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Tag: Internal Revenue Service

  • 5 reasons why the Republican claim about 87,000 new IRS agents is an exaggeration | CNN Politics

    5 reasons why the Republican claim about 87,000 new IRS agents is an exaggeration | CNN Politics

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    Washington
    CNN
     — 

    In its first vote on legislation, the new Republican-controlled House approved a bill Monday that would rescind nearly $80 billion for the Internal Revenue Service – with key GOP lawmakers making the exaggerated claim that the money would be used to hire 87,000 auditors who will target hardworking Americans.

    “House Republicans just voted unanimously to repeal the Democrats’ army of 87,000 IRS agents,” tweeted speaker Kevin McCarthy after the vote.

    “This was our very first act of the new Congress, because government should work for you, not against you,” he added.

    But Democrats approved the $80 billion in funding last year as part of the sweeping Inflation Reduction Act, intending to support the troubled IRS crack down on tax cheats and provide better service to taxpayers.

    The bill to rescind the funding, which passed along party lines, has little chance of becoming law, given the Democratic majority in the Senate and a pledge from President Joe Biden to veto the bill if it ever reaches his desk.

    But the vote highlights how funding for the IRS has become a political football. The issue is sure to come up when Daniel Werfel, Biden’s nominee for IRS commissioner, gets a confirmation hearing.

    Here’s why the Republicans’ oft-repeated claim about new IRS agents is exaggerated:

    The 87,000 figure comes from a 2021 Treasury report that estimated the IRS could hire 86,852 full-time employees over the course of a decade with a nearly $80 billion investment – not solely enforcement agents.

    And all those new employees can’t be hired overnight. The money will flow to the IRS over a 10-year period.

    “The reality is the $80 billion boost would be spread throughout the agency, with money flowing to enforcement, taxpayer services, operations, and modernization,” wrote Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center.

    The Inflation Reduction Act dictates that about $45.6 billion will go toward strengthening enforcement activities – including collecting taxes owed, providing legal support, conducting criminal investigations and providing digital asset monitoring. But the IRS has not specified how many auditors will be hired.

    More than $25 billion is allocated to support IRS operations, including expenses like rent payments, printing, postage and telecommunications.

    Nearly $4.8 billion can be used for modernizing the agency’s customer service technology, like developing a callback service.

    Roughly $3 billion is allocated for taxpayer assistance, filing and account services.

    Many of the new hires will be replacing staff that the IRS has already lost or is expected to lose through attrition in coming years.

    Last year, then-IRS Commissioner Charles Rettig told lawmakers that staffing has shrunk to 1970s levels and that the IRS would need to hire 52,000 people over the next six years just to maintain current staffing levels to replace those who retire or otherwise leave.

    The IRS is already using the new funds to ramp up hiring for work outside of its audit operations.

    In October, the IRS announced it had hired 4,000 customer service representatives to answer phones and provide other taxpayer assistance. At the time, the agency said it intended to hire another 1,000 staffers by the end of 2022.

    Many of the new staff will be in place at the start of the 2023 tax season, and nearly all are expected to be trained by Presidents’ Day in February, which is traditionally when the agency sees the highest call volumes.

    National Taxpayer Advocate Erin Collins expects IRS services for taxpayers to improve this year – in part due to the funding increase.

    Taxpayer service, like answering the phones and processing returns in a timely manner, has suffered as the IRS’ budget has shrunk by more than 15% over the last decade. Collins, who heads the independent watchdog organization within the IRS, last year called the IRS service “horrendous.”

    Only about one in eight calls from taxpayers got through to an IRS employee last year, according to her annual report released Wednesday.

    The IRS struggled significantly during the Covid-19 pandemic, allowing backlogs of millions of tax returns to pile up in the past two years.

    “The majority of new hires the IRS makes will be those who answer the phones, work on processing individual tax returns or go after high-end taxpayers or corporations who are avoiding their taxes,” wrote Rettig in an op-ed published by Yahoo!Finance in August.

    A Trump appointee, Rettig called the claim that the IRS is hiring 87,000 agents to harass taxpayers “absolutely false.”

    While audit rates are expected to go up for some taxpayers as the new funding flows to the IRS, the rates have also been declining for some time.

    Audit rates of individual income tax returns decreased for all income levels between tax years 2010 to 2019, according to the Government Accountability Office. They decreased the most for taxpayers with incomes of $200,000 and above, which are generally more complex.

    The Inflation Reduction Act says that the new investment in the IRS is not “intended to increase taxes on any taxpayer or small business with a taxable income below $400,000.”

    Still, there is some uncertainty about how exactly the IRS will decide how to ramp up audits.

    In an effort to shed some clarity, Treasury Secretary Janet Yellen affirmed the Biden administration’s commitment to not target low- and middle-income taxpayers.

    “I direct that any additional resources – including any new personnel or auditors that are hired – shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels,” she wrote in a six to Rettig in August.

    Yellen also directed the IRS to produce an operational plan within six months to detail how the new funding will be spent.

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  • Millionaire? Here’s how likely you are to be audited by the IRS.

    Millionaire? Here’s how likely you are to be audited by the IRS.

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    The Biden administration has trumpeted its plans to crack down on rich tax evaders, funneling $46 billion to the IRS so it can ferret out money hidden by the ultra-wealthy. 

    For now, though, the chances of a high income earner being audited by the IRS remain vanishingly low. A new report released by the Transactional Records Access Clearinghouse at Syracuse University found that a millionaire’s chances of coming face-to-face with an auditor fell in 2022 to just 1.1%.

    Although IRS enforcement agents devote a quarter of their time to auditing millionaires, nearly 700,000 millionaires face “no scrutiny whatsoever,” the group found. 

    The IRS was slightly more active with audits by mail — instances in which the agency asks for additional information on certain items in a person’s tax return. Some 85% of all audits, and just under half of millionaire audits, were done by mail, TRAC found. Still, it called this form of enforcement a “fiction.”

    The number of millionaire tax returns the IRS audits every year has fallen from nearly 41,000 a decade ago to just 16,800 in 2022, with the pace of enforcement slowing as the agency lost funding and personnel.

    “Severe budget cutbacks over the years meant that the IRS has examined fewer and fewer millionaire returns,” TRAC said. 

    While the number of millionaire audits rose modestly from 2020 to 2022, the rate stayed low because the number of high-income tax returns also grew in that time. 

    In 2022, 703,000 tax returns were filed reporting an income of at least $1 million, IRS figures show. 

    “Easy marks”

    One group that hasn’t benefited from the shrinking IRS are lower-income taxpayers. Those who earn less than $25,000 and qualify for the Earned Income Tax Credit are audited at five times the rate of everyone else, TRAC found. In fiscal year 2022, nearly 1.3% of these tax returns were subject to an in-person or mail audit.

    By comparison, the average audit rate for all tax returns was just 0.4% last year. 

    “[T]his group of taxpayers have historically been targeted not because they account for the most tax under-reporting, but because they are easy marks in an era when IRS increasingly relies upon correspondence audits yet doesn’t have the resources to assist taxpayers or answer their questions,” TRAC concluded. 

    “While these small differences may sound trivial, the difference represented tens of thousands of low-income families,” the report said.

    The Biden administration has promised to crack down on ultra-wealthy tax evaders, while vowing that audit rates remain level for anyone making under $400,000 a year. The IRS released data last year showing that it has stepped up audits of the highest earners, with a particular focus on those making $5 million or more. 

    Still, the recent funding boost for the IRS in the Inflation Reduction Act has led some Republicans to claim the agency is raising a “new army” of tax collectors to harass middle-income workers. While these are partisan claims meant to discredit the IRS, TRAC notes that the agency’s own record in this area leaves it open to criticism.

    Under former Commissioner Charles Rettig, whose tenure marked the increased audits of low-income Americans, recently leaving the agency, TRAC is calling on the IRS to create “a full and detailed transparency program.” Americans deserve to know “how these new funds are being applied in the selection of taxpayers for stepped up audits,” the report said.

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  • What we’re learning from the release of Trump’s tax returns

    What we’re learning from the release of Trump’s tax returns

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    What we’re learning from the release of Trump’s tax returns – CBS News


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    The thousands of pages of documents released by congressional Democrats paint a more detailed picture of former president Donald Trump’s finances over a six-year period, including his time in the Oval Office. Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, joins CBS News to break down what the documents tell us.

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  • Trump’s tax returns to be released Friday after long fight

    Trump’s tax returns to be released Friday after long fight

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    A House committee is set to release six years of Donald Trump’s tax returns on Friday, pulling back the curtain on financial records that the former president fought for years to keep secret.

    The Democratic-controlled House Ways and Means Committee voted last week to release the returns, with some redactions of sensitive information, such as Social Security numbers and contact information. Their dissemination comes in the waning days of Democrats’ control of the House and as Trump’s fellow Republicans prepare to retake power in the chamber.

    The committee obtained six years of Trump’s personal and business tax records, from 2015 to 2020, while investigating what it said in a Dec. 20 report was the Internal Revenue Service’s failure to pursue mandatory audits of Trump on a timely basis during his presidency, as required under the tax agency’s protocol.

    The release raises the potential of new revelations about Trump’s finances, which have been shrouded in mystery and intrigue since his days as an up-and-coming Manhattan real estate developer in the 1980s. The returns could take on added significance now that Trump has launched a third campaign for the White House.

    Trump’s tax returns are likely to offer the clearest picture yet of his finances during his time in office.

    Trump, known for building skyscrapers and hosting a reality TV show before winning the White House, broke political norms by refusing to make public his returns as he sought the presidency — though he did give some limited details about his holdings and income on mandatory disclosure forms.

    Instead, Trump has touted his wealth in the annual financial statements he gives to banks to secure loans and to financial magazines to justify his place on rankings of the world’s billionaires.

    Trump’s longtime accounting firm has since disavowed the statements, and New York Attorney General Letitia James has filed a lawsuit alleging Trump and his Trump Organization inflated asset values on the statements as part of a yearslong fraud. Trump and his company have denied wrongdoing.

    It will not be the first time Trump’s tax returns have been under scrutiny. In October 2018, The New York Times published a Pulitzer Prize-winning series based on leaked tax records that showed that Trump received a modern-day equivalent of at least $413 million from his father’s real estate holdings, with much of that money coming from what the Times called “tax dodges” in the 1990s.

    A second series in 2020 showed that Trump paid just $750 in federal income taxes in 2017 and 2018, as well as no income taxes at all in 10 of the past 15 years because he generally lost more money than he made.

    In its report last week, the Ways and Means Committee indicated the Trump administration may have disregarded a post-Watergate requirement mandating audits of a president’s tax filings.

    The IRS only began to audit Trump’s 2016 tax filings on April 3, 2019 — more than two years into his presidency — when Ways and Means chair Rep. Richard Neal, D-Mass., asked the agency for information related to the tax returns.

    By comparison, there were audits of President Joe Biden for the 2020 and 2021 tax years, said Andrew Bates, a White House spokesperson. A spokesperson for former President Barack Obama said Obama was audited in each of his eight years in office.

    An accompanying report from Congress’ nonpartisan Joint Committee on Taxation raised multiple red flags about aspects of Trump’s tax filings, including his carryover losses, deductions tied to conservation and charitable donations, and loans to his children that could be taxable gifts.

    The House passed a bill in response that would require audits of any president’s income tax filings. Republicans strongly opposed the legislation, raising concerns that a law requiring audits would infringe on taxpayer privacy and could lead to audits being weaponized for political gain.

    Republicans have argued that Democrats will regret the move once Republicans take power in January, and they warn that the committee’s new GOP chair will be under pressure to seek and make public the tax returns of other prominent people.

    The measure, approved mostly along party lines, has little chance of becoming law in the final days of this Congress. Rather, it is seen as a starting point for future efforts to bolster oversight of the presidency.

