Tag: us department of the treasury

Income Tax Deadline Fast Facts | CNN

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Here’s a look at the annual income tax filing deadline in the United States. April 15, 2024, is the deadline to file 2023 income tax returns.

In fiscal year 2022, the IRS amassed more than $4.9 trillion in gross tax collections.

(Source: Center on Budget and Policy Priorities, FY 2023)
Medicare, Medicaid, CHIP, marketplace subsidies 24%
Social Security 21%
National Defense 13%
Economic security programs 8%
Benefits for veterans & federal retirees 8%
Interest on debt 10%
Education 4%
Transportation 2%
Natural resources and agricultrue 1%
Science and medical research 1%
Law enforcement 1%
International 1%
All other 4%

1862 – During the Civil War, the IRS is born when President Abraham Lincoln and Congress create the Commissioner of Internal Revenue and enact an income tax to pay war expenses. The first income tax levies 3% on incomes between $600 and $10,000 and 5% on anything over $10,000. This income tax lasts until 1872.

1895 – The Supreme Court rules in Pollock v. Farmers’ Loan and Trust Co. that taxing incomes uniformly throughout the United States is unconstitutional.

1913 – The 16th Amendment is ratified by the states, giving Congress the authority to enact an income tax. Congress also introduces the first 1040 form and levies a 1% tax on personal incomes over $3,000 with 6% surtax on incomes of more than $500,000.

1954 – The tax filing deadline is moved from March 15 to April 15, to give taxpayers more time to prepare their returns.

January 3, 1996 – Congress enacts the Taxpayer Bill of Rights to ensure relief from overzealous collection efforts on the part of IRS personnel.

March 20, 2020 – Secretary of the Treasury Steven Mnuchin tweets that tax day is moving from April 15 to July 15 due to the coronavirus pandemic.

March 17, 2021 – The IRS announces the filing deadline has been moved from April 15 to May 17, to allow filers more time to navigate tax situations complicated by the coronavirus pandemic.

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March 28, 2024
IRS has collected $160 million in back taxes by cracking down on millionaires | CNN Politics

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The Internal Revenue Service has collected $160 million in back taxes this year by cracking down on millionaires who haven’t paid what they owe, the agency said Friday.

The recent effort to target high-income individuals has been boosted by an increase in federal funding provided by Democrats last year through the Inflation Reduction Act. Republicans have criticized the amount of money the IRS is getting, and future funding is uncertain.

In September, the IRS started seeking back taxes from about 1,600 taxpayers with income above $1 million and more than $250,000 in tax debt. So far, the IRS has closed 100 of those cases, collecting $122 million, it said Friday.

Earlier this year, the IRS collected $38 million from more than 175 high-income earners. That brings the total to $160 million so far this year.

“I think that the evidence that we’ve seen to date, in terms of the amount that we have recovered … points to this being a highly important effort for us,” IRS Commissioner Danny Werfel said on a call with reporters.

In one successful case, an individual was ordered to pay more than $15 million in restitution last month for falsifying personal expenses as deductible business expenses, including the construction of a 51,000-square-foot mansion complete with an outdoor pool and pool house, as well as tennis, basketball and bocce courts, according to an IRS press release. The person also falsified expenses for luxury vehicles, artwork, country club memberships and homes for his children.

Another individual pleaded guilty last week to filing false tax returns and skimming more than $670,000 from his business. The person spent $110,000 on personal expenses and $502,000 on gambling, the IRS said.

The agency’s effort to ramp up enforcement aims to narrow what’s known as the “tax gap,” the difference between the amount owed and the amount actually collected on time by the IRS. The most recent estimate shows that $688 billion was not collected during tax year 2021.

The IRS plans to bring a new focus to cracking down on large corporations that have not been paying the taxes they owe.

The agency will target US subsidiaries of foreign companies that distribute goods in the US and do not pay what they owe in taxes on the profit they earn. It will start sending compliance notices next month to about 150 subsidiaries to “reiterate their US tax obligations and incentivize self-correction,” the announcement said.

As new accountants come on board at the IRS in early 2024, they are expected to begin 60 audits of some of the largest corporate taxpayers. The targeted corporations will be selected by the IRS accountants using a combination of artificial intelligence and subject matter expertise that will better detect tax cheating. The use of technology is meant to help avoid burdening taxpayers with needless audits.

The Inflation Reduction Act, which included a provision to deliver $80 billion to the IRS over 10 years, has allowed the agency to begin a complete overhaul of its operations. It’s working to hire new staff, update technology, improve taxpayer services and audit tax cheats.

The new funds have already helped improve taxpayer services at the IRS. In the 2023 filing season, it answered 3 million more calls and cut phone wait times to three minutes from 28 minutes compared with the year before.

The IRS is currently working on building its own free tax filing program, known as Direct File, that will launch as a limited pilot program next year.

The IRS has also put a plan in motion to digitize all paper-filed tax returns by 2025. The move is expected to cut processing times in half and speed up refunds by four weeks.

Republicans have raised questions about whether the $80 billion investment in the IRS would lead to increased audits for average Americans. Earlier this year, Republican lawmakers were able to reclaim $20 billion of the funding in a bipartisan deal to address the debt ceiling.

The White House argued that the cut won’t fundamentally change what the IRS can do over the next few years. Biden administration officials have also repeatedly said that taxpayers earning less than $400,000 a year won’t face an increase in audits due to the new funding.

