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Government Accountability Office Audit Reveals IRS Service Bad — And Getting Worse

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Fewer taxpayers are getting through on the Internal Revenue Service hotline, their wait times for help has surged to 17 minutes, and 40 percent of those who write in questions wait over 45 days for an answer, a deterioration of taxpayer service that is just getting worse, according to a new government audit.

It’s not much better for professional tax preparers seeking help, according to a new Government Accountability Office report on IRS taxpayer operations. The GAO found that just 73 percent of tax preparers who needed assistance from a live IRS official got through on the phone and their wait was an average of 22 minutes–19 minutes more than the wait in 2007.

And unfortunately for taxpayers, help is not on the way. The GAO found that the IRS doesn’t have a plan that can fix the service breakdowns fast enough and Congress isn’t expected to help out with more money.

The “IRS does not have a strategy to reverse declines in service,” said Uncle Sam’s auditor. “The federal government’s tight budget environment makes any meaningful increase in resources for taxpayer service unlikely,” it added.

There is good news, however, in their annual report.

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IRS Loses Lawsuit in Fight Against Tax Preparers

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FALLS CHURCH, Va. (AP) — A federal judge on Friday barred the IRS from imposing a series of new regulations, including a competency exam, on hundreds of thousands of tax preparers.

U.S. District Judge James Boasberg in Washington ruled against the IRS in favor of three tax preparers who filed suit last year with the help of a libertarian legal group, the Arlington, Va.-based Institute for Justice.

Since 2011, in response to what it says has been a growing problem of poorly done returns, the IRS has sought to impose a series of new regulations on tax preparers. That included a requirement to pass a qualifying exam, paying an annual application fee, and taking 15 hours annually of continuing-education courses.

Attorneys and certified public accountants would have been exempt from the regulations.

The Institute for Justice argued that the IRS lacked the statutory authority to impose the regulations and said they would put tens of thousands of mom-and-pop tax preparers out of business, because the regulations were onerous and create a competitive disadvantage to the attorneys and CPAs who were exempt.

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Karl Rove’s Super PAC Promised IRS It Would Spend ‘Limited’ Money on Elections

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In a confidential 2010 filing, Crossroads GPS — the dark money group that spent more than $70 million from anonymous donors on the 2012 election — told the Internal Revenue Service that its efforts would focus on public education, research and shaping legislation and policy.

The group’s application for recognition as a social welfare nonprofit acknowledged that it would spend money to influence elections, but said “any such activity will be limited in amount, and will not constitute the organization’s primary purpose.”

Political insiders and campaign-finance watchdogs have long questioned how Crossroads, the brainchild of GOP strategist Karl Rove, had characterized its intentions to the IRS.

Now, for the first time, ProPublica has obtained the group’s application for recognition of tax-exempt status, filed in September 2010. The IRS has not yet recognized Crossroads GPS as exempt, causing some tax experts to speculate that the agency is giving the application extra scrutiny. If Crossroads GPS is ultimately not recognized, it could be forced to reveal the identities of its donors.

The tax code allows groups like Crossroads to spend money on political campaigns — and to keep their donors private — as long as their primary purpose is enhancing social welfare.

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New Obamacare Tax Form Mandates Americans Report Personal Health ID Info to IRS

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photo credit: majunznkWhen Obamacare’s individual mandate takes effect in 2014, all Americans who file income tax returns must complete an additional IRS tax form. The new form will require disclosure of a taxpayer’s personal identifying health information in order to determine compliance with the Affordable Care Act’s individual mandate.

As confirmed by IRS testimony to the tax-writing House Committee on Ways and Means, “taxpayers will file their tax returns reporting their health insurance coverage, and/or making a payment”.

So why will the Obama IRS require your personal identifying health information?

Simply put, there is no way for the IRS to enforce Obamacare’s individual mandate without such an invasive reporting scheme. Every January, health insurance companies across America will send out tax documents to each insured individual. This tax document—a copy of which will be furnished to the IRS—must contain sufficient information for taxpayers to prove that they purchased qualifying health insurance under Obamacare.