    Every president and major-party candidate since Richard Nixon has voluntarily made at least summaries of their tax information available to the public. Trump bucked that trend as a candidate and as president, repeatedly asserting that his taxes were “under audit” and couldn’t be released.

    Trump’s lawyers were repeatedly denied in their quest to keep his tax returns from the Ways and Means Committee. A three-judge federal appeals court panel in August upheld a lower-court ruling granting the committee access.

    Trump’s lawyers also tried and failed to block the Manhattan district attorney’s office from getting Trump’s tax records as part of its investigation into his business practices, losing twice in the Supreme Court.

    Trump’s longtime accountant, Donald Bender, testified at the Trump Organization’s recent Manhattan criminal trial that Trump reported losses on his tax returns every year for a decade, including nearly $700 million in 2009 and $200 million in 2010.

    Bender, a partner at Mazars USA LLP who spent years preparing Trump’s personal tax returns, said Trump’s reported losses from 2009 to 2018 included net operating losses from some of the many businesses he owns through the Trump Organization.

    The Trump Organization was convicted earlier this month on tax fraud charges for helping some executives dodge taxes on company-paid perks such as apartments and luxury cars.

    ———

    Associated Press writer Paul Wiseman in Washington contributed to this report.

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  • IRS delays rule change for people who get paid on Venmo, Etsy, Airbnb and other apps | CNN Business

    IRS delays rule change for people who get paid on Venmo, Etsy, Airbnb and other apps | CNN Business

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    New York
    CNN
     — 

    Anyone getting paid for their goods and services through apps like Venmo, PayPal or CashApp, or platforms like Etsy and Airbnb, just got a reprieve from the IRS.

    Following concerns expressed by the tax community, the electronic transactions industry and some lawmakers, the IRS said Friday it would delay by one year the implementation of a rule change that would have resulted in a virtual paper chase of tax forms going out by January 31, 2023, to anyone using such apps for their business transactions.

    The rule change requires third-party payment platforms to issue a 1099-K to the IRS and the app user for business transaction payments if they add up to more than $600 over the course of the year. A business transaction that is taxable is defined as a payment for a good or service, including tips.

    It used to be those platforms only had to issue you a 1099-K if you engaged in more than 200 business transactions for which you received total payments of more than $20,000 in a year.

    “The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan,” said Acting IRS Commissioner Doug O’Donnell. “To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes. The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements.”

    Indeed, the increase in 1099-Ks issued early next year for people’s 2022 tax returns was expected to be, in a word, “ginormous,” according to Wendy Walker, who chairs the information reporting subgroup on the Internal Revenue Service Advisory Council.

    Walker works as a solution principal for Sovos, which helps more than 30,000 business clients with tax compliance, including the issuance of all types of 1099s, of which there are at least 16 different varieties.

    Some businesses that only had to issue a couple thousand 1099-Ks under the prior rules were looking at a couple hundred thousand, she noted. “Our clients … have reported enormous increases in their potential filing obligations as result of the threshold change,” Walker said.

    Meanwhile, those receiving 1099-Ks for the first time will have to figure out what portion of the amount reported on the form is actually taxable versus what portion represents payments that may be deductible business expenses, such as a fee paid to the payment platform or a credit issued to the business, Walker said.

    “People are just not going to understand how to take that gross amount and then work off the deductions to get to their taxable amount.”

    The move was welcomed by those representing third-party payment platforms.

    “Given the potential confusion the reporting requirement would cause, we applaud the delay, ” said Scott Talbott, spokesman for the Electronic Transactions Association. “The $600 reporting requirement is not worth the problems it would cause. ETA will keep working to increase the threshold to a realistic amount.”

    How does ETA define realistic? A threshold that falls between $10,000 and $20,000, Talbott said. “ETA supports a reporting threshold that ties into regular businesses and not consumers occasionally selling a handbag or a bike online.”

    The new rule doesn’t impose any additional taxes on anyone. Nor does it change your obligation as a taxpayer to always report to the IRS all of your taxable income from your business activities.

    But the 1099-K reporting will make it harder for someone to evade the taxes they owe by underreporting their business income.

    The rule also does not apply to personal transactions you conduct on an electronic payment platform. For example, if a friend sends you money through Venmo to help pay for a dinner out or your mother sends you some spending money.

    Lastly, the 1099-K reporting rule does not apply to any transactions made through Zelle. That’s because Zelle is a payments clearinghouse that connects the payer’s bank account directly to the receiver’s bank account. “Zelle facilitates messaging between financial institutions, but does not hold accounts or handle settlement of funds,” the company said in a statement earlier this year.

    But the IRS may still get reporting on at least some of your business transactions on Zelle, Walker said.

    If there is a business-to-business payment over the Zelle network, the business that makes the payment must provide the receiving business and the IRS with either a 1099-NEC for non-employee compensation or a 1099-MISC for other expenses, she explained.

    Like the 1099-K, those other forms also provide information to the IRS that will make it harder for businesses to understate their income in a tax year.

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  • IRS says it will delay requirement to report $600 in gig work on taxes

    IRS says it will delay requirement to report $600 in gig work on taxes

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    The IRS said it is delaying a controversial requirement by one year that would have led to more online sellers and gig workers having income reported to the nation’s tax agency.

    The rule change would have required payment platforms such as Venmo, Paypal or Cash App to send tax forms called 1099-Ks to anyone receiving over $600. Previously, such payment services only had to report users’ income to the Internal Revenue Service if they had more than 200 transactions, exceeding $20,000 in revenue.

    Online selling platforms including eBay, Etsy and Poshmark had pushed back hard against the proposal to lower the reporting limit to $600, claiming it would create confusion and make it harder for sellers to earn a living. Meanwhile, Republican members of Congress said the plan was an example of government overreach that would ensnare people using apps to pay friends and family. 

    “The IRS and Treasury heard a number of concerns” about the changes, acting IRS Commissioner Doug O’Donnell said in a Friday statement. “To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation” of the new rule, the statement said.

    “The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements,” he added.

    Transfer more than $20,000? You’ll still get a form.

    Even though the delay means that people during the 2023 tax season will only get tax forms if they meet the earlier guidelines of receiving more than $20,000 in payments and making more than 200 transactions in a year, anyone who makes a profit from any sort of income is legally required to pay tax on that money.

    Postponing the reporting “does not change the rules regarding taxability of income,” the National Taxpayer Advocate, an independent advocate within the IRS, noted this week. “As before, taxpayers must report all income on their tax return, whether they received a Form 1099 or not. Taxpayers should continue to track and report their taxable income from all sources electronic and nonelectronic.”

    However, the IRS underscored that personal transactions, such as repaying a friend for a shared meal, aren’t meant to be tracked by the now-delayed rule on reporting $600 in side-gig income.

    “The law is not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill,” the IRS emphasized Friday.

    Some tax professionals had also warned that people who used apps for business as well as personal transactions could be confused by amounts reported on the new forms and potentially wind up paying more than they would need to in taxes — or have to spend hours untangling their finances to determine what was business income and what wasn’t. 

    It’s also likely that many online sellers who sell only small amounts as a hobby aren’t keeping track of their actual income and expenses related to their online endeavors, experts say.

    Delaying the rule gives people more time to get up to speed, the Taxpayer Advocate said.

    “The postponement should provide taxpayers additional time to familiarize themselves with the rules and, more importantly, to properly identify personal versus business payments” made through apps, the NTA said.

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  • Editorial Roundup: United States

    Editorial Roundup: United States

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    Excerpts from recent editorials in the United States and abroad:

    Dec. 21

    The Washington Post on Trump’s tax records

    In 2020, President Donald Trump and Melania Trump paid no federal income taxes by claiming millions in dubious deductions and carrying over losses from previous years.

    Somehow, that’s not the most scandalous detail to emerge following the House’s four-year legal brawl to obtain Mr. Trump’s tax returns. It turns out the Internal Revenue Service did not conduct — let alone complete — mandatory examinations of Mr. Trump’s returns while he was president, despite its own internal policy from 1977 requiring such reviews and the White House’s claims that they were happening. A report by the House Ways and Means Committee, released after members voted Tuesday to make Mr. Trump’s filings public, proposes codifying into law the norm that every president since Richard M. Nixon had observed, until Mr. Trump: the routine release of presidential tax returns.

    In April 2019, on the very day the committee inquired about the status of mandatory presidential audits, the IRS notified Mr. Trump that his 2015 return would be examined. But the audit was assigned mainly to one agent, and Mr. Trump threw sand in the gears. The lone IRS employee had to review a return that included over 400 pass-through entities, numerous schedules, foreign tax credits and millions in carried-over losses from previous years.

    An accompanying report from the Joint Committee on Taxation, summarizing Mr. Trump’s returns, raises questions about several deductions he’s claimed. For example, he took a $21.1 million deduction in 2015 for donating 158 acres of real estate but had no qualified appraisal for the land. He also reported making cash donations of more than $500,000 in 2018 and 2019 without substantiation, according to the report.

    An internal IRS memo said Mr. Trump’s taxes were so complicated that “it is not possible to obtain the resources available to examine all potential issues.” In other words, even if the agency wanted, it lacked the resources for a thorough review. The congressional report recommends that the IRS assign two senior agents, as well as specialists on partnerships, foreign transactions and financial products, to ensure all presidential audits are complete and timely. This is a no-brainer.

    Alas, this problem is bigger than Mr. Trump. Former IRS commissioner Charles Rettig has testified the agency lacks the resources to closely scrutinize the filings of many people in Mr. Trump’s stratum. “We get outgunned routinely,” he said. No American should be too big to audit.

    Fortunately, the Inflation Reduction Act provided $79 billion for IRS modernization, including expanded resources to wade through complex returns from high-income taxpayers. Paying taxes is a responsibility of citizenship. Taking steps to ensure presidents pay what they owe, by requiring mandatory audits and returning to the norm of releasing presidential returns, would help restore public confidence that tax laws are administered fairly and applied equally.

    ONLINE: https://www.washingtonpost.com/opinions/2022/12/21/trump-tax-records-irs-scandals/

    ———

    Dec. 24

    The New York Times on taking on extremism in the U.S.

    Whoever shot the small steel ball through the front window of the Brewmaster’s Taproom in Renton, Wash., this month wasn’t taking chances. The person wore a mask and removed the front and rear license plates of a silver Chevrolet Cruze. The police still have no leads.

    The bar’s owner, Marley Rall, thought the motivation seemed clear: The attack followed social media posts from conservatives angry about the bar’s Drag Queen Storytime and Bingo, slated for the following weekend.

    The Taproom sits in a two-story office park a 15-minute drive from downtown Seattle. It has a little outside patio and about two dozen local craft beers on tap. Dogs are welcome. A sign on the door reads: “I don’t drink beer with racists. #blacklivesmatter.” Now there’s also a note with an arrow pointing to the hole in the window reading: “What intolerance looks like.”

    Over the past two years, criticism of the bar’s long-running monthly Drag Queen Storytime had been limited to nasty voice mail messages and emails. But talk on right-wing message boards has turned much darker, Ms. Rall said. One post this month about the Taproom event read: “Drag Queen Storytime Protest. STOP Grooming Kids! Bring signs, bullhorns, noisemakers.”

    Ms. Rall knew how protests like this could escalate. There was an incident in 2019 at a library drag queen story hour about 10 minutes from the bar, where members of the Proud Boys and other paramilitary groups got into a shouting match with supporters of the event.

    Was the shot at the Taproom a warning? She had no way to know, so she kept the event on the calendar.

    Sitting in a corner of the Taproom a few hours before her story time was set to begin, Sylvia O’Stayformore said she didn’t care if the Proud Boys showed up to an event that was aimed at teaching children empathy. Protesters or not, she had a show to put on. “I’d never be intimidated by all this,” she said.