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October 20, 2023
Fact check: The first Republican presidential debate of the 2024 election | CNN Politics
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Republican presidential candidates delivered a smattering of false and misleading claims at the first debate of the 2024 election – though none of the eight candidates on stage in Milwaukee delivered anything close to the bombardment of false statements that typically characterized the debate performances of former President Donald Trump, the Republican front-runner who skipped the Wednesday event.

Sen. Tim Scott of South Carolina inaccurately described the state of the economy in early 2021 and repeated a long-ago-debunked false claim about the Biden-era Justice Department. Former New Jersey Gov. Chris Christie misstated the sentence attached to a gun law relevant to the investigation into the president’s son Hunter Biden. Florida Gov. Ron DeSantis misled about his handling of the Covid-19 pandemic, omitting mention of his early pandemic restrictions.

Below is a fact check of those claims and various others from the debate, some of which left out key context. In addition, below is a brief fact check of some of Trump’s claims from a pre-taped interview he did with Tucker Carlson, which was posted online shortly before the debate aired. Trump made a variety of statements that were not true.

DeSantis and the pandemic

DeSantis criticized the federal government for its handling of the Covid-19 pandemic, claiming it had locked down the economy, and then said: “In Florida, we led the country out of lockdown, and we kept our state free and open.”

Facts First: DeSantis’s claim is misleading at best. Before he became a vocal opponent of pandemic restrictions, DeSantis imposed significant restrictions on individuals, businesses and other entities in Florida in March 2020 and April 2020; some of them extended months later into 2020. He did then open up the state, with a gradual phased approach, but he did not keep it open from the start.

DeSantis received criticism in March 2020 for what some critics perceived as a lax approach to the pandemic, which intensified as Florida beaches were packed during Spring Break. But that month and the month following, DeSantis issued a series of major restrictions. For example, DeSantis:
Closed Florida’s schools, first with a short-term closure in March 2020 and then, in April 2020, with a shutdown through the end of the school year. (In June 2020, he announced a plan for schools to reopen for the next school year that began in August. By October 2020, he was publicly denouncing school closures, calling them a major mistake and saying all the information hadn’t been available that March.)

On March 14, 2020, announced a ban on most visits to nursing homes. (He lifted the ban in September 2020.)

On March 17, 2020, ordered bars and nightclubs to close for 30 days and restaurants to operate at half-capacity. (He later approved a phased reopening plan that took effect in May 2020, then issued an order in September 2020 allowing these establishments to operate at full capacity.)

On March 17, 2020, ordered gatherings on public beaches to be limited to a maximum of 10 people staying at least six feet apart, then, three days later, ordered a shutdown of public beaches in two populous counties, Broward and Palm Beach. (He permitted those counties’ beaches to reopen by the last half of May.)

On March 20, 2020, prohibited “any medically unnecessary, non-urgent or non-emergency” medical procedures. (The prohibition was lifted in early May 2020.)

On March 23, 2020, ordered that anyone flying to Florida from an area with “substantial community spread” of the virus, “to include the New York Tri-State Area (Connecticut, New Jersey and New York),” isolate or quarantine for 14 days or the duration of their stay in Florida, whichever was shorter, or face possible jail time or a fine. Later that week, he added Louisiana to the list. (He lifted the Louisiana restriction in June 2020 and the rest in August 2020.)

On April 3, 2020, imposed a statewide stay-home order that temporarily required people in Florida to “limit their movements and personal interactions outside of their home to only those necessary to obtain or provide essential services or conduct essential activities.” (Beginning in May 2020, the state switched to a phased reopening plan that, for months, included major restrictions on the operations of businesses and other entities; DeSantis described it at the time as a “very slow and methodical approach” to reopening.)
-From CNN’s Daniel Dale

Nikki Haley, the former South Carolina governor and US ambassador to the United Nations, said: “Donald Trump added $8 trillion to our debt, and our kids are never going to forgive us for this.”

Facts First: Haley’s figure is accurate. The total public debt stood at about $19.9 trillion on the day Trump took office in 2017 and then increased by about $7.8 trillion over Trump’s four years, to about $27.8 trillion on the day he left office in 2021.

It’s worth noting, however, that the increase in the debt during any president’s tenure is not the fault of that president alone. A significant amount of spending under any president is the result of decisions made by their predecessors – such as the creation of Social Security, Medicare and Medicaid decades ago – and by circumstances out of a president’s control, notably including the global Covid-19 pandemic under Trump; the debt spiked in 2020 after Trump approved trillions in emergency pandemic relief spending that Congress had passed with overwhelming bipartisan support.

Still, Trump did choose to approve that spending. And his 2017 tax cuts, unanimously opposed by congressional Democrats, were another major contributor to the debt spike.

-From CNN’s Daniel Dale and Katie Lobosco

North Dakota Gov. Doug Burgum claimed that Biden’s signature climate bill costs $1.2 trillion dollars and is “just subsidizing China.”

Facts First: This claim needs context. The clean energy pieces of the Inflation Reduction Act – Democrats’ climate bill – passed with an initial price tag of nearly $370 billion. However, since that bill is made up of tax incentives, that price tag could go up depending on how many consumers take advantage of tax credits to buy electric vehicles and put solar panels on their homes, and how many businesses use the subsidies to install new utility scale wind and solar in the United States.

Burgum’s figure comes from a Goldman Sachs report, which estimated the IRA could provide $1.2 trillion in clean energy tax incentives by 2032 – about a decade from now.

On Burgum’s claim that Biden’s clean energy agenda will be a boon to China, the IRA was specifically written to move the manufacturing supply chain for clean energy technology like solar panels and EV batteries away from China and to the United States.

