Tag Archives | IRS

The real IRS tax-exempt scandal is who they DIDN’T go after

The rolling sideshow of hearings and revelations about the IRS department responsible for reviewing organizations applying for 501(c)(4) tax-exempt status might not ever get around to dealing with a larger question: Why were some little organizations steamrolled with questions and scrutiny, while major national operations apparently got a pass?

As ProPublica pointed out in a long piece examining what it characterized as dysfunction at the IRS, a review by the Inspector General said that there was insufficient oversight of 200 lower-level employees responsible for examining more than 60,000 nonprofit applications annually.

“The main question raised…is how the Cincinnati office and superiors in Washington could have gotten it so wrong,” the story notes. “The audit shows no evidence that these workers even looked at records from the Federal Election Commission to vet much larger groups that spent hundreds of thousands and even millions in anonymous money to run election ads.”

The tax-exempts that didn’t come under scrutiny, as The New York Times points out, included mega-fundraisers from both sides of the political spectrum, such as Crossroads Grassroots Policy Strategy, Karl Rove’s organization, and the Democratic-oriented Priorities USA.

Organizations are supposed to operate “exclusively” for the promotion of social welfare in order to qualify as a 501(c)(4) tax-exempt group. At least, that’s what the tax code says. But the IRS has given a pass to groups that can show they are not “primarily engaged” in election-related activities.

Admit it: Regardless of where you stand politically, isn’t this one area where you’d like to see the IRS enforce the very letter of the tax code?

Grammy winner Lauryn Hill, celebrity tax evader, gets no love from the IRS

It’s pretty easy to skip filing a tax return. Even a second or third return. But sooner or later, the IRS has a habit of catching up with you. Especially if you’re a high-profile rich person, like hip-hop and R&B artist and eight-time Grammy winner Lauryn Hill.

Hill was sentenced to three months in prison and another three months of home confinement after failing to file tax returns in 2005, 2006 and 2007, as reported in the New York Times. She’s supposed to report to prison on July 8.

Her attorney said before the sentencing that Hill had paid more than $900,000 to settle her tax debts and penalties, according to the Huffington Post. Hill didn’t pony up until after federal judge Madeline Cox Arleo criticized her in court in Newark, saying, “This is not someone who stands before the court penniless. This is a criminal matter. Actions speak louder than words, and there has been no effort here to pay these taxes.”

Apparently the payment didn’t mollify Arleo, who obviously felt Hill deserved a little quiet time to think over her bad behavior.

Oscars tax hangover: No free swag bags for celebrities

You probably heard that performers, nominees and others attending the Oscars got “Swag Bags” containing goodies worth $47,802, as Today.com and others reported. A lovely consolation prize for any nominees who didn’t get the statue, fer sure.

But did you hear that people getting the bags have to pay taxes on them?

Really! The IRS has said–you can see it for yourself right here
that the value of the goodies are income and not gifts.

Says the Service, “…the organizations and merchants who participate in giving the gift bags do not do so solely out of affection respect or similar impulses for the recipients of the gift bags.”

The IRS says that businesses showering goodies on celebrities don’t do it out of affection!Those corporations don’t really, really love them!!

And people, don’t think the celebrities won’t notice that these gift bags are not about love. The IRS also has a bunch of rules about how businesses have to report the value of the gifts on Form 1099-MISC, which is sent to the goodie-bag recipients…and to the IRS.

Sex and the IRS: making “friends” with your IRS auditor, extreme version

Dear IRS: I’ve Read About This In Your Manuals, But I Never Thought It Would Happen To Me…

Sometimes I sort through tedious tax court cases looking for some mildly interesting nugget to share, and sometimes a thing of sheer weirdness lands in my lap.

An Oregon man has filed a lawsuit claiming that an IRS agent intimidated and coerced him into having sex with her.

You cannot make up stuff like this.

The Register-Guard in Eugene, Oregon, has all the details of Vincent Burroughs’ accusation that IRS agent Dora Abrahamson used her position to both threaten him with tax penalties and lure him into having sex with her, after coming to his home “provocatively attired.” (She also sent him a photo of herself in her lingerie.)

This poses so very many questions:

–Have you ever before seen “IRS agent,” “intimidated” and “sex” in the same sentence?

–Threats of tax penalties if you don’t put out: Turn-On or Turn-Off?

–IRS agents actually own “provocative attire”?

Robert W. Wood at Forbes
tries to be halfway serious by using this story as a jumping-off point for discussing legitimate ways of getting out of tax penalties . Good for him. Me, I’m just looking forward to seeing what the late-night comics do with this.

Late refunds this year, courtesy of Congress

Are you used to filing your returns in January so you can get your tax refund early?

For 2013, think again.

Because Congress didn’t give us the final tax code for 2012 until January of this year, many taxpayers will be unable to get their returns processed by the IRS until late February or early March.

Who can’t file early? Anyone whose return includes depreciation (Form 4562), a residential energy credit (Form 5694) adoption expenses (Form 8839) and about two dozen other forms.

You can find out if you have one of the forms on the late list by checking here.

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