    Far-right activists have been waging a nationwide campaign of harassment against L.G.B.T.Q. people and events in which they participate. Drag queen story events are similar to other public readings for children, except that readers dress in a highly stylized and gender-fluid manner and often read books that focus on acceptance and tolerance. This month alone, drag queen events were the target of protests in Grand Prairie, Texas; San Antonio; Fall River, Mass.; Columbus, Ohio; Southern Pines, N.C.; Jacksonville, Fla.; Lakeland, Fla.; Chicago; Long Island; and Staten Island.

    On Monday, protesters vandalized the home of a gay New York City councilor with homophobic graffiti and attacked one of his neighbors in protest of drag queen story hours held at libraries.

    The protests use the language of right-wing media, where demonizing gay and transgender people is profitable and popular. Tucker Carlson, a Fox News host who rails against transgender people and the medical facilities that serve them, has the highest-rated prime-time cable news program in the country. Twitter personalities with millions of followers flag drag events and spread anti-trans rhetoric that can result in in-person demonstrations or threats. Facebook pages of activist groups can mobilize demonstrators with ease.

    Some Republican lawmakers are using the power of the state in service of the same cause. Several states are trying to restrict or ban public drag shows altogether, amid a record number of anti-L.G.B.T.Q. bills introduced this year. Republican politicians also used a barrage of lies about trans people in their campaign ads during the midterm elections, funded to the tune of at least $50 million, according to a report released in October from the Human Rights Campaign Foundation.

    This campaign isn’t happening in a vacuum. Levels of political violence are on the rise across the country, and while some of it comes from the left, a majority comes from the right, where violent rhetoric that spurs actual violence is routine and escalating. At anti-L.G.B.T.Q. events, sign-waving protesters are increasingly joined by members of the street-fighting Proud Boys and other right-wing paramilitary groups. Their presence increases the risk of such encounters turning violent.

    In a series of editorials, this board has argued for a concerted national effort against political violence. It would require cracking down on paramilitary groups, tracking extremists in law enforcement, creating a healthier culture around guns and urging the Republican Party to push fringe ideas to the fringes. Every American citizen has a part to play, and the most important thing we all can do is to demand that in every community, we treat our neighbors — and their civil liberties and human rights — with respect.

    One way to do that is to call out and reject the dehumanizing language that has become so pervasive in online discussions, and in real life, about particular groups of people. Calling L.G.B.T.Q. people pedophiles is an old tactic, and it makes ignoring or excusing any violence that may come their way easier. While direct calls for violence are beyond the pale for most Republican politicians, and the causes of specific violent acts are not easily traced, calling transgender people pedophiles or “groomers” is increasingly common and usually goes unchallenged.

    Marco Rubio, a Republican senator from Florida, released a TV ad recently in which he said: “The radical left will destroy America if we don’t stop them. They indoctrinate children and try to turn boys into girls.” A conservative activist group recently ran ads in several states, including one that said, “Transgenderism is killing kids.” This year, as Florida lawmakers debated the so-called Don’t Say Gay bill, a spokeswoman for Gov. Ron DeSantis of Florida posted on Twitter: “If you’re against the Anti-Grooming Bill, you are probably a groomer or at least you don’t denounce the grooming of 4-8 year old children. Silence is complicity.”

    The silence from a great majority of Republicans on the demonization of, and lies about, trans people has indeed meant complicity — complicity in what experts call stochastic terrorism, in which vicious rhetoric increases the likelihood of random violence against the people who are the subject of the abusive language and threats.

    Drag queen story hours aren’t the only current target for right-wing extremists. On Aug. 30, an operator at Boston Children’s Hospital, a pioneer in providing gender-affirming care, answered the telephone at about 7:45 p.m. and received a disturbing threat. “There is a bomb on the way to the hospital,” the caller said. “You better evacuate everyone, you sickos.” It was the first of seven bomb threats the hospital received over several months. The most recent came on Dec. 14.

    After extremists posted online the address of a physician who works with trans children at the hospital, the doctor had to flee the home. “These have been some of the hardest months of my life,” the doctor said.

    Around the country, at least 24 hospitals or medical facilities in 21 states have been harassed or threatened in the wake of right-wing media attacks, according to a tally this month by the Human Rights Campaign Foundation. To protect their employees, some hospitals are stripping information about the transgender services they provide from their websites. The messages that appear to trigger these attacks are often outlandish lies about what care these medical facilities actually provide. As a result, many hospitals feel they have no choice but to protect their staff, even if it means making the care they provide less visible. Removal of official information creates a risk that more disinformation could fill the void.

    Given the transnational nature of extremism, these threats can come from anywhere. The F.B.I. arrested three people in connection with the various threats against Boston doctors. One person lived in Massachusetts, another in Texas and the third in Canada.

    Data collected by the Armed Conflict Location and Event Data Project, which tracks political violence, puts the harassment of hospitals into a wider, troubling context. Acts of political violence against the entire L.G.B.T.Q. community have more than tripled since 2021; anti-L.G.B.T.Q. demonstrations have more than doubled in the same period. And the nature of the intimidation is changing: Protesters dressed as civilians have been replaced by men in body armor and fatigues; signs have been replaced by semiautomatic rifles.

    Even dictionary publishers have become targets. This year, a California man was arrested for threatening to shoot up and bomb the offices of Merriam-Webster because he was angry about its definitions related to gender identity.

    ONLINE: https://www.nytimes.com/2022/12/24/opinion/anti-trans-violence.html

    ———

    Dec. 23

    The Wall Street Journal on Congress on proxy voting:

    The House of Representatives spent Friday passing the $1.65 trillion omnibus spending blowout, and the bill is loaded with earmarks and pet priorities from healthcare to public lands that few Members have bothered to read. This is no way to run a government, and compounding the embarrassment is that half of the lawmakers had already ditched Washington for the holidays.

    The House had roughly 230 “active proxy letters” on Friday. Speaker Nancy Pelosi through a rule change allowed Members to vote by proxy in 2020, a putatively temporary measure to mitigate the risks of Covid-19. But the reprieve has been renewed every 45 days for more than two years and is now an all-purpose excuse to go AWOL.

    Members sign a letter, available on the House clerk’s website, that says they are “unable to physically attend proceedings in the House Chamber due to the ongoing public health emergency,” and designate a colleague to cast their vote. But no one even bothers anymore to fake a cough or pretend the absence has anything to do with Covid-19. Mrs. Pelosi told a CNN reporter on Friday that the mass sick day is “related to the weather more than anything else.”

    Members sometimes missed votes pre-Covid, and voters can judge for themselves whether a snowstorm is a fair reason for their Representative to leave Washington early. But it should give Americans more pause that so many Members of Congress are so cavalier about misrepresenting the reason they won’t be at roll call.

    The abuse is bipartisan, and Members from Rep. Alexandria Ocasio-Cortez to Rep. Marjorie Taylor Greene availed themselves of proxy letters this week. Business Insider reports that Ms. Greene is vacationing in Costa Rica.

    An October CQ Roll Call analysis found that a dozen House Democrats cast more than half their votes by proxy. Retiring members are particular offenders, and a joke in the press is that they are “quiet quitting.” The Roll Call report noted that voting by proxy is more common on days Members are showing up or leaving town. Is it easier to get Covid on a Friday?

    GOP leader Kevin McCarthy said on Friday that the Republican House in January would repeal “proxy voting once and for all,” though it may not be easy to herd his colleagues back into the chamber now that they’ve grown accustomed to weighing in from afar.

    But the $1.65 trillion spending bill touches every corner of policy from education to national defense. The least elected officials could do is show up to debate the merits.

    ONLINE: https://www.wsj.com/articles/the-house-pretends-to-calls-in-sick-congress-proxy-voting-nancy-pelosi-omnibus-bill-11671833628

    ———

    Dec. 22

    The Los Angeles Times on the U.S. Postal Service:

    It’s the time of year when we see a lot more mail trucks trundling through neighborhoods as letter carriers work hard to deliver everyone’s holiday cards and packages on time.

    But this season we have something new to celebrate: The U.S. Postal Service’s announcement this week that it will spend billions of dollars to buy tens of thousands of electric delivery vehicles over the next few years. It’s a victory in the fight against climate change and a welcome shift by an agency that until recently had intended to update its huge, aging fleet with another generation of gas guzzlers. It’s also a win for public health, as a growing number of zero-emission mail trucks will soon start to deliver not only letters and packages, but cleaner air to every corner of the nation.

    The Postal Service will buy 106,000 delivery vehicles by 2028, of which 66,000 will be electric, and plans to purchase zero-emission delivery trucks exclusively by 2026. The $9.6-billion plan is a dramatic change from earlier this year, when Postmaster General Louis DeJoy, who was appointed during the Trump administration, planned to make only 10% of the next-generation fleet electric and add as many as 165,000 new gas-guzzling delivery trucks over the next decade that get less than 9 miles per gallon. That would have been a huge mistake considering these vehicles last 30 years and could be on the roads polluting the air and warming the climate into the 2060s.

    The Biden administration, which does not have direct control over the Postal Service, pushed back nonetheless. California, New York and more than a dozen other states filed suit in April to halt the purchase of gas-powered trucks, joining environmental groups in demanding investments in clean, zero-emission vehicles instead.

    California’s intervention “played a big part in stopping USPS from committing to decades of air pollution around the nation,” said Liane Randolph, who chairs the state Air Resources Board.

    While the Postal Service will need to do more to fully electrify its aging fleet of more than 220,000 vehicles, this move helps put us closer to achieving President Biden’s climate goals, including an order he issued last year for the federal government to purchase only zero-emission vehicles by 2035, and to do so by 2027 for light-duty vehicles. The nation’s largest vehicle fleet now has the potential to become its largest electric one too. Instead of lagging behind private-sector companies such as Amazon and FedEx, the Postal Service can help lead the way toward a zero-emission future.

    Mail delivery trucks are especially well-suited for electrification because they run defined, local routes with low daily mileage and have hours of operation that allow them to be easily recharged. Because these vehicles serve virtually every community, electrifying them will bring widespread benefits, curbing air pollution while reducing fuel and maintenance costs and our dependence on oil.

    It seems especially significant that something as ordinary and ubiquitous as the white mail truck will now help the nation blaze a trail toward a fossil-free future through every neighborhood in the country. And we won’t have to wait for years either. The new vehicles are expected to go into service on postal routes in late 2023.

    That’s a gift we should all welcome this holiday season and enjoy for years to come.

    ONLINE: https://www.latimes.com/opinion/story/2022-12-22/postal-service-electric-vehicles

    ———

    Dec. 22

    The Guardian on Zelenskyy’s visit to Washington:

    President Volodymyr Zelenskyy’s highly choreographed visit to Washington was a significant international moment. Not long ago, Mr. Zelenskyy had been adamant that his place was always on the frontline with his people. This week, however, he made a lightning trip in person, via Poland, to Washington itself, meeting President Joe Biden at the White House and delivering a primetime address to the U.S. Congress before heading back into his suffering country less than 24 hours later.

    The visit was much more than a Christmas celebration of Ukraine’s defiance and of Mr. Zelenskyy’s immense role in it. Instead, it was a political event with important future implications for Ukraine, the United States and Russia, and for the conflict more generally. It was clearly focused on what should happen in 2023 rather than what has happened already.

    Mr. Zelenskyy had three principal objectives. The first was to rally American and, by extension, global support. The second was to intervene at a pivotal moment in the war and in U.S. politics to advance that effort. The third was to make an ambitious pitch for even more financial and military support from the only state that is in a position to supply it, and thus to strengthen Ukraine’s resistance during a bitter winter, with the prospect of fresh fighting in the spring.

    In public, Mr. Zelenskyy produced another media-savvy performance, especially in his address to Congress. He spent every hour in Washington in his iconic olive-green fatigues, and emphasized the immediacy of his cause by presenting Congress with a battlefield Ukrainian flag that he had collected from soldiers on the frontline in Bakhmut on Tuesday. He skillfully mixed gratitude with fresh requests for support. U.S. aid and support was not charity, he insisted, but an investment in the “global security and democracy” for which the U.S. and its allies stand.

