.  Here’s a link that discusses the timeline for the destruction of evidence relating to the congressional subpoena. So, what happened to the two employees blamed for destroying 422 back up tapes containing the information in the subpoena?  Absolutely nothing.  They have both been transferred to different positions but still work at the IRS.  It appears the only people capable of holding crooked politicians accountable are the voters.

California tampon tax survives due to Governor Brown’s veto

Citing fiscal concerns, Governor Brown vetoed a bill that would have ended the sales tax on tampons and other feminine supplies.  This bill, as well as another bill to end sales tax on diapers, although passed unanimously by the legislature did not survive the governors veto.  Another bill which would have conformed to a federal law granting tax relief from cancellation of debt income through a short sale or foreclosure of someone’s home was also vetoed.  So CA can’t afford to help struggling young mothers with diapers or feminine products.  Nor can they afford to give tax relief to those who lost their homes, but hey,  we have been promised that someday we will have a bullet train.

The Gig Economy: how is it taxed?

Many people have turned recently to providing services or renting their houses or cars to provide extra income through internet based sites such as AirBnB, Uber, taskrabbit etc.  IRS reminds us that this extra income is taxable and should be reported.  In general all income is taxable unless specifically excluded by statute.  On the IRS website, they have a page dedicated to providing info on the shared economy.  It is also imperative to know what deductions you are entitled to on your tax returns in relation to the income.  What to deduct and where on your return to deduct it varies greatly by your exact circumstances.  You can contact us or another competent tax professional such as an Enrolled Agent in your area to address these issues.

Dems file FOIA request for Trumps tax records

The Political Action Group Democratic Coalition Against Trump has filed a FOIA (Freedom Of Information Act) request to try and obtain tax records of Donald Trump. Although they claim that similar requests have been successful in the past it would be illegal for the IRS to honor it. IRC§ 6103 prohibits the release of tax return information to anyone even other government agencies unless the request for information meets one of the specific exceptions laid out in that code section.  Wanting to know information about a political opponent is not even close to any exception listed under the IRC.  Although releasing the information would be illegal, that doesn’t mean they won’t do it.  IRS employees have violated this law on various occasions in recent years to try and influence elections.

Appeals Court rules against IRS in targeting scandal

The appeals court for the District of Columbia just ruled against the IRS in a suit brought by various groups that were victims of the IRS targeting scandal. In spite of multiple violations of law, the IRS has failed to fully cooperate with congressional investigators and the DOJ refuses to prosecute those responsible, but the victims have filed suit and based on this decision will still have their day in court. I have outlined the major points of the scandal here for those interested in learning more.

Identity Theft

Unfortunately, ID theft is a common concern for many of us. The Federal Government has put together a useful website to assist in dealing with the issue here.

Olympic Medals Taxable?

US Olympic athletes who win medals receive a cash payment from the US Olympic Committee which under current law is taxable to the recipient. Current tax law says that all income is taxable regardless of its source unless specifically exempted by statute. Senator Charles Schumer is pushing legislation to exempt athletes from taxation for winning a medal. He says someone whose hard work has allowed them to rise to the top of their sport and win a medal should not be punished for their success by taxing their medal earnings. Isn’t our entire tax system based on taxing people for their success? The more you earn, the higher the tax rate you pay.

Is that donation tax deductible?

Donations to qualified charities are tax deductible, but how do you know if a charity qualifies?  The IRS has information about the topic and an online tool to look up and check the status of a charity here.

IRS rules that pregnancy qualifies for special tax break.

Federal tax law allows a married couple to exclude from income up to 500,000  in gain on the sale of their principal residence as long as they have lived in the residence at least two full years.  A partial exclusion is also available if the home is owned for less than two years, but was sold due to “unforeseen circumstances”.  In PLR 201628002 the IRS agrees that an unplanned pregnancy qualifies as an unforeseen circumstance which would allow a pro-rated exclusion based on the time lived in the home.

Judge holds IRS accountable for their mistake.

It’s refreshing to see someone in government held accountable for their mistakes.  David Buffano won a recent tax court case against the IRS and got his tax bill eliminated because the IRS failed to assess the tax correctly.  Even though the IRS had failed to file a Statutory Notice of Deficiency against the client which is required by law, they still tried to collect the tax.  That is, until the tax court judge stopped them.  It’s nice to know that at least sometimes government officials are required to follow the law.