In the year since it was passed, the IRA has spurred 83 new or expanded manufacturing facilities in the US, and close to 30,000 new clean energy manufacturing jobs, according to a tally from trade group American Clean Power.

-From CNN’s Ella Nilsen

With the economy as one of the main topics on the forefront of voters’ minds, Scott aimed to make a case for Republican policies, misleadingly suggesting they left the US economy in record shape before Biden took office.

“There is no doubt that during the Trump administration, when we were dealing with the COVID virus, we spent more money,” Scott said. “But here’s what happened at the end of our time in the majority: we had low unemployment, record low unemployment, 3.5% for the majority of the population, and a 70-year low for women. African Americans, Hispanics, and Asians had an all-time low.”

Facts First: This is false. Scott’s claims don’t accurately reflect the state of the US economy at the end of the Republican majority in the Senate. And in some cases, his exaggerations echo what Trump himself frequently touted about the economy under his leadership.

By the time Trump left office and the Republicans lost the Senate majority in January 2021, US unemployment was not at a record low. The US unemployment rate dropped to a seasonally adjusted rate of 3.5% in September 2019, the country’s lowest in 50 years. While it hovered around that level for five months, Scott’s assertion ignores the coronavirus pandemic-induced economic destruction that followed. In April 2020, the unemployment rate spiked to 14.7% — the highest level since monthly records began in 1948. As of December 2020, the unemployment rate was at 6.7%.

Nor was the unemployment rate for women at a 70-year low by the end of Trump’s time in office. It reached a 66-year low during certain months of 2019, at 3.4% in April and 3.6% in August, but by December 2020, unemployment for women was at 6.7%.

The unemployment rates for African Americans, Hispanics, and Asians were also not at all-time lows at the end of 2020, but they did reach record lows during Trump’s tenure as president.

-From CNN’s Tara Subramaniam

Scott said that the Justice Department under President Joe Biden is targeting “parents that show up at school board meetings. They are called, under this DOJ, they’re called domestic terrorists.”

Facts First: It is false that the Justice Department referred to parents as domestic terrorists. The claim has been debunked several times – during the uproar at school boards over Covid-19 restrictions and anti-racism curriculums; after Kevin McCarthy claimed Republicans would investigate Merrick Garland with a majority in the House; and even by a federal judge. The Justice Department never called parents terrorists for attending or wanting to attend school board meetings.

The claim stems from a 2021 letter from The National School Boards Associations asking the Justice Department to “deal with” the uptick in threats against education officials and saying that “acts of malice, violence, and threats against public school officials” could be classified as “the equivalent to a form of domestic terrorism and hate crimes.” In response, Garland released a memo encouraging federal and local authorities to work together against the harassment campaigns levied at schools, but never endorsed the “domestic terrorism” notion.

A federal judge even threw out a lawsuit over the accusation, ruling that Garland’s memo did little more than announce a “series of measures” that directed federal authorities to address increasing threats targeting school board members, teachers and other school employees.

-From CNN’s Hannah Rabinowitz

Haley, the former ambassador to the United Nations and governor of South Carolina, said the US is spending “less than three and a half percent of our defense budget” on Ukraine aid, and that in terms of financial aid relative to GDP, “11 of the European countries have given more than the US.”

Facts First: This is partly true. Haley’s claim regarding the US aid to Ukraine compared to the total defense budget is slightly under the actual percentage, but it is accurate that 11 European countries have given more aid to Ukraine as a percentage of their total GDP than the US.

As of August 14, the US has committed more than $43 billion in military aid to Ukraine since the beginning of the war in Ukraine, according to the Defense Department. In comparison, the Fiscal Year 2023 defense budget was $858 billion – making aid to Ukraine just over 5% of the total US defense budget.

As of May 2023, according to a Council of Foreign Relations tracker, 11 countries were providing a higher share in aid to Ukraine relative to their GDP than the US – led by Estonia, Latvia, Lithuania, and Poland.

-From CNN’s Haley Britzky

Former Vice President Mike Pence said Wednesday that the Trump administration “spent funding to backfill on the military cuts of the Obama administration.”

Facts First: This is misleading. While military spending decreased under the Obama administration, it was largely due to the 2011 Budget Control Act, which received Republican support and resulted in automatic spending cuts to the defense budget.

Mike Pence, a senator at the time, voted in favor of the Budget Control Act.

-From CNN’s Haley Britzky

Christie said President Biden’s son Hunter Biden was “facing a 10-year mandatory minimum” for lying on a federal form when he purchased a gun in 2018.

Facts First: Christie, a former federal prosecutor, clearly misstated the law. This crime can lead to a maximum prison sentence of 10 years, but it doesn’t have a 10-year mandatory minimum.

These comments are related to the highly scrutinized Justice Department investigation into Hunter Biden, which is currently ongoing after a plea deal fell apart earlier this summer.

As part of the now-defunct deal, Hunter Biden agreed to plead guilty to two tax misdemeanors and enter into a “diversion agreement” with prosecutors, who would drop the gun possession charge in two years if he consistently stayed out of legal trouble and passed drug tests.

The law in question makes it a crime to purchase a firearm while using or addicted to illegal drugs. Hunter Biden has acknowledged struggling with crack cocaine addiction at the time, and admitted at a court hearing and in court papers that he violated this law by signing the form.

The US Sentencing Commission says, “The statutory maximum penalty for the offense is ten years of imprisonment.” There isn’t a mandatory 10-year punishment, as Christie claimed.