    It is clear that the Biden administration agrees with that. The deeper questions of the visit, however, are how urgently Washington wants that investment to bear fruit and what price it is willing to pay. Weapons and money are the twin keys to the answer. Mr. Biden and his aides will have assured Mr. Zelenskyy that the U.S. wants Russia to be defeated in Ukraine. But they will also have told him that they do not want a wider conflict and that they may have a different definition of what defeat could look like.

    The toughest arguments behind closed doors will have focused on Ukraine’s demands for more and better weaponry, and on the terms to be set for ending the conflict. At home, though, finance is an even bigger political issue for Mr. Biden. The U.S. has already spent more than $48bn on humanitarian, financial and military support; another $2bn in military aid was announced during the visit. The administration also aims to get another aid package, worth almost $45bn, through Congress before the Republicans take over the House of Representatives in January.

    The US domestic political question is whether bipartisan support continues in January. Mr. Zelenskyy’s visit was in large part directed towards ensuring that it does. But the real issues this week will have been military and strategic. Russia is preparing a fresh ground assault, perhaps during winter. Another Ukrainian counterattack is expected too. Mr. Zelenskyy is the hero of the hour. But Washington is increasingly looking towards an endgame in 2023. The end of the conflict is increasingly in the US’s hands, not just those of Russia and Ukraine.

    Some on both sides of the Atlantic made the comparison between Mr. Zelenskyy’s wartime flight from Kyiv this week and Winston Churchill’s visit to Washington after Pearl Harbor in 1941. For that comparison to be intellectually useful rather than merely sentimental, it is important to remember that Churchill’s visit marked the moment in the second world war when the U.S. began to take charge of the allied cause in Europe. The same thing may be true this time over Ukraine.

    ONLINE: https://www.theguardian.com/commentisfree/2022/dec/22/the-guardian-view-on-zelenskiy-in-washington-a-pivotal-moment

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  • IRS conducted audits on Bidens, House passes requirement for mandatory IRS audit of president

    IRS conducted audits on Bidens, House passes requirement for mandatory IRS audit of president

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    The IRS has conducted audits on the federal income taxes of President Joe Biden and first lady Jill Biden for the last two years, one of which required the first couple to pay slightly more than originally owed.

    White House deputy press secretary Andrew Bates told CBS News, “The routine audits took place during both years of this administration. For tax year 2020, the IRS determined that the president and first lady were due an additional federal income tax refund. For tax year 2021, it was found that they owed an additional $13, which could have been waived under IRS policy but they chose to pay.”

    While the IRS was able to carry out its audits of the Bidens, it failed to complete any audits of former president Donald Trump during his four years in office, the House Ways and Means Committee revealed this week. The Wall Street Journal first reported details of the Biden audits.

    The release of tax agency records showing the lack of audits prompted congressional Democrats this week to quickly propose legislation mandating annual audits of sitting presidents and disclosure of their returns. The House approved the bill Thursday 222 to 201, voting mostly along party lines.

    Under the legislation, the IRS would be required to make publicly available an initial report about its examination of the president’s income tax return “[n]ot later than 90 days after the filing of a Presidential income tax return.”  Every180 days after that, the IRS would be required to provide an updated report, with an estimate of the timeframe for completion, and then a final report required 90 days after the IRS completes its audit.

    There were five Republicans who joined Democrats in voting for the mandatory annual audits: Reps. Liz Cheney, of Wyoming; Adam Kinzinger, of Illinois; Fred Upton, of Michigan; John Katko, of New York; and Tom Rice, of South Carolina. None of them are returning to Congress next year — Kinzinger, Upton and Katko retired, and Cheney and Rice lost their reelection bids.

    The House Ways and Means Committee noted in its report this week that in 1977, a few years after the IRS found “numerous problems” with President Richard Nixon’s tax returns, it adopted a policy of requiring an annual audit for the president and vice president while they were in office. It meant that “no IRS employee would be required to make the affirmative decision to audit the president; it would be routine.”

    The committee is expected to release the Trump tax returns it has obtained after the Christmas holiday.

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  • IRS says it will delay requirement to report $600 in gig work on taxes

    IRS says it will delay requirement to report $600 in gig work on taxes

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    The IRS said it is delaying a controversial requirement by one year that would have led to more online sellers and gig workers having income reported to the nation’s tax agency.

    The rule change would have required payment platforms such as Venmo, Paypal or Cash App to send tax forms called 1099-Ks to anyone receiving over $600. Previously, such payment services only had to report users’ income to the Internal Revenue Service if they had more than 200 transactions, exceeding $20,000 in revenue.

    Online selling platforms including eBay, Etsy and Poshmark had pushed back hard against the proposal to lower the reporting limit to $600, claiming it would create confusion and make it harder for sellers to earn a living. Meanwhile, Republican members of Congress said the plan was an example of government overreach that would ensnare people using apps to pay friends and family. 

    “The IRS and Treasury heard a number of concerns” about the changes, acting IRS Commissioner Doug O’Donnell said in a Friday statement. “To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation” of the new rule, the statement said.

    “The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements,” he added.

    Transfer more than $20,000? You’ll still get a form.

    Even though the delay means that people during the 2023 tax season will only get tax forms if they meet the earlier guidelines of receiving more than $20,000 in payments and making more than 200 transactions in a year, anyone who makes a profit from any sort of income is legally required to pay tax on that money. 

    That means even if people don’t receive a tax form, they are still required to report the income and pay tax on it. However, the IRS underscored that personal transactions, such as repaying a friend for a shared meal, aren’t meant to be tracked by the now-delayed rule on reporting $600 in side-gig income.

    “The law is not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill,” the IRS emphasized Friday.

    Some tax professionals had also warned that people who used apps for business as well as personal transactions could be confused by amounts reported on the new forms and potentially wind up paying more than they would need to in taxes — or have to spend hours untangling their finances to determine what was business income and what wasn’t. 

    It’s also likely that many online sellers who sell only small amounts as a hobby aren’t keeping track of their actual income and expenses related to their online endeavors, experts say.

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  • House committee meets to discuss public release of Trump’s tax returns

    House committee meets to discuss public release of Trump’s tax returns

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    Washington — The Democratic-controlled House Ways and Means Committee is expected to vote Tuesday on whether to publicly release years of former President Donald Trump’s tax returns, which he has long tried to shield.

    Committee Chairman Richard Neal, a Democrat from Massachusetts, has kept a close hold on the panel’s actions, including whether the panel will meet in a public or private session. Minutes after the committee convened, it voted to go into a closed-door session to consider its next steps regarding the returns. The panel is expected to reopen the session for a final vote on next steps, and lawmakers agreed to release the transcript from its private session if any taxpayer information is released.

    If lawmakers move forward with plans to release the returns, it’s unclear how quickly that would happen. But after a yearslong battle that ultimately resulted in the Supreme Court clearing the way last month for the Treasury Department to send the returns to Congress, Democrats are under pressure to act aggressively. 

    The committee received six years of tax returns for Trump and some of his businesses. And with just two weeks left until Republicans formally take control of the House, Tuesday’s meeting could be the last opportunity for Democrats to disclose whatever information they have gleaned.

    Before committee members convened to discuss the release of Trump’s tax information, Rep. Kevin Brady, the panel’s top Republican, said the consequences of making the returns public would extend beyond the former president.

    “Our concern is not whether the president should have made his tax returns public as is traditional, nor about the accuracy of his tax returns. That is for the IRS and the taxpayer for determine,” he said in a press conference. “Our concern is that if taken, this committee action will set a terrible precedent that unleashes a dangerous new political weapon that reaches far beyond the former president and overturns decades of privacy protections for average Americans.”

    politics
    Reps. Richard Neal and Kevin Brady arrive for a House Ways and Means Committee hearing to discuss tax returns from former President Donald Trump and whether to make them public on Dec. 20, 2022.

    MANDEL NGAN/AFP via Getty Images


    Brady, of Texas, said that in the future, the heads of the Ways and Means and Senate Finance Committee, which under federal law can request certain individuals’ tax returns, “will have nearly unlimited power to target and make public the tax returns of private citizens.”

    Trump has long had a complicated relationship with his personal income taxes.

    As a presidential candidate in 2016, he broke decades of precedent by refusing to release his tax forms to the public. He bragged during a presidential debate that year that he was “smart” because he paid no federal taxes and later claimed he wouldn’t personally benefit from the 2017 tax cuts he signed into law that favored people with extreme wealth, asking Americans to simply take him at his word.

    Tax records would have been a useful metric for judging his success in business. The image of a savvy businessman was key to a political brand honed during his years as a tabloid magnet and star of “The Apprentice” television show. They also could reveal any financial obligations — including foreign debts — that could influence how he governed.

    But Americans were largely in the dark about Trump’s relationship with the IRS until October 2018 and September 2020, when The New York Times published two separate series based on leaked tax records.

    The Pulitzer Prize-winning 2018 articles showed how Trump received a modern equivalent of at least $413 million from his father’s real estate holdings, with much of that money coming from what the Times called “tax dodges” in the 1990s. Trump sued the Times and his niece, Mary Trump, in 2021 for providing the records to the newspaper. In November, Mary Trump asked an appeals court to overturn a judge’s decision to reject her claims that her uncle and two of his siblings defrauded her of millions of dollars in a 2001 family settlement.

    The 2020 articles showed that Trump paid just $750 in federal income taxes in 2017 and 2018. Trump paid no income taxes at all in 10 of the past 15 years because he generally lost more money than he made.

    The articles exposed deep inequities in the U.S. tax code as Trump, a reputed multi-billionaire, paid little in federal income taxes. IRS figures indicate that the average tax filer paid roughly $12,200 in 2017, about 16 times more than the former president paid.

    Details about Trump’s income from foreign operations and debt levels were also contained in the tax filings, which the former president derided as “fake news.”

    At the time of the 2020 articles, Neal said he saw an ethical problem in Trump overseeing a federal agency that he has also battled with legal filings.

    “Now, Donald Trump is the boss of the agency he considers an adversary,” Neal said in 2020. “It is essential that the IRS’s presidential audit program remain free of interference.”

    The Manhattan district attorney’s office also obtained copies of Trump’s tax records in February 2021 after after a protracted legal fight that included two trips to the Supreme Court.

    The office, then led by District Attorney Cyrus Vance Jr., had subpoenaed Trump’s accounting firm in 2019, seeking access to eight years of Trump’s tax returns and related documents.

    The DA’s office issued the subpoena after Trump’s former personal lawyer Michael Cohen told Congress that Trump had misled tax officials, insurers and business associates about the value of his assets. Those allegations are the subject of a fraud lawsuit that New York Attorney General Letitia James filed against Trump and his company in September.

    Trump’s longtime accountant, Donald Bender, testified at the Trump Organization’s recent criminal trial that Trump reported losses on his tax returns every year for a decade, including nearly $700 million in 2009 and $200 million in 2010.

    Bender, a partner at Mazars USA LLP who spent years preparing Trump’s personal tax returns, said Trump’s reported losses from 2009 to 2018 included net operating losses from some of the many businesses he owns through his Trump Organization.

    The Trump Organization was convicted earlier this month on tax fraud charges for helping some executives dodge taxes on company-paid perks such as apartments and luxury cars.

    The current Manhattan district attorney, Alvin Bragg, told CBS News in an interview last week that his office’s investigation into Trump and his businesses continues.

    “We’re going to do our talking in the courtroom,” Bragg said. “We’re working everyday.”


    Manhattan District Attorney Alvin Bragg discusses Trump criminal probe

    07:40

    Trump, who refused to release his returns during his 2016 presidential campaign and his four years in the White House while claiming that he was under IRS audit, has argued there is little to be gleaned from the tax returns even as he has fought to keep them private.