This new tax information document must, at a minimum, contain: the name and health insurance identification number of the taxpayer; the name and tax identification number of the health insurance company; the number of months the taxpayer was covered by this insurance plan; and whether or not the plan was purchased in one of Obamacare’s “exchanges.”

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100 Days Until Taxmageddon

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Sunday will mark the start of the 100-day countdown to “Taxmageddon” – the date the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2013:

First Wave: Expiration of 2001 and 2003 Tax Relief. In 2001 and 2003, the GOP Congress enacted several tax cuts for small business owners, families, and investors (later re-upped by President Obama and Democrat Congress in 2010). The following tax hikes will occur on January 1, 2013:

Personal income tax rates will rise on January 1, 2013. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which the majority of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.

Higher taxes on marriage and family coming on January 1, 2013. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of taxable income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level.

Middle Class Death Tax returns on January 1, 2013. The death tax is currently 35% with an exemption of $5 million ($10 million for married couples). For those dying on or after January 1 2013, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors on January 1, 2013. The capital gains tax will rise from 15 percent this year to 23.8 percent in 2013. The top dividends tax will rise from 15 percent this year to 43.4 percent in 2013. This is because of scheduled rate hikes plus Obamacare’s investment surtax.

Read more from this story detailing the Second Wave (20+ new Obamacare taxes) and the Third Wave (AMT Increases and Employer Tax Hikes).

Crime Does Pay: Convicted Felon Gets $104 Million from IRS

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Bradley Birkenfeld, the former UBS AG (UBSN) banker who went to prison after telling the Internal Revenue Service how the bank helped thousands of Americans evade taxes, secured a whistle-blower award of $104 million, the largest individual federal payout in U.S. history.

Birkenfeld told authorities how UBS bankers came to the U.S. to woo rich Americans, managed $20 billion of their assets and helped them cheat the IRS. He pleaded guilty to conspiracy in 2008, a year after reporting the bank’s conduct to the Justice Department, U.S. Senate, IRS and Securities and Exchange Commission. He left prison on Aug. 1.

“The IRS sent 104 million messages to whistle-blowers around the world — that there is now a safe and secure way to report tax fraud,” Birkenfeld’s attorney Stephen M. Kohn said today at a news conference in Washington. He is seeking a presidential pardon for Birkenfeld, who is under home confinement.

Birkenfeld’s disclosures preceded UBS’s decision to pay $780 million to avoid prosecution, admit it fostered tax evasion from 2000 to 2007 and turn over data on 250 Swiss accounts. UBS later agreed to provide information on another 4,450 accounts. Since then, at least 33,000 Americans have voluntarily disclosed offshore accounts to the IRS, generating more than $5 billion.

The UBS case led to an erosion of the use of Swiss bank secrecy by wealthy Americans to cheat the IRS. At least 11 banks are under criminal investigation in the U.S. Two dozen offshore bankers, lawyers and advisers, as well as 50 American taxpayers, have been charged with crimes.

Read more from this story HERE.

Alaska couple plead guilty to conspiring to kill federal judge

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Lonnie and Karen Vernon, followers of jailed Alaska militia leader Schaeffer Cox, reached a deal with prosecutors to avoid the need for a trial that had been set to begin next month.

The Vernons and Cox were active in the “sovereign citizen” movement, whose adherents believe individuals are sovereign nations and federal, state and local laws do not apply to them.

The Vernons each entered a guilty plea to a single count of conspiracy to commit murder for their plan to kill Alaska-based U.S. District Judge Ralph Beistline, who presided over a federal income tax case that ultimately cost the couple their home.

The Vernons also admitted in their plea agreement to planning to kill an Internal Revenue Service official and Beistline’s daughter and grandchildren.

The Vernons bought a silencer-equipped pistol and grenades in March 2011 and told the seller of the weapons about their intentions, according to the plea agreement. But the seller turned out to be a confidential government informant, and the Vernons were arrested immediately after the transaction took place.