During his answer, Christie also criticized the Justice Department for agreeing to a deal in June where Hunter Biden could avoid prosecution on the felony gun offense. That deal was negotiated by special counsel David Weiss, who was first appointed to the Justice Department by former President Donald Trump.

-From CNN’s Marshall Cohen

Burgum and Scott got into a back and forth over IRS staffing with Burgum saying that the “Biden administration wanted to put 87,000 people in the IRS,” and Scott suggesting they “fire the 87,000 IRS agents.”

Facts First: This figure needs context.

The Inflation Reduction Act, which passed last year without any Republican votes, authorized $80 billion in new funding for the IRS to be delivered over the course of a decade.

The 87,000 figure comes from a 2021 Treasury report that estimated the IRS could hire 86,852 full-time employees with a nearly $80 billion investment over 10 years.

While the funding may well allow for the hiring of tens of thousands of IRS employees over time, far from all of these employees will be IRS agents conducting audits and investigations.

Many other employees will be hired for the non-agent roles, from customer service to information technology, that make up most of the IRS workforce. And a significant number of the hires are expected to fill the vacant posts left by retirements and other attrition, not take newly created positions.

The IRS has not said precisely how many new “agents” will be hired with the funding. But it is already clear that the total won’t approach 87,000. And it’s worth noting that the IRS may not receive all of the $80 billion after Republicans were able to claw back $20 billion of the new funding as part of a deal to address the debt ceiling made earlier this year.

-From CNN’s Katie Lobosco

Trump repeated a frequent claim during his interview with Carlson that streamed during the GOP debate that his retention of classified documents at Mar-a-Lago after leaving the White House was “covered” under the Presidential Records Act and that he is “allowed to do exactly that.”

Facts First: This is false. The Presidential Records Act says the exact opposite – that the moment presidents leave office, all presidential records are to be turned over to the federal government. Keeping documents at Mar-a-Lago after his presidency concluded was in clear contravention of that law.

According to the Presidential Records Act, “upon the conclusion of a President’s term of office, or if a President serves consecutive terms upon the conclusion of the last term, the Archivist of the United States shall assume responsibility for the custody, control, and preservation of, and access to, the Presidential records of that President.”

The sentence makes clear that a president has no authority to keep documents after leaving the White House.

The National Archives even released a statement refuting the notion that Trump’s retention of documents was covered by the Presidential Records Act, writing in a June news release that “the PRA requires that all records created by Presidents (and Vice-Presidents) be turned over to the National Archives and Records Administration (NARA) at the end of their administrations.”

-From CNN’s Hannah Rabinowitz

While discussing electric vehicles, Trump claimed that California “is in a big brownout because their grid is a disaster,” adding that the state’s ambitious electric vehicle goals won’t work with the grid in such shape.

Facts First: Trump’s claim that California’s grid is currently in a “big brownout” and is a “disaster” isn’t true. California’s grid suffered rolling blackouts in 2020, but it has performed quite well in the face of extreme heat this summer, owing in large part to a massive influx of renewable energy including battery storage. These big batteries keep energy from wind and solar running when the wind isn’t blowing and sun isn’t shining. (Batteries are also being deployed at a rapid rate in Texas, a red state.)

Another reason California’s grid has stayed stable this year even during extreme temperature spikes is the fact that a deluge of snow and rain this winter and spring has refilled reservoirs that generate electricity using hydropower.

As Trump insinuated, there are real questions about how well the state’s grid will hold up as California’s drivers shift to electric vehicles by the millions by 2035 – the same year it will phase out selling new gas-powered cars. California state officials say they are preparing by adding new capacity to the grid and urging more people to charge their vehicles overnight and during times of the day when fewer people are using energy. But independent experts say the state needs to exponentially increase its clean energy while also building out huge amounts of new EV chargers to achieve its goals.

-From CNN’s Ella Nilsen

Trump and the border wall

Trump claimed to Carlson, “I had the strongest border in the history of our country, and I built almost 500 miles of wall. You know, they’d like to say, ‘Oh, was it less?’ No, I built 500 miles. In fact, if you check with the authorities on the border, we built almost 500 miles of wall.”

Facts First: This needs context. Trump and his critics are talking about different things when they use different figures for how much border wall was built during his presidency. Trump is referring to all of the wall built on the southern border during his administration, even in areas that already had some sort of barrier before. His critics are only counting the Trump-era wall that was built in parts of the border that did not have any previous barrier.

A total of 458 miles of southern border wall was built under Trump, according to a federal report written two days after Trump left office and obtained by CNN’s Priscilla Alvarez. That is 52 miles of “primary” wall built where no barriers previously existed, plus 33 miles of “secondary” wall that was built in spots where no barriers previously existed, plus another 373 miles of primary and secondary wall that was built to replace previous barriers the federal government says had become “dilapidated and/or outdated.”

Some of Trump’s rival candidates, such DeSantis and Christie, have used figures around 50 miles while criticizing Trump for failing to finish the wall – counting only the primary wall built where no barriers previously existed.

While some Trump critics have scoffed at the replacement wall, the Trump-era construction was generally much more formidable than the older barriers it replaced, which were often designed to deter vehicles rather than people on foot. Washington Post reporter Nick Miroff tweeted in 2020: “As someone who has spent a lot of time lately in the shadow of the border wall, I need to puncture this notion that ‘replacement’ sections are ‘not new.’ There is really no comparison between vehicle barriers made from old rail ties and 30-foot bollards.”

Ideally, both Trump and his opponents would be clearer about what they are talking about: Trump that he is including replacement barriers, his opponents that they are excluding those barriers.