    “You can’t learn much from tax returns, but it is illegal to release them if they are not yours!” he complained on his social media network last weekend.

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  • Trump’s tax returns to be discussed by congressional panel

    Trump’s tax returns to be discussed by congressional panel

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    WASHINGTON — The Democratic-controlled House Ways and Means Committee is expected to vote Tuesday on whether to publicly release years of Donald Trump ’s tax returns, which the former president has long tried to shield.

    Committee Chairman Richard Neal, D-Mass., has kept a close hold on the panel’s actions, including whether the panel will meet in a public or private session. And if lawmakers move forward with plans to release the returns, it’s unclear how quickly that would happen.

    But after a yearslong battle that ultimately resulted in the Supreme Court clearing the way last month for the Treasury Department to send the returns to Congress, Democrats are under pressure to act aggressively. The committee received six years of tax returns for Trump and some of his businesses. And with just two weeks left until Republicans formally take control of the House, Tuesday’s meeting could be the last opportunity for Democrats to disclose whatever information they have gleaned.

    Trump has long had a complicated relationship with his personal income taxes.

    As a presidential candidate in 2016, he broke decades of precedent by refusing to release his tax forms to the public. He bragged during a presidential debate that year that he was “smart” because he paid no federal taxes and later claimed he wouldn’t personally benefit from the 2017 tax cuts he signed into law that favored people with extreme wealth, asking Americans to simply take him at his word.

    Tax records would have been a useful metric for judging his success in business. The image of a savvy businessman was key to a political brand honed during his years as a tabloid magnet and star of “The Apprentice” television show. They also could reveal any financial obligations — including foreign debts — that could influence how he governed.

    But Americans were largely in the dark about Trump’s relationship with the IRS until October 2018 and September 2020, when The New York Times published two separate series based on leaked tax records.

    The Pulitzer Prize-winning 2018 articles showed how Trump received a modern equivalent of at least $413 million from his father’s real estate holdings, with much of that money coming from what the Times called “tax dodges” in the 1990s. Trump sued the Times and his niece, Mary Trump, in 2021 for providing the records to the newspaper. In November, Mary Trump asked an appeals court to overturn a judge’s decision to reject her claims that her uncle and two of his siblings defrauded her of millions of dollars in a 2001 family settlement.

    The 2020 articles showed that Trump paid just $750 in federal income taxes in 2017 and 2018. Trump paid no income taxes at all in 10 of the past 15 years because he generally lost more money than he made.

    The articles exposed deep inequities in the U.S. tax code as Trump, a reputed multi-billionaire, paid little in federal income taxes. IRS figures indicate that the average tax filer paid roughly $12,200 in 2017, about 16 times more than the former president paid.

    Details about Trump’s income from foreign operations and debt levels were also contained in the tax filings, which the former president derided as “fake news.”

    At the time of the 2020 articles, Neal said he saw an ethical problem in Trump overseeing a federal agency that he has also battled with legal filings.

    “Now, Donald Trump is the boss of the agency he considers an adversary,” Neal said in 2020. “It is essential that the IRS’s presidential audit program remain free of interference.”

    The Manhattan district attorney’s office also obtained copies of Trump’s tax records in February 2021 after after a protracted legal fight that included two trips to the Supreme Court.

    The office, then led by District Attorney Cyrus Vance Jr., had subpoenaed Trump’s accounting firm in 2019, seeking access to eight years of Trump’s tax returns and related documents.

    The DA’s office issued the subpoena after Trump’s former personal lawyer Michael Cohen told Congress that Trump had misled tax officials, insurers and business associates about the value of his assets. Those allegations are the subject of a fraud lawsuit that New York Attorney General Letitia James filed against Trump and his company in September.

    Trump’s longtime accountant, Donald Bender, testified at the Trump Organization’s recent criminal trial that Trump reported losses on his tax returns every year for a decade, including nearly $700 million in 2009 and $200 million in 2010.

    Bender, a partner at Mazars USA LLP who spent years preparing Trump’s personal tax returns, said Trump’s reported losses from 2009 to 2018 included net operating losses from some of the many businesses he owns through his Trump Organization.

    The Trump Organization was convicted earlier this month on tax fraud charges for helping some executives dodge taxes on company-paid perks such as apartments and luxury cars.

    The current Manhattan district attorney, Alvin Bragg, told The Associated Press in an interview last week that his office’s investigation into Trump and his businesses continues.

    “We’re going to follow the facts and continue to do our job,” Bragg said.

    Trump, who refused to release his returns during his 2016 presidential campaign and his four years in the White House while claiming that he was under IRS audit, has argued there is little to be gleaned from the tax returns even as he has fought to keep them private.

    “You can’t learn much from tax returns, but it is illegal to release them if they are not yours!” he complained on his social media network last weekend.

    Republicans, meanwhile, have railed against the potential release, arguing that it would set a dangerous precedent.

    Rep. Kevin Brady of Texas, the Ways and Means Committee’s Republican leader, accused Democrats on the committee of “unleashing a dangerous new political weapon that reaches far beyond President Trump, and jeopardizes the privacy of every American.”

    “Going forward, partisans in Congress have nearly unlimited power to target political enemies by obtaining and making public their private tax returns to embarrass and destroy them,” Brady said in a statement. “We urge Democrats, in their rush to target former President Trump, not to unleash this dangerous new political weapon on the American people.”

    ———

    Kinnard reported from Columbia, South Carolina. Associated Press writers Michael R. Sisak and Jill Colvin in New York contributed this report.

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  • Biden’s pick for IRS commissioner would face backlog of tax returns while gearing up for next filing season | CNN Politics

    Biden’s pick for IRS commissioner would face backlog of tax returns while gearing up for next filing season | CNN Politics

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    CNN
     — 

    Even though the Internal Revenue Service has been steadily chipping away at its major backlog of tax filings, millions of individuals and businesses are still waiting for their tax returns to be fully processed and their refunds to be sent.

    Dealing with this mountain of paperwork, as well as deploying the nearly $80 billion that Congress gave the agency earlier this year, could fall to Daniel Werfel, whom President Joe Biden nominated last month to be the next IRS commissioner.

    Werfel, whose Senate confirmation hearing has yet to be scheduled, is no stranger to turmoil at the IRS. He served as acting commissioner for seven months in 2013 after his predecessor was forced to resign following the revelation that the agency targeted conservative groups seeking tax-exempt status for extra scrutiny.

    Prior to joining the IRS, Werfel worked for nearly 16 years at the White House’s Office of Management and Budget, serving as deputy controller and then federal controller. After leaving the government, he joined Boston Consulting Group, where he is a managing director and partner on the federal and public sector teams.

    “The management challenges are significant, both spending the money efficiently and wisely,” said John Koskinen, who served as IRS commissioner from 2013 to 2017. “It’ll be an interesting, but good challenge for him. I think he’s more than up to it.”

    During his time at the IRS, Werfel responded to numerous congressional investigations, the White House noted when it announced his nomination.

    If confirmed, he is expected to be called again to Capitol Hill. House Republicans, who will take charge of the chamber in January, plan to conduct multiple inquiries into the agency.

    “Will he cooperate with congressional oversight efforts, such as the pending requests related to the continuing large tax return backlog, Child Tax Credit administration, and the agency’s suspicious solicitation of millions of additional tax credit claims right before an election, among many others?” Texas Rep. Kevin Brady, the Republican leader of the House Ways and Means Committee, said when Werfel was nominated.

    The Covid-19 pandemic wreaked havoc on the IRS, which closed its offices for several months in 2020. Millions of paper returns and correspondence piled up in trailers during the shutdown.

    On top of that, Congress enacted several relief programs that were carried out by the agency in 2020 and 2021 – including three rounds of stimulus checks, a monthly child tax credit and an unemployment compensation exclusion – all of which added to the pressure on its staff.

    The agency has devoted more resources to clearing the massive backlog of paper returns and is moving more quickly than it did a year ago, National Taxpayer Advocate Erin Collins said during a Tax Policy Center panel discussion last month. But the IRS is still not where she would like it to be.

    There were still 3.2 million unprocessed individual returns as of November 25, according to the agency. Of these, 1.5 million are paper returns waiting to be reviewed and processed and 1.7 million are returns that require error correction or other special handling.

    The IRS also has 800,000 unprocessed amended individual tax returns as of late November. It could take more than 20 weeks for the filings to be processed.

    Those figures remain daunting with only a few weeks left before the agency shuts down its systems to prepare for the upcoming filing year. But they show the IRS is making progress. There were about 3 million individual paper returns and 1.3 million amended returns waiting to be processed as of October 21, Collins wrote in a blog post last month.

    As for business returns, Collins found there were more than 4 million in need of initial processing as well as several hundred thousand amended returns as of October 21.

    Plus, there are 6.3 million suspended returns, of which nearly 3 million were being reviewed for potential identity theft as of late October. And the agency has about 4.5 million pieces of correspondence awaiting processing.

    The IRS does not provide updated processing figures for business returns, correspondence or all suspended returns online.

    What’s more, the agency is only answering about one in 10 calls it receives. The rate was around 85% two decades ago.

    The IRS said it intends to be “healthy” by the end of the year, Collins wrote, but she questioned how the agency defines “healthy.”

    “Regardless of the IRS’ definition, none of the above taxpayers will see the IRS as ‘healthy’ until their return is worked,” she wrote.

    The IRS did not respond to requests for comment.

    The backlog stems in part from cuts to the agency’s budget and staffing levels over the past decade. The budget is down more than 15%, after adjusting for inflation, and staffing has shrunk to 1970s levels, former Commissioner Charles Rettig told a Senate committee earlier this year.

    The agency is already deploying part of the $80 billion in funding that it will receive over 10 years from the Democrats’ Inflation Reduction Act, which passed this summer.

    In October, the IRS announced it had hired 4,000 customer service representatives to answer phones and provide other taxpayer assistance. It said it intends to hire another 1,000 staffers by the end of the year.

    Many will be in place at the start of the 2023 tax season, and nearly all will be trained by Presidents’ Day in February, which is traditionally when the agency sees the highest call volumes.

    The IRS expects the phones to be answered at a much higher rate this upcoming season, the agency said.

    In addition, the IRS is looking to hire 700 people for its Taxpayer Assistance Centers across the country. It will be the first time in a decade that its more than 270 walk-in sites will be properly staffed, the agency said.

    While the upcoming tax filing season should be better than the last two, there are reasons for concern, said Larry Gray, national government liaison for the National Association of Tax Professionals. Since the new employees will still be learning, he questioned whether they will be as accurate or be able to answer questions as quickly as those with a few years under their belts.

    Plus, training the new hires is pulling experienced staffers away from processing the backlog.

    “We are moving in a direction to better,” said Gray. But “if you think the backlog is going to be gone, you are waking up in a dream.”

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  • Made money online this year? You could owe more in taxes

    Made money online this year? You could owe more in taxes

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    With 2022 drawing to a close, the IRS is alerting Americans so they can avoid a potentially nasty surprise when they pay taxes next year. 

    Starting in 2023, more people who made money on eBay, Etsy, Poshmark, Uber or other digital platforms will have their income reported to the Internal Revenue Service. Anyone who made more than $600 via a gig platform or who was paid that much on Venmo will receive a 1099-K form, meaning that those funds will be reported to the IRS, the agency said. 

    Americans already receive 1099 forms if they make money as an independent contractor, if they earn interest on a bank savings account or if they make a significant sum by selling things online. What’s new is the $600 threshold

    Before this year, people only received a 1099-K form if they earned at least $20,000 from online platforms and made more than 200 transactions on the platform. Now, a single transaction exceeding $600 can trigger a 1099-K reporting requirement, according too IRS

    Millions could potentially owe taxes

    Roughly one in four Americans has made money by selling something online, renting their home or using a digital platform to take on work, according to Pew. That suggests the new IRS rule could affect millions of people. 