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Obama’s classmate certain Columbia University secret threatens presidency

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I am President Obama’s classmate at Columbia University, Class of ’83. I am also one of the most accurate Las Vegas oddsmakers and prognosticators. Accurate enough that I was awarded my own star on the Las Vegas Walk of Stars. And I smell something rotten in Denmark. Obama has a big skeleton in his closet. It’s his college records. Call it “gut instinct” but my gut is almost always right. Obama has a secret hidden at Columbia- and it’s a bad one that threatens to bring down his presidency. Gut instinct is how I’ve made my living for 29 years since graduating Columbia.

Obama and his infamous strategist David Axelrod understand how to play political hardball, the best it’s ever been played. Team Obama has decided to distract America’s voters by condemning Mitt Romney for not releasing enough years of his tax returns. It’s the perfect cover. Obama knows the best defense is a bold offense. Just keep attacking Mitt and blaming him for secrecy and evasion, while accusing him of having a scandal that doesn’t exist. Then ask followers like Senator Harry Reid to chase the lead. The U.S. Senate Majority Leader appears to now be making up stories out of thin air, about tax returns he knows nothing about. It’s a cynical, brilliant, and vicious strategy. Make Romney defend, so he can’t attack the real Obama scandal.

This is classic Axelrod. Obama has won several elections in his career by slandering his opponents and leaking sealed documents. Not only do these insinuations and leaks ruin the credibility and reputation of Obama’s opponents, they keep them on the defensive and off Obama’s trail of sealed documents.

By attacking Romney’s tax records, Obama’s socialist cabal creates a problem that doesn’t exist. Is the U.S. Senate Majority Leader making up stories out of thin air? You decide. But the reason for this baseless attack is clear- make Romney defend, so not only is he “off message” but it helps the media ignore the real Obama scandal.

My answer for Romney? Call Obama’s bluff.  Romney should call a press conference and issue a challenge in front of the nation. He should agree to release more of his tax returns, only if Obama unseals his college records. Simple and straight-forward. Mitt should ask “What could possibly be so embarrassing in your college records from 29 years ago that you are afraid to let America’s voters see? If it’s THAT bad, maybe it’s something the voters ought to see.” Suddenly the tables are turned. Now Obama is on the defensive.

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Video: Sen. Harry Reid Is a “Dirty Liar,” says RNC Chair Priebus

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Republican National Committee chair Reince Priebus called Sen. Harry Reid a “dirty liar” this morning on “This Week” for accusing presumptive GOP presidential nominee Mitt Romney of not paying taxes.

Reid, the Democratic Senate Majority Leader from Nevada, said in an interview with the Huffington Post last month that, according to a source that called his office, Mitt Romney did not pay taxes for ten years. The accusation was strongly denounced by Romney, who said it was false and that Reid needed to “put up or shut up.” Romney, the former governor of Massachusetts has been under intense pressure by Democrats and even some in the GOP to release more tax returns.

 

Photo credit: Gage Skidmore

Government gone wild: IRS paying billions in fraudulent tax refunds

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The IRS is paying out billions of dollars in fraudulent tax refunds to identity thieves; a problem that the tax service’s inspector general told CNBC is a “growing problem” involving numbers that are increasing “exponentially.”

In a new report to be issued Thursday, the inspector general for the IRS says that tax thieves are stealing the identities of taxpayers and then filing bogus returns on their behalf and collecting fraudulent refunds as a result.

The inspector general estimates that the IRS could issue as much as $21 billion in fraudulent tax refunds over the next five years.

The scam is so rampant that thieves are apparently sending in false returns in bulk without even bothering to change the mailing address on the returns. The inspector general said it found one residential address in Lansing, Michigan that was the source of an astonishing 2,137 tax returns, and to which the IRS directed more than $3.3 million in potentially fraudulent refunds.

In another case, a single residential address in Chicago was the source of 765 tax returns, generating more than $900,000 in potentially fraudulent refunds, the report said.

Read more from this story HERE.