-From CNN’s Daniel Dale
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August 23, 2023
FBI agent contests whistleblower claims in Hunter Biden case, transcript shows | CNN Politics

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The FBI agent managing the team on the Hunter Biden criminal case testified to the House Judiciary Committee that US Attorney David Weiss had ultimate authority over the case, contesting testimony brought forward by whistleblowers.

Thomas Sobocinski, the special agent in charge of the FBI’s Baltimore field office, told committee investigators in a closed-door interview last week that from his perspective, Weiss had the authority to bring forward whatever charges he wanted in whatever venue he preferred.

“It was my understanding that David Weiss had the authority, and at no point did I ever differ from that,” Sobociniski said, according to a copy of his interview transcript obtained by CNN. “There’s never been anything in my view that changed that.”

Sobocinski’s transcript, which was first reported by The Washington Post, comes as House Republicans continue to investigate allegations that the criminal case of President Joe Biden’s son was mishandled. It’s all part of the House GOP impeachment inquiry into the president, even though Republicans have yet to find evidence that the president did anything illegal.

Sobocinski’s testimony disputes a number of claims from an Internal Revenue Service whistleblower about a key October 2022 meeting including FBI and IRS agents, Weiss, and other Justice Department prosecutors that occurred at a critical point in the criminal probe. IRS whistleblower Gary Shapley, who was in the meeting and worked on this case, said Weiss revealed in that meeting that he is not the deciding person on whether charges are filed. Shapley provided his notes on that meeting and email exchanges about it to Congress to support his claim. The notes say, “Weiss stated – He is not the deciding person.”

But Sobocinski was also in that October 2022 meeting and said Weiss never said that.

“I went into that meeting believing he had the authority, and I have left that meeting believing he had the authority to bring charges,” Sobocinski testified.

Reflecting on Shapley’s accusation of Weiss, Sobocinski said, “In my recollection, if he would have said that, I would have remembered it.”

In a letter to the House Judiciary Committee responding to Sobocinski’s testimony, Shapley’s legal team contested Sobocinski’s testimony, noting that Shapley took notes of the October 2022 meeting while Sobocinski did not.

“Mr. Sobocinski apparently acknowledged that he took no notes in the meeting, nor did he document it in any contemporaneous fashion afterwards,” wrote Empower Oversight President Tristan Leavitt and attorney Mark Lytle, according to the letter obtained by CNN. “By contrast, SSA Shapley took notes during the meeting. These notes, combined with his fresh memory of the meeting, formed the basis for the email he sent later that day and corroborate his current recollection.”

House Republicans responded to the comments saying that the whistleblowers, Shapley and Joseph Ziegler, a 13-year IRS special agent with the Criminal Investigation Division, were “wholly consistent.”

“Gary Shapley and Joseph Ziegler have been wholly consistent throughout their disclosures to Congress, and the only people who haven’t are people like David Weiss, Merrick Garland, and their liberal cronies,” said Russell Dye, a spokesperson for Judiciary Committee Chairman Jim Jordan, an Ohio Republican.

Sobocinski also disputed Shapley’s claim that Weiss said in the October 2022 meeting he was denied special counsel status and denied venues to bring forward charges.

Sobocinski told the House Judiciary panel he was informed of Weiss’ special counsel status the day Attorney General Merrick Garland announced it last month, and that Weiss was not previously denied special counsel status as Shapley has claimed.

“I don’t have a recollection with him saying that there or at any point in my communication with Mr. Weiss,” Sobocinski said. “That would have been a total 180 from all our previous conversations about authorities.”

When asked if anybody at FBI headquarters ever prevented Weiss from taking any steps or accessing any necessary resources, Sobocinski replied, “Not that I’m aware of.”

Sobocinski told congressional investigators that he did raise concerns repeatedly about the pace of the investigation into Hunter Biden.

“I would have liked for it to move faster,” he said.

Republicans on the committee raised the question of why Weiss was eventually given special counsel status if Weiss had the ultimate authority as Sobocinski has argued. Sobocinski acknowledged that Weiss would be the best person to answer these questions, and more specifics about how special counsel status was granted.

On whether Weiss was denied venues to bring forward charges against the president’s son, Sobocinski said he only had “high-level conversations” about the specific charges, but from his understanding “there was a process” within the Justice Department for US attorneys to bring forward charges outside of their district that involved a lot of “bureaucracy” but was “not a permission issue.”

“Without going into specifics, there were discussion about taxes and venue,” Sobocinski said. “And, once again, Mr. Weiss had the authority to bring it.”

Shapley’s notes on the October 2022 meeting included that an FBI agent asked the group if they were concerned about the investigation being politicized. Sobocinski noted that part of why the meeting was called was in response to a media leak about the status of the criminal investigation. He told congressional investigators that he wanted to ask anyone in the room if they felt the investigation into the president’s son had been politicized, and he said no one in the room, not even Shapley, raised any concerns.

“I wanted to go on record in the room of the leaders who were involved in this investigation,” Sobocinski said. “Thought that it was no, and nobody in that room raised their voice to say anything other.”

Sobocinski also addressed broader claims made about how the Hunter Biden criminal investigation has been handled. To discredit GOP claims that prosecutors colluded with Hunter Biden’s Secret Service by informing them they wanted to interview Hunter, Sobocinski said that as a former Secret Service agent, he said it was “expected” for an investigative entity to speak with him ahead of interviewing a protectee of his. Sobocinski also said he is not aware of any evidence that the Department of Justice has retaliated against the IRS whistleblowers who have come forward.