    Accountants emphasize that just getting a 1099 form from the IRS doesn’t necessarily mean you owe additional tax. However, the new reporting obligations could come as a shock for casual online sellers or digital platform workers who haven’t treated their side gigs as a business and haven’t kept track of expenses that might reduce what they owe in taxes.

    For instance, a person who delivers food for DoorDash would be eligible to deduct some of the cost of gas, car maintenance, auto loan payments, cell phone service and the bags that keep dishes hot from their gross earnings.  

    What should you do? 

    If you’ve done gig work or sold items online, start collecting information on any costs you’ve incurred in the process of completing those tasks. 

    “If you’re an online seller and you’re buying supplies or even driving your car to pick up items or ship items out, you should keep track of those [expenses],” Lisa Greene-Lewis, a CPA at TurboTax, told CBS MoneyWatch earlier this year. “They are deductible if they’re related to your business.” 

    For instance, if you’re selling designer clothes on Poshmark, note what you paid for that item in the first place. In many cases, sellers are charging less for a used item than they paid for it and shouldn’t owe any taxes on the income they earn by selling it.

    If you have a side gig running an eBay or Etsy business, money you spend on maintaining a website, ads or promoted posts on the platform, storage space for your goods and shipping costs are all business-related expenses that you can deduct from your gross sales, according to tax experts. 

    Could the law change? 

    It’s possible. Companies including Airbnb, eBay, Etsy, PayPal and Poshmark have formed a group dubbed the “Coalition for 1099-K Fairness” and are lobbying Congress to relax the $600 reporting rule. A GOP member of the House wrote to the IRS last week asking for the law to be pushed back by a year, claiming that “this new requirement will be confusing and unworkable.” 

    The group and lawmakers met last week to discuss loosening the law, but with just a few weeks left in the session it’s uncertain if any deal will be reached, Bloomberg Tax reported.

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  • IRS inspector general says intensive audits of former FBI Director Comey and deputy were random | CNN Politics

    IRS inspector general says intensive audits of former FBI Director Comey and deputy were random | CNN Politics

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    CNN
     — 

    An inspector general for the Internal Revenue Service said this week that significant tax audits conducted for 2017 and 2019 – years where former FBI Director James Comey and then-deputy Andrew McCabe have said they were audited – were randomly selected and did not show misconduct by the IRS.

    The report does not mention Comey or McCabe by name but says the assessment was conducted after a July New York Times article.

    “Maybe it’s a coincidence or maybe somebody misused the IRS to get at a political enemy,” Comey said in a statement in July.

    McCabe told CNN’s Laura Coates at the time that, “people need to be able to trust the institutions of government and so that’s why there should be some – we should dig through this and find out what happened.”

    In July, The New York Times reported that Comey had received a highly intensive tax audit for 2017 and McCabe had received the same for 2019, questioning whether it was “sheer coincidence” that the two were selected.

    The Times was first to report the inspector general’s findings.

    An attorney for Comey declined to comment on the inspector general’s report and McCabe did not respond to CNN’s request for comment.

    Democratic Rep. Richard Neal, the chairman of the House Ways and Means Committee, said in a statement that he had “requested a deeper probe into the former president’s use of the IRS against his political enemies” last month, noting that “this report alleviates some concerns” but hopes to receive more information from the inspector general.

    The inspector general said in its report that the office will continue to examine certain IRS practices related to the intensive tax audits.

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  • Who is Jack Smith, the special counsel named in the Trump investigations | CNN Politics

    Who is Jack Smith, the special counsel named in the Trump investigations | CNN Politics

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    CNN
     — 

    Jack Smith, the special counsel announced by Attorney General Merrick Garland on Friday to oversee the criminal investigations into the retention of classified documents at former President Donald Trump’s Mar-a-Lago resort and parts of the January 6, 2021, insurrection, is a long-time prosecutor who has overseen a variety of high-profile cases during a career that spans decades.

    Smith’s experience ranges from prosecuting a sitting US senator to bringing cases against gang members who were ultimately convicted of murdering New York City police officers. In recent years, Smith has prosecuted war crimes at The Hague. His career in multiple parts of the Justice Department, as well as in international courts, has allowed him to keep a relatively low-profile in the oftentimes brassy legal industry.

    His experience and resume will allow him, at least at first, to fly underneath the type of political blowback that quickly met former special counsel Robert Mueller’s team. It also shows he is adept at managing complex criminal cases related to both public corruption and national security – and that he has practice making challenging decisions with political implications.

    Smith is widely expected to be tasked with making policy decisions around whether to charge a former president of the United States. Garland’s statements on Friday and the recent steps taken in the Mar-a-Lago and January 6 investigations have signaled that, at the very least, Donald Trump is under investigation and could potentially be charged with a crime.

    “He knows how to do high-profile cases. He’s independent. He will not be influenced by anybody,” said Greg Andres, a former member of Mueller’s team.

    Andres, who has known Smith since the late 1990s when they started at a US attorney’s office together and ultimately became co-chiefs of the office’s criminal division, said it’s the breadth of Smith’s experience that will enable him to withstand the public scrutiny and make tough judgment calls.

    “He will evaluate the evidence and understand what type of case should be charged or not. He has the type of experience to make those judgments,” said Andres.

    “He understands the courtroom. He understands how to try a case. He knows how to prove a case,” he added. “Particularly in these circumstances it will be critical to understand what types of evidence is required to prove the case in court.”

    In a statement following his announcement, Smith pledged to conduct the investigations “independently and in the best traditions of the Department of Justice.”

    “The pace of the investigations will not pause or flag under my watch. I will exercise independent judgment and will move the investigations forward expeditiously and thoroughly to whatever outcome the facts and the law dictate,” Smith said.

    One former colleague highlighted that Smith has prosecuted members of both parties.

    “He’s going to be really aggressive,” the person said, adding that “things are going to speed up.” Smith, they said, “operates very quickly” and has a unique ability to quickly determine the things that are important to a case and doesn’t waste time “hand-wringing over things that are real sideshows.”

    In court, Smith comes off as very down-to-earth and relatable, this person said, characterizing that as a good attribute to have as a prosecutor.

    Smith also will not care about the politics surrounding the case, they said, adding he has very thick skin and will “do what he’s going to do.”

    Smith began his career as an assistant district attorney with the New York County District Attorney’s Office in 1994. He worked in the Eastern District of New York in 1999 as an assistant US attorney, where he prosecuted cases including civil rights violations and police officers murdered by gangs, according to the Justice Department.

    As a prosecutor in Brooklyn, New York, one of Smith’s biggest and most high-profile cases was prosecuting gang member Ronell Wilson for the murder of two New York City police department detectives during an undercover gun operation in Staten Island.

    Wilson was convicted and sentenced to death, the first death penalty case in New York at the time in 50 years, though a judge later found he was ineligible for the death penalty.

    Moe Fodeman, who worked with Smith at EDNY, called him “one of the best trial lawyers I have ever seen.”

    “He is a phenomenal investigator; he leaves no stone unturned. He drills down to get to the true facts,” Fodeman said.

    Fodeman, who is still friends with Smith, said he is a “literally insane” cyclist and triathlete.

    Beginning in 2008, Smith worked for the International Criminal Court and oversaw war crimes investigations under the Office of the Prosecutor for two years.

    In 2010, he became chief of the Public Integrity Section of the Justice Department, where he oversaw litigation of public corruption cases. Lanny Breuer, the former assistant attorney general for the DOJ’s Criminal Division who recruited Smith, said his onetime employee was “a terrific prosecutor” with a “real sense of fairness.”

    “If you are going to have a special counsel, in my view, and you want someone who is going to be fearless, but fair, and not going to be intimidated and not overly bureaucratic, that’s Jack – he is all of these things,” Breuer told CNN.

    “Smith brings cases quickly. … He doesn’t sit on cases. He is a person of action,” Breuer added.

    After his stint at the Public Integrity Section, Smith was appointed first assistant US attorney for the Middle District of Tennessee in 2015.

    Though he is not widely known in Washington, DC, legal circles, Smith is described as a consummate public servant.

    About a decade ago, he hired waves of line prosecutors into the Public Integrity Section of the Justice Department, supervising dozens over his years in charge there.

    Brian Kidd, whom Smith hired at the unit, recalled how his boss walked him through every step of a complicated racketeering case against corrupt police officers.

    “He was not going to tolerate a politically motivated prosecution,” Kidd said. “And he has an incredible ability to motivate the people working with him and under him. He’s incredibly supportive of his team.”

    Smith handled some of the most high-profile political corruption cases in recent memory – to mixed outcomes.

    He was the head of the public integrity unit when then-Virginia Gov. Bob McDonnell was indicted in 2014, and was in meetings with the defense team and involved in decision-making leading up to the charges, according to a person familiar with the case.

    McDonnell was initially convicted of receiving gifts for political favors, but then his conviction was overturned by the Supreme Court.

    Smith was also at the helm of the unit when the DOJ failed to convict at trial former Senator and vice presidential candidate John Edwards.

    A Republican source familiar with Smith’s oversight of the investigation into former House Majority Leader Tom DeLay commended Smith’s non-biased approach, saying that he ultimately made a “just” decision to conclude the investigation without alleging DeLay committed any crime.

    In recent years while working at The Hague, he has not lived in the United States. He’s no longer on the US Triathlon team but is still a competitive biker.

    Smith took over as acting US Attorney when David Rivera departed in early 2017 before leaving the Justice Department later that year and becoming vice president of litigation for the Hospital Corporation of America. In 2018, he became chief prosecutor for the special court in The Hague, where he investigated war crimes in Kosovo.

    “Throughout his career, Jack Smith has built a reputation as an impartial and determined prosecutor, who leads teams with energy and focus to follow the facts wherever they lead,” Garland said during the announcement on Friday. “Mr. Smith is the right choice to complete these matters in an even-handed and urgent manner.”

    In May 2014, the House Oversight Committee interviewed Smith behind closed doors as part of the Republican-led investigation into the alleged IRS targeting of conservative groups. Then-Oversight Chairman Darrell Issa launched the probe following a 2013 inspector general report that found delays in the processing of applications by certain conservative groups and requesting information from them that was later deemed unnecessary.

    Republicans sought testimony from Smith, who at the time was Public Integrity section chief, due to his involvement with arranging a 2010 meeting between Justice Department officials and then-IRS official Lois Lerner, the official at the center of the IRS scandal. The meeting had been convened to discuss the “evolving legal landscape” of campaign finance law following the Citizens United Supreme Court decision, according to a May 2014 letter written by Issa and Rep. Jim Jordan, the Ohio Republican who is expected to be House Judiciary chairman next year.

    “It is apparent that the Department’s leadership, including Public Integrity Section Chief Jack Smith, was closely involved in engaging with the IRS in wake of Citizens United and political pressure from prominent Democrats to address perceived problems with the decision,” Issa and Jordan wrote in the letter seeking Smith’s testimony.

    Smith testified that his office “had a dialogue” with the FBI about opening investigations related to politically active non-profits following the meeting with Lerner, but did not ultimately do so, according to a copy of his interview obtained by CNN.

    Smith explained that he had asked for the meeting with the IRS because he wanted to learn more about the legal landscape of political non-profits following the Citizens United decision because he was relatively new to the public integrity section. He said that Lerner explained it would be difficult if not impossible to bring a case on the abuse of tax-exempt status.

    Smith repeated at several points in the interview that the Justice Department did not pursue any investigations due to politics.

    “I want to be clear – it would be more about looking at the issue, looking at whether it made sense to open investigations,” he said. “If we did, you know, how would you go about doing this? Is there predication, a basis to open an investigation? Things like that. I can’t say as I sit here now specifically, you know, the back-and-forth of that discussion. I can just tell you that – because I know one of your concerns is that organizations were targeted. And I can tell you that we, Public Integrity, did not open any investigations as a result of those discussions and that we certainly, as you know, have not brought any cases as a result of that.”

