The IRS mess

IRS logoAs a former employee – I spent six years there in the early 1980s – I hate to see the IRS in a bad light. The organization takes more hits than it deserves, but this time, the hit is well deserved. No way the IRS should be targeting a specific group of entities.

Others have written more elegantly than I on this subject, including this editorial in today’s paper. I have to agree with this article, though: IRS Code section 501(c)4 has been abused and the IRS should be looking at all who are attempting to become tax-exempt under that provision.

Better yet: how about Congress changing the law and making it clear that political entities are not “social welfare” organizations? That would go a long way towards putting a stop to this.


9 thoughts on “The IRS mess

      1. Sales taxes. Have them collected by the States as they are now, and remitted to the U.S. government.

        That’s how Canada does sales tax.

        1. Canada also collects income tax and so do their provinces. Is there a major industrialized nation that does not collect income tax? Any of the up and comers in BRIC not charge income taxes?

  1. On the positive side, it appears from reporting when management found out about this they tried to put a stop to it. I maybe remembering incorrectly, but I thought the IG noted that the mid-level manager did her best to rein in the investigations when she found out, ordering the Cincinnati office to stop further interrogatories and for the group to change their criteria.

    This makes it seem like some individual misjudgments versus a systemic problem that requires national time and attention.

    I wonder if internal audit reports from say JP Morgan were made public, whether they would get this much attention.

    1. Again I don’t see it as a huge scandal. The report does not identify systemic failures or issues with tone at the top of the organization. Some key things in the report I see are:

      – “We asked the Acting Commissioner, Tax Exempt and Government Entities Division; the Director, EO; and Determinations Unit personnel if the criteria were influenced by any individual or organization outside the IRS. All of these officials stated that the criteria were not influenced by any individual or organization outside the IRS.”
      – Two, TIGDA, didn’t include in their audit whether the applications should have been approved or denied.
      – “Specifically, only first-line management approved references to the Tea Party in the BOLO listing criteria before it was implemented.”
      – “After being briefed on the expanded criteria in June 2011, the Director, EO, immediately directed that the criteria be changed.”
      – The combination of TIGDA’s imputed applications that should have been reviewed by the EO function was only 4% of the total universe.
      – The recommendations are such things as additional training for staff.

      This reads as first line managerial bad decision making, and lack of focus by management on timely processing. Just doesn’t seem like something that requires a lot of attention from anyone other than mid level and executive management of the agency.

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