The Department of Justice sent Sobocinski a letter the day before his interview giving him permission to discuss the details of the October 7, 2022, meeting and Weiss’ authority on the case. But Sobocinski was not permitted to discuss the ongoing criminal investigation.

This story has been updated with additional developments.

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August 2, 2023
Fact check: Republicans make false, misleading claims at first Biden impeachment inquiry hearing | CNN Politics

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The Republican-led House Oversight Committee is holding its first hearing Thursday in the impeachment inquiry of President Joe Biden – and Republicans on the committee have made a series of false and misleading claims, as well as some other claims that have left out critical context.

Below is a CNN fact check. This article will be updated as additional fact checks are completed.

Republican Rep. James Comer, the chairman of the House Oversight Committee, said in his opening remarks at the hearing on Thursday that the committee has uncovered how “the Bidens and their associates created over 20 shell companies” and “raked in over $20 million between 2014 and 2019.”

Facts First: The $20 million figure is roughly accurate for Joe Biden’s family and associates, according to the bank records subpoenaed by the committee, but the phrase “the Bidens and their associates” obscures the fact that there is no public evidence to date that President Joe Biden himself received any of this money. And it’s worth noting that a large chunk of the money went to the “associates” – Hunter Biden’s business partners – not even Biden’s family itself.

So far, none of the bank records obtained by the committee have shown any payments to Joe Biden. And a Washington Post analysis in August found that, of about $23 million in payments the committee had identified from foreign sources, nearly $7.5 million went to members of the Biden family – almost all of it to Hunter Biden – and the rest to people Hunter Biden did business with. (The Post also questioned the use of the vague phrase “shell companies,” noting that “virtually all of the companies” that had been listed by the committee at the time had “legitimate business interests” or “clearly identified business investments.”)

A Republican aide for the House Oversight Committee disputed the Post’s analysis on Thursday, saying that bank records obtained by the panel actually show that, of $24 million in payments between 2014 and 2019, $15 million went to members of the Biden family and $9 million went to associates. CNN has reached out to the Post for comment; the committee has not publicly released the underlying bank records that would definitively show the breakdown in payments.

The records obtained by the committee have shown that during and after Joe Biden’s tenure as vice president, Hunter Biden made millions of dollars through complex financial arrangements from private equity deals, legal fees and corporate consulting in Ukraine, China, Romania and elsewhere. Again, Republicans have not produced evidence that Joe Biden got paid in any of these arrangements.

Republican Rep. Jim Jordan of Ohio repeated a false claim about Hunter Biden that CNN debunked when Jordan made the same claim last week.

Jordan claimed that Hunter Biden himself said he was unqualified to sit on the board of directors of a Ukrainian energy company, Burisma Holdings.

“Hunter Biden’s not qualified, fact number two, to sit on the board. Not my words, his words. He said he got on the board because of the brand, because of the name,” Jordan said Thursday.

Facts First: It’s not true that Hunter Biden himself said he wasn’t qualified to sit on the Burisma board. In fact, Hunter Biden said in a 2019 interview with ABC News that “I was completely qualified to be on the board” and defended his qualifications in detail. He did acknowledge, as Jordan said, that he would “probably not” have been asked to be on the board if he was not a Biden – but he nonetheless explicitly rejected claims that he wasn’t qualified, calling them “misinformation.”

When the ABC interviewer asked what his qualifications for the role were, he said: “Well, I was vice chairman on the board of Amtrak for five years. I was the chairman of the board of the UN World Food Programme. I was a lawyer for Boies Schiller Flexner, one of the most prestigious law firms in the world. Bottom line is that I know that I was completely qualified to be on the board to head up the corporate governance and transparency committee on the board. And that’s all that I focused on. Basically, turning a Eastern European independent natural gas company into Western standards of corporate governance.”

When the ABC interviewer said, “You didn’t have any extensive knowledge about natural gas or Ukraine itself, though,” Biden responded, “No, but I think I had as much knowledge as anybody else that was on the board – if not more.”

Asked if he would have been asked to be on the board if his last name wasn’t Biden, Biden said, “I don’t know. I don’t know. Probably not.” He added “there’s a lot of things” in his life that wouldn’t have happened if he had a different last name.

A side note: Biden had served as the board chair for World Food Program USA, a nonprofit that supports the UN World Food Programme, not the UN program itself as he claimed in the interview.

Jordan cited new documents obtained from IRS whistleblowers, made public by House Republicans on Wednesday, to argue that the Justice Department improperly blocked investigators from asking about Joe Biden in a 2020 search warrant related to Hunter Biden’s overseas dealings.

“We learned yesterday, in the search warrant…examining Hunter Biden electronic communications, they weren’t allowed to ask about Political Figure 1,” Jordan said. “Political Figure number 1 is the big guy, is Joe Biden.”

Facts First: This is highly misleading. The Justice Department official who gave this instruction said Joe Biden’s name shouldn’t be mentioned in the search warrant because there wasn’t any legal basis to do so. Furthermore, this occurred during Trump’s presidency, so it doesn’t prove pro-Biden meddling by the Biden-era Justice Department.

The August 2020 email from a deputy to now-special counsel David Weiss, the Trump-appointed federal prosecutor who is leading the Hunter Biden probe, said the warrant was for “BS,” an apparent reference to Blue Star Strategies, a lobbying firm that represented Burisma Holdings, the Ukrainian energy company where Hunter Biden was on the board.