    Smith also testified that he was not aware of anyone at the Justice Department placing pressure on the IRS – and that he was never pressured to investigate any political groups.

    “No. And maybe I can stop you guys. I know there’s a series of these questions. I’ve never been asked these things, and anybody who knows me would never even consider asking me to do such a thing,” Smith said.

    This story has been updated with additional details.

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  • The increase in funding for the IRS is not going create an army of agents that will come after you

    The increase in funding for the IRS is not going create an army of agents that will come after you

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    The Inflation Reduction Act that President Biden signed on Tuesday includes a $79 billion injection for the Internal Revenue Service (IRS). Many political figures and members of the media are reacting incredulously to this long-sought budget increase for the nation’s tax agency. In discussing this budget increase, Senator Chuck Grassley suggested in an interview on Fox News last week that the IRS “are they going to have a strike force that goes in with AK-15s already loaded, ready to shoot some small-business person in Iowa with these? Because I think they are going after middle class and small business people…” On August 11th, Fox News host Brian Kilmeade warned his viewers that “Joe Biden’s new army” of armed IRS agents could “hunt down and kill middle-class taxpayers that don’t pay enough.” We find these hyperbolic claims to be false. Although the IRS intends to hire more people, Treasury Department officials say not all new hires will work on enforcement and increased revenues won’t come from middle-income earners. Treasury Secretary Janet L. Yellen directed IRS Commissioner Charles P. Rettig not to use the new funding to increase enforcement of taxpayers earning less than $400,000. The IRS is a bureau of the Treasury Department.

    Overall, IRS audits dropped by 44% between 2015 and 2019, according to a 2021 Treasury Inspector General for Tax Administration report. Last year the Treasury Department had proposed a plan to hire roughly 87,000 IRS employees over the next decade if it was allocated enough money. The IRS will be releasing final numbers for its hiring plans in the coming months, according to a Treasury official. But those employees will not all be hired at the same time, they will not all be auditors and many will be replacing employees who are expected to quit or retire.

    As reported by AP

    The IRS currently has about 80,000 employees, including clerical workers, customer service representatives, enforcement officials, and others. The agency has lost roughly 50,000 employees over the past five years due to attrition, according to the IRS. More than half of IRS employees who work in enforcement are currently eligible for retirement, said Natasha Sarin, the Treasury Department’s counselor for tax policy and implementation.

    Budget cuts, mostly demanded by Republicans, have also diminished the ranks of enforcement staff, which fell roughly 30% since 2010 despite the fact that the filing population has increased. The IRS-related money in the Inflation Reduction Act is intended to boost efforts against high-end tax evasion, Sarin said.

    Albany Law School Professor Danshera Cords shares her insight on this budget increase to the IRS…

    The Inflation Reduction Act appropriated $79 billion over 10 years to the IRS to improve three areas: taxpayer service, enforcement, and operations. Since 2012, it has been widely reported on the degree to which budget appropriations have resulted in declining service levels, aging IT, and falling staffing levels. Commissioner of the Internal Revenue Charles Rettig, an appointee of President Trump, has repeatedly sought budget increases to jump start the hiring and technology to more sophisticated audits of higher income individuals, businesses and crypto-assets. Given the aging infrastructure, computer systems that are out of date, and a filing backlog, the expenditures have long been needed.

    This appropriation is intended to help implement a plan to improve the IRS’s infrastructure in each of these areas. According to IRS data, in FY2012 the IRS had nearly 90,000 full-time employees. As a result of budget reductions, retirements, hiring freezes, the number of employees had dropped 12.9% to 78,661 in FY 2021.

    Restoring the IRS to previous staffing levels with new employees is more likely to help the average taxpayer than threaten them in any way. Moreover, hiring new enforcement staff including auditors, requires time and new personnel need training. Within its FY2021 budget, examination and collections personnel comprised more than five times the budget as investigations, consistent with prior years. New initiatives to combat fraud in higher income brackets require more sophisticated technology and better trained personnel.

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  • Whistleblowers say IRS recommended far more charges, including felonies, against Hunter Biden | CNN Politics

    Whistleblowers say IRS recommended far more charges, including felonies, against Hunter Biden | CNN Politics

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    CNN
     — 

    Two whistleblowers told Congress that IRS investigators recommended charging Hunter Biden with attempted tax evasion and other felonies, which are far more serious crimes than what the president’s son has agreed to plead guilty to, according to transcripts of their private interviews with lawmakers.

    The IRS whistleblowers said the recommendation called for Hunter Biden to be charged with tax evasion and filing a false tax return – both felonies – for 2014, 2018 and 2019. The IRS also recommended that prosecutors charge him with failing to pay taxes on time, a misdemeanor, for 2015, 2016, 2017, 2018 and 2019, according to the transcripts, which were released Thursday by House Republicans.

    It appears that this 11-count charging recommendation also had the backing of some Justice Department prosecutors, but not from more senior attorneys, according to documents that the whistleblowers provided to House investigators.

    In a deal with prosecutors announced earlier this week, Hunter Biden is pleading guilty to just two tax misdemeanors.

    The allegations come from Gary Shapley, a 14-year IRS veteran, who oversaw parts of the Hunter Biden criminal probe, and an unnamed IRS agent who was on the case nearly from its inception. Shapley approached Congress this year with information that he claimed showed political interference in the investigation. He and the entire IRS team were later removed from the probe.

    “I am alleging, with evidence, that DOJ provided preferential treatment, slow-walked the investigation, did nothing to avoid obvious conflicts of interest in this investigation,” Shapley told lawmakers.

    David Weiss, the Trump-appointed US attorney in Delaware who oversaw the Hunter Biden criminal probe, eventually reached a plea deal where the president’s son will plead guilty to two misdemeanors for failing to pay taxes on time. The plea agreement will also resolve a separate felony gun charge, if Hunter Biden abides by certain court-imposed conditions for a period of time.

    Hunter Biden isn’t pleading guilty to any felonies, and he wasn’t charged with any tax felonies. CNN reported that prosecutors are expected to recommend no jail time. He is scheduled to appear in federal court in Delaware on July 26.

    It isn’t uncommon for there to be internal disagreements among investigators over which charges to file against the target of an investigation, much like the disagreements that the IRS whistleblowers described. CNN reported last year that some FBI and IRS investigators were at odds with other Justice Department officials over the strength of the case, and that there were discussions over which types of charges were appropriate and whether further investigation was needed.

    Sources familiar with the criminal probe told CNN in April that prosecutors were still actively weighing a felony tax charge against Hunter Biden. And it is common for prosecutors to strike deals with defendants where they plead guilty to a small subset of the possible charges they could’ve faced.

    The Justice Department probe into Hunter Biden was opened in November 2018, and was codenamed “Sportsman.” According to Shapley’s testimony, federal investigators knew as early as June 2021 that there were potential venue-related issues with charging Hunter Biden in Delaware. Under federal law, charges must be brought in the jurisdiction where the alleged crimes occurred.

    If the potential charges couldn’t be brought in Delaware, then Weiss would need help from his fellow US attorneys. He looked to Washington, DC, where some of Hunter Biden’s tax returns were prepared, and the Central District of California, which includes the Los Angeles area where Hunter Biden lives.

    But Shapley told the committee that the US attorneys in both districts wouldn’t seek an indictment.

    A second whistleblower, an IRS case agent who also testified to the committee but hasn’t been publicly identified, also told lawmakers that this is what happened. He agreed that Weiss was “was told no” when he tried to get the cooperation of the US attorneys in in DC and Los Angeles, who are Biden appointees.

    Hunter Biden’s eventual plea agreement was filed in Weiss’ jurisdiction, in Delaware.

    Shapley contends in his interview that Attorney General Merrick Garland was not truthful when he told Congress that Weiss had full authority on the investigation.

    Shapley recounted a meeting on October 7, 2022, where, according to Shapley’s notes memorializing the meeting, Weiss said, “He is not the deciding person on whether charges are filed” against Hunter Biden. This undermines what Weiss and Garland have publicly said about Weiss’ independence on the matter.

    Shapley also testified to committee investigators that it was during this October 2022 meeting that he learned for the first time that Weiss had requested to be named as a special counsel, but was denied.

    In testimony to Congress in March, Garland said Weiss was advised “he is not to be denied anything he needs.”

    Regarding the claims of political interference with the Hunter Biden criminal probe, Weiss told House Republicans in a recent letter that Garland granted him “ultimate authority over this matter, including responsibility for deciding where, when, and whether to file charges.”

    After the transcripts were released Thursday, spokespeople for the US attorney’s offices in DC and Los Angeles issued near-identical statements reiterating that Weiss “was given full authority to bring charges in any jurisdiction he deemed appropriate.” The Justice Department echoed those comments in a statement saying Weiss “needs no further approval” to bring charges wherever he wants.

    The whistleblowers also allege that at multiple key junctures, investigators were thwarted in their efforts because prosecutors were concerned about interfering in the 2020 presidential election.

    In 2020, IRS investigators sought to conduct search warrants and take other overt steps. But according to Shapley, several weeks before the election, in September 2020, a Justice Department prosecutor questioned the optics of searching Hunter Biden’s residence and Joe Biden’s guest home.

    Later that year, other planned searches were delayed because then-President Donald Trump was refusing to concede and was continuing to contest the results.

    Republicans have slammed the plea agreement Hunter Biden struck as a “sweetheart deal,” and said it amounted to “a slap on the wrist.”

    House Ways and Means Committee Chairman Jason Smith said earlier Thursday that the transcripts reveal “credible whistleblower testimony alleging misconduct and abuse” at the Justice Department that “resulted in preferential treatment for the president’s son.”

    The Missouri Republican highlighted the whistleblowers’ allegations that the Justice Department “overstepped” in their efforts to intervene in the Hunter Biden criminal probe.

    “The testimony … details a lack of US attorney independence, recurring unjustified delays, unusual actions outside the normal course of any investigation, a lack of transparency across the investigation and prosecution teams, and bullying and threats from the defense counsel,” Smith said.

    Democrats on the committee said the transcripts were “a premature and incomplete record” of what happened with the Hunter Biden probe and accused the GOP of a “stunning abuse of power.”

    Hunter Biden’s lawyer pushed back in a statement Friday against the whistleblowers claims, saying it was “preposterous and deeply irresponsible” to suggest that federal investigators “cut my client any slack” during their “extensive” five-year probe.

    “A close examination of the document released publicly yesterday by a very biased individual raises serious questions over whether it is what he claims it to be,” attorney Chris Clark said. “It is dangerously misleading to make any conclusions or inferences based on this document.”

    Shapley, the IRS supervisor-turned-whistleblower, told House lawmakers that Justice Department prosecutors denied requests to look into messages allegedly from Hunter Biden where he used his father as leverage to pressure a Chinese company into paying him.

    “I am sitting here with my father and we would like to understand why the commitment made has not been fulfilled,” according to a document Shapley gave to Congress, which quotes from texts that are allegedly from Hunter Biden to the CEO of a Chinese fund management company.

    The message continues: “Tell the director that I would like to resolve this now before it gets out of hand. And now means tonight.” The message goes onto say, “I will make certain that between the man sitting next to me and every person he knows and my ability to forever hold a grudge that you will regret not following my direction. I am sitting here waiting for the call with my father.”

    The second, unnamed IRS whistleblower also testified to lawmakers about this alleged WhatsApp message, saying prosecutors questioned whether they could be sure Hunter Biden was telling the truth that his father was actually in the room in the messages. The unnamed whistleblower testified that they did not know whether the FBI investigated the message.

    Shapley told House investigators that a Justice Department attorney insisted that the FBI not ask directly about Joe Biden when doing interviews. But the FBI did manage to ask one key witness about Joe Biden, and Shapley said the witness told investigators that some suggestions of the president’s involvement were overstated.

    An email sent among business partners of Hunter Biden said an equity stake should be held “for the big guy,” an apparent reference to Joe Biden, who was vice president at the time. But one of the associates told the FBI that it was probably just “wishful thinking or maybe he was just projecting” that Joe Biden would get involved if he did not run for president in 2016.

    Joe Biden has repeatedly denied having any involvement in his son’s overseas business dealings, where he made millions of dollars from China, Ukraine and other countries. House Republicans have used their oversight probes to look for evidence that Joe Biden was actually involved.

    This story has been updated with additional developments.

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  • McCarthy floats potential impeachment inquiry into Garland over IRS whistleblower claims | CNN Politics

    McCarthy floats potential impeachment inquiry into Garland over IRS whistleblower claims | CNN Politics

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    CNN
     — 

    Speaker Kevin McCarthy is floating the possibility that the House could open an impeachment inquiry into Attorney General Merrick Garland over Internal Revenue Service whistleblower allegations that Justice Department leadership improperly interfered in the Hunter Biden probe, which Garland has denied.

    “If it comes true what the IRS whistleblower is saying, we’re going to start impeachment inquiries on the attorney general,” McCarthy said Monday on Fox News.

    In congressional testimony publicly released on Thursday, two IRS whistleblowers alleged to lawmakers that the president’s son had been given preferential treatment by the Justice Department.

    McCarthy said on Fox News that the IRS agents who came forward “watched the abuse of power in how Hunter Biden was treated.”

    The allegation that the DOJ has been politicized against conservatives has been central to how House Republicans approach their congressional investigations, though there is scant evidence backing up most of their claims.

    Garland rejected those claim during a Friday news conference.

    “Some have chosen to attack the integrity of the Justice Department … by claiming that we do not treat like cases alike,” Garland said. “This constitutes an attack on an instutiton that is essential to American democracy … nothing could be further from the truth.”

    Regarding the Hunter Biden probe, the whistleblowers made several explosive allegations, including that the IRS had recommended far more serious charges for the president’s son and that US Attorney in Delaware David Weiss was blocked from bringing charges in other states.

    Garland said Friday that Weiss was “permitted to continue his investigation and to make a decision to prosecute any way in which he wanted to and in any district in which he wanted to.”

    “I don’t know how it would be possible for anybody to block him from bringing a prosecution, given that he has this authority,” Garland said.

    Hunter Biden will plead guilty to two tax misdemeanors and struck a deal with federal prosecutors to resolve a felony gun charge, the Justice Department said Tuesday in court filings.

    As part of the plea agreement, the Justice Department has agreed to recommend a sentence of probation for the two counts of failing to pay taxes in a timely matter for the years 2017 and 2018, according to sources. Hunter Biden owed at least $100,000 in federal taxes for 2017, and at least $100,000 in 2018, but did not pay what was due to the IRS by the deadlines.

    A judge will have the final say on any sentence.

    Garland said Friday he would “support Mr. Weiss explaining or testifying” about the allegations raised by the whistleblowers “when he deems it appropriate.”

    McCarthy said on Fox News Monday, “We have requested by July 6, Weiss to come in and answer these questions because the IRS whistleblowers took copious notes.”

    The federal prosecutor overseeing the Hunter Biden investigation sent a letter to House Judiciary Chair Jim Jordan in early June saying that he had “ultimate authority” over the probe.

    Weiss, who was appointed by former President Donald Trump, makes clear in a letter obtained by CNN that he was granted this authority, cutting against Republican claims that Garland and the DOJ are “weaponized” against conservatives and politicizing the Hunter Biden case.

    “I want to make clear that, as the attorney general has stated, I have been granted ultimate authority over this matter, including responsibility for deciding where, when, and whether to file charges and for making decisions necessary to preserve the integrity of the prosecution, consistent with federal law, the Principles of Federal Prosecution, and Departmental regulations” Weiss wrote to Jordan on June 7.

    In response, Jordan has asked Weiss to explain and provide further information about the letter stating he had “ultimate authority” over the probe.

    Jordan asked in a letter to Weiss why he was the one to respond to Congress on June 7, when the initial letter from Jordan about alleged retaliation against the IRS whistleblowers was addressed to Garland. “Who instructed you to sign and send your June 7 letter to the committee?,” Jordan asked.

    Hunter Biden’s lawyer pushed back in a statement on Friday against the whistleblowers’ claims, saying it was “preposterous and deeply irresponsible” to suggest that federal investigators “cut my client any slack” during their “extensive” five-year probe.

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  • Tax prep companies shared private taxpayer data with Google and Meta for years, congressional probe finds | CNN Business

    Tax prep companies shared private taxpayer data with Google and Meta for years, congressional probe finds | CNN Business

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    CNN
     — 

    Some of America’s largest tax-prep companies have spent years sharing Americans’ sensitive financial data with tech titans including Meta and Google in a potential violation of federal law — data that in some cases was misused for targeted advertising, according to a seven-month congressional investigation.

    The report highlights what legal experts described to CNN as a “five-alarm fire” for taxpayer privacy that could lead to government and private lawsuits, criminal penalties or perhaps even a “mortal blow” for some industry giants involved in the probe including TaxSlayer, H&R Block and TaxAct.

    Using visitor tracking technology embedded on their websites, the three tax-prep companies allegedly sent tens of millions of Americans’ personal information to the tech industry without consent or appropriate disclosures, according to the congressional report reviewed by CNN.

    Beyond ordinary personal data such as people’s names, phone numbers and email addresses, the list of information shared also included taxpayer data — details about people’s filing status, adjusted gross income, the size of their tax refunds and even information about the buttons and text fields they clicked on while filling out their tax forms, which could reveal what tax breaks they may have claimed or which government programs they use, according to the report.

    The report, which drew on congressional interviews and written testimony from Meta, Google and the tax-prep companies, also found that every taxpayer who used TaxAct’s IRS Free File service while the tracking was enabled would have had their information shared with the tech companies. Some of the tax-prep companies still do not know whether the data they shared continues to be held by the tech platforms, the report said.

    “On a scale from one to 10, this is a 15,” said David Vladeck, a law professor at Georgetown University and a former consumer protection chief at the Federal Trade Commission, the country’s top privacy watchdog. “This is as great as any privacy breach that I’ve seen other than exploiting kids. This is a five-alarm fire, if what we know about this so far is true.”

    It is also an example, Vladeck said, of why the United States needs federal legislation guaranteeing every American a basic right to data privacy — an issue that has languished in Congress for years despite electronic data becoming an ever-larger part of the global economy.

    The congressional findings represent the latest claims of wrongdoing to hit the embattled tax-prep industry after a report last year by the investigative journalism outlet The Markup highlighted the tracking practice.

    Wednesday’s bombshell report adds to those earlier revelations by identifying a previously unreported category of data that was allegedly being collected and shared: the webpage titles in online tax software that can reveal what tax forms users have accessed, said an aide to Democratic Sen. Elizabeth Warren, who helped lead the congressional probe. For example, taxpayers who entered information about their college savings contributions or rental income may have done so on webpages bearing titles reflecting that information, which would then have been shared with the tech companies, the aide said.

    During the probe, Meta told investigators it used the taxpayer data it received to target third-party ads to users of its platform and to train its artificial intelligence algorithms, the report said. The Warren aide told CNN it was unclear whether Meta knew it was inappropriately using taxpayer data at the time. A Meta spokesperson said the company instructs its partners not to use its tools to share sensitive information and that Meta’s systems are “designed to filter out potentially sensitive data it is able to detect.”

    The technology behind the data collection, known as a tracking pixel, is commonly used across the entire internet. A small snippet of code that website owners can insert onto their sites, tracking pixels gather information that can help companies, including but not limited to Meta and Google, understand the behavior or interests of website visitors.

    Because of the tracking technology used by TaxAct, TaxSlayer and H&R Block, “every single taxpayer who used their websites to file their taxes could have had at least some of their data shared,” the report said.

    The tax-prep companies at the center of the investigation told lawmakers the collected data had been scrambled to help protect privacy, according to the report. But the report also said some of the tax-prep firms themselves were not fully aware of how much information was being exposed to the tech platforms, and the report cited past FTC research concluding that even “anonymized” data can be easily reverse-engineered to identify a person.

    The pixels’ use in a taxpayer context resulted in the “reckless” sharing of legally protected data that could put taxpayers at risk, according to the report by Warren and her Democratic colleagues Sens. Ron Wyden; Richard Blumenthal; Tammy Duckworth; and Sheldon Whitehouse; Sen. Bernie Sanders, an independent who caucuses with Democrats; and Democratic Rep. Katie Porter.

    The FTC, the Internal Revenue Service, the Justice Department and the Treasury Inspector General for Tax Administration “should fully investigate this matter and prosecute any company or individuals who violated the law,” the lawmakers wrote in a letter dated Tuesday to the agencies and obtained by CNN. The FTC and DOJ declined to comment; the IRS and TIGTA didn’t immediately respond to a request for comment.

    In a statement, H&R Block said it takes client privacy “very seriously, and we have taken steps to prevent the sharing of information via pixels.” Wednesday’s report said H&R Block had testified to using the tracking technology for “at least a couple of years.”

    TaxAct and TaxSlayer didn’t immediately respond to a request for comment. The report said TaxAct had been using Meta’s tools since 2018 and Google’s since about 2014, while TaxSlayer began using Meta’s tools in 2018 and Google’s in 2011. The investigation found that all three tax-prep companies had discontinued their use of Meta’s pixel after The Markup’s report last November.

    Intuit, the maker of TurboTax, received an initial inquiry letter from the lawmakers in December but was not a focus of Wednesday’s report because the company did not use tracking pixels to the same extent, the investigation found.

    Tax preparation firms have faced mounting scrutiny in recent years amid reports that many have turned to data harvesting as a business model and that the largest among them have spent millions lobbying against legislation that could make it easier for Americans to file their tax returns. An IRS report this year found that 72% of Americans would be interested in using a free, electronic tax filing service if it were provided by the agency as an alternative to private online filing services. The IRS plans to launch a pilot version of that service to a limited number of taxpayers in the 2024 tax filing season.

    Google told CNN it prohibits business customers from uploading to its platform sensitive data that could be traced back to a person.

    “We have strict policies and technical features that prohibit Google Analytics customers from collecting data that could be used to identify an individual,” a Google spokesperson said. “Site owners — not Google — are in control of what information they collect and must inform their users of how it will be used. Additionally, Google has strict policies against advertising to people based on sensitive information.”

    Wednesday’s report focuses more heavily on Meta’s use of taxpayer data, the Warren aide told CNN, because Google did not appear to have used the information for its own commercial purposes as overtly as Meta and the investigation was unable to fully determine whether Google may have used the data for other applications.

    The allegations could nevertheless create extensive legal risk for both the tech companies as well as the tax-preparation firms, according to tax and privacy legal experts.

    The tax-prep companies could face billions in fines under US tax law if the federal government decides to sue, said Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center. In addition, the US government could seek criminal penalties.

    “The scope of ‘taxpayer information’ is broad by design,” Rosenthal said, adding that tax-prep companies can be sued for “knowingly” or “recklessly” leaking that information. “The companies shouldn’t be sharing it in a way that some third party could obtain it.”

    Theoretically, he said, the tax code also affords individual taxpayers the right to file private lawsuits against the tax-prep companies. But most if not all of those firms require customers to submit to mandatory arbitration that could realistically make bringing a private claim more challenging, said the Warren aide.

    Apart from the tax code, both the tech giants as well as the tax-prep firms could also face civil liability from the FTC — which can police data breaches and hold companies accountable for their commitments to user privacy — and potentially from state governments that have their own privacy laws on the books, said Vladeck.

    Depending on the strength of the allegations, the tax-prep companies could quickly be forced into a binding settlement, said a former FTC official who requested anonymity in order to speak more freely.

    “If the facts are really strong, these companies would probably rather settle than go to court. This is very embarrassing,” the former official said. “It could be a mortal blow to the tax prep companies.”

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