The Weiss deputy said in the email that “other than the attribution, location and identity stuff at the end, none if it is appropriate and within the scope of this warrant” and that “there should be nothing about Political Figure 1 in here,” according to emails released by House Republicans. Another document released by the GOP confirm that Joe Biden is “Political Figure 1.”

Before obtaining a search warrant, investigators need to establish probable cause and secure approval from a judge. If federal prosecutors believed the references to Joe Biden weren’t within the legal scope of what the warrant was looking for, it wouldn’t have been appropriate or lawful to include them.

Comer said in his opening remarks that the committee recently uncovered “two additional wires sent to Hunter Biden that originated in Beijing from Chinese nationals; this happened when Joe Biden was running for president of the United States – and Joe Biden’s home is listed on the beneficiary address.”

Facts First: This lacks important context. Comer was correct that the committee has found evidence of two wire transfers sent to Hunter Biden from Chinese nationals in the second half of 2019, during Joe Biden’s presidential campaign, but he did not explain that Joe Biden’s home being listed as the beneficiary address doesn’t demonstrate that Joe Biden received any of the money. Nor did he explain that there may well be benign reasons for the inclusion of the address. Hunter Biden has lived at his father’s Wilmington, Delaware, home at times and listed that address on his driver’s license; Hunter Biden’s lawyer Abbe Lowell said in a statement to CNN this week that the address was listed on these transfers simply because it was the address Hunter Biden used on the bank account the money was going to, which Lowell said Hunter Biden did “because it was his only permanent address at the time.”

“This was a documented loan (not a distribution or pay-out) that was wired from a private individual to his new bank account which listed the address on his driver’s license, his parents’ address, because it was his only permanent address at the time,” Lowell said in the statement. “We expect more occasions where the Republican chairs twist the truth to mislead people to promote their fantasy political agenda.”

White House spokesman Ian Sams wrote on X, formerly known as Twitter, on Wednesday: “Imagine them arguing that, if someone stayed at their parents’ house during the pandemic, listed it as their permanent address for work, and got a paycheck, the parents somehow also worked for the employer…It’s bananas…Yet this is what extreme House Republicans have sunken to.”

Comer told CNN this week his panel is trying to put together a timeline on where Hunter Biden was living around the time of the transfers, which occurred in July 2019 and August 2019. Joe Biden was a candidate in the Democratic presidential primary at the time.

Republican Rep. Nancy Mace of South Carolina claimed at the Thursday hearing, “We already know the president took bribes from Burisma,” a Ukrainian energy company where Hunter Biden sat on the board of directors.

Facts First: Mace’s claim is false; we do not “already know” that Joe Biden took any bribe. The claim about a bribe from Burisma is a completely unproven allegation. The FBI informant who relayed the claim to the FBI in 2020 was merely reporting something he said he had been told by Burisma’s chief executive. Later in the hearing, a witness called by the committee Republicans, George Washington University law professor Jonathan Turley, called “the bribery allegation” the most concerning piece of evidence he had heard today – but he immediately cautioned that “you have to only take that so far” given that it is “a secondhand account.”

According to an internal FBI document made public by Republican Sen. Chuck Grassley of Iowa earlier this year over the strong objections of the FBI, the informant said in 2020 – when Donald Trump was president – that the CEO of Burisma, Mykola Zlochevsky, had claimed in 2016 that he made a $5 million payment to “one Biden” and another $5 million payment to “another Biden.” But the FBI document did not contain any proof for the claim, and the document said the informant was “not able to provide any further opinion as to the veracity” of the claim.

Republicans have tried to boost the credibility the allegation by saying it was in an FBI document and that the FBI had viewed the informant as highly credible. But the document merely memorialized the information provided by the informant; it does not demonstrate that the information is true. And Hunter Biden’s former business associate Devon Archer testified to the House Oversight Committee earlier this year that he had not been aware of any such payments to the Bidens; Archer characterized Zlochevsky’s reported claim as an example of the Ukrainian businessman embellishing his influence.

Rep. Tim Burchett, a Tennessee Republican, falsely claimed that Hunter Biden never paid taxes on his foreign income.

He said Hunter Biden “failed to pay any taxes” on the millions of dollars he got from Ukrainian companies, and that this shows how “the Biden family doesn’t have to” pay taxes.

“Who’s going to write the check for the money Hunter Biden didn’t pay?” Burchett asked, adding that “hardworking Americans” would end up footing the bill.

Facts First: This is false. Hunter Biden repeatedly missed IRS deadlines, and his conduct was so egregious that federal investigators believe it was criminal, but he eventually belatedly paid all of his back taxes, plus interest and penalties, to the tune of about $2 million.

Documents from Hunter Biden’s criminal cases indicate that he repeatedly missed tax deadlines, even though he had the funds and was repeatedly warned by his accountant and business partners. He was prepared to plead guilty to two misdemeanors in July, for failing to pay taxes on time in 2017 and 2018, before the plea deal collapsed.

But there’s a difference between failing to pay taxes on time and failing to pay taxes at all. In 2021, while the criminal investigation was still underway and before any charges were filed, Hunter Biden paid roughly $2 million to the IRS to cover all the back taxes, plus penalties and interest.

Hunter Biden was able to make the massive payment thanks to a roughly $2 million loan from a friend and attorney who has been supporting him during his legal troubles, according to court filings.

Democratic Rep. Alexandria Ocasio-Cortez of New York accused a Republican member of the committee, Rep. Byron Donalds of Florida, of cutting out “critical context” from an image of a purported text message that Donalds displayed earlier in the Thursday hearing. Ocasio-Cortez also said that Donalds had displayed a “fabricated image.”

The dispute was over an image Donalds showed of a purported 2018 text message from the president’s brother James Biden to the president’s son Hunter Biden – provided by IRS whistleblowers and released by House Republicans on Wednesday – in which James Biden purportedly wrote, “This can work, you need a safe harbor. I can work with you father [sic] alone !! We as usual just need several months of his help for this to work.”

After showing the image, Donalds asked a witness at the committee, “If you saw a text message like this between the president’s brother and the president’s son, wouldn’t you be concerned about them trying to give plausible deniability for the president of the United States to not have any knowledge of said business dealings?”

Facts First: Donalds didn’t invent the James Biden text message, but Ocasio-Cortez was correct that Donalds left out critical context – specifically, context that showed there was no sign that the purported text exchange between James Biden and Hunter Biden was about business dealings. The information released by House Republicans this week appeared to show that James Biden’s purported text about getting “help” from Joe Biden came in direct response to a purported Hunter Biden text saying he could not afford alimony, school tuition for his children, food and gas “w/o [without] Dad.” Donalds did not display this purported Hunter Biden text at the Thursday hearing.

In other words, when James Biden purportedly mentioned the possibility of several months of help from Joe Biden, he gave no indication he was referring to some sort of business transaction, much less the foreign transactions that House Republicans have been focused on in their investigations into the president. But Donalds didn’t make that clear.

With that said, Ocasio-Cortez herself could have been clearer about what she meant when she claimed the image Donalds showed was “fabricated.”

The contents of the purported James Biden text Donalds displayed were not made up, according to the IRS whistleblowers. What appeared to be novel was the graphic Donalds used; he showed the text in a form that made it look like a screenshot from an iPhone text conversation, with white words over a blue background bubble. The House Republican spreadsheet that the words were taken from did not include any such graphics, and, again, it did include the preceding purported Hunter Biden message that Donalds didn’t show.

Republican Rep. Pat Fallon of Texas said at the Thursday hearing, “In an interview back in 2019 with The New Yorker, even Hunter admitted that he talked to his dad about business, specifically Burisma.”

Facts First: This needs context. The 2019 New Yorker article in question reported that Hunter Biden said he recalled Joe Biden discussing Burisma with him “just once” in a brief exchange that consisted of this: “Dad said, ‘I hope you know what you are doing,’ and I said, ‘I do.’”

It’s fair for Fallon to say that this counts as Joe Biden discussing business with his son, but Fallon did not mention how brief and limited Hunter Biden said the purported discussion was.

This story has been updated with additional information.

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August 2, 2023
Former IRS contractor accused of stealing Trump’s tax returns pleads guilty | CNN Politics

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CNN
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The former IRS contractor accused of leaking former President Donald Trump’s tax returns and stealing tax information on thousands of the wealthiest people in the US pleaded guilty in federal court on Thursday.

Prosecutors say Charles Littlejohn of Washington, DC, sent Trump’s tax returns and other data to two media outlets that “published numerous articles describing the tax information they obtained from the Defendant.”

Littlejohn pleaded guilty to the one count of disclosing tax information, which he was charged with in late September.

The contractor’s crime affected so many individuals that prosecutors plan to create a public website to notify the victims of any developments in the case.

During the plea hearing, an attorney for Trump gave a victim impact statement, calling the crime “an egregious breach.”

Trump’s attorney, Alina Habba, said that Trump’s returns were “kept in a vault at the IRS” and suggested that the leak may have cost Trump votes in the 2020 election.

Habba said Trump was opposed to the plea deal and called for the maximum sentence of five years in prison for Littlejohn.

Judge Ana Reyes, the federal judge overseeing the case, said she agreed “completely that anyone taking the law into their own hands is unacceptable.”

“I cannot overstate how troubled I am by what occurred,” Reyes said. “Make no mistake, this was not acceptable.”

A sentencing hearing has been scheduled for January 29.

This story has been updated with additional developments.

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August 2, 2023
Microsoft to appeal IRS request for nearly $29 billion in back taxes | CNN Business

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CNN
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Microsoft plans to contest a US Internal Revenue Service request for an additional $28.9 billion in back taxes for the years 2004 to 2013, the company said in a securities filing Wednesday.

The demand is the result of a yearslong audit by the IRS into Microsoft’s past accounting practices. In particular, the agency took issue with how the company “allocated profits … among countries and jurisdictions,” Microsoft said in the filing.

“The IRS says Microsoft owes an additional $28.9 billion in tax for 2004 to 2013, plus penalties and interest,” the company said. It noted that the IRS’s determination is not final and does not include up to $10 billion in taxes Microsoft paid under the 2017 Tax Cuts and Jobs Act that could reduce its final bill.

The company said it plans to appeal the IRS request, a process that will likely take several years.

“We believe we have always followed the IRS’s rules and paid the taxes we owe in the U.S. and around the world,” the company said in the filing. “Since 2004, we have paid over $67 billion in taxes to the U.S.”

Microsoft noted that as it prepares to work through the IRS Appeals Process — and, potentially, the courts — the company believes its current “allowances for income tax contingencies are adequate.”

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August 2, 2023
EXCLUSIVE: Hunter Biden lawyers to meet with Justice Department officials next week as scrutiny of investigation intensifies | CNN Politics

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Lawyers for Hunter Biden are scheduled to meet next week with US attorney David Weiss and at least one senior career official from Justice Department headquarters to discuss the long-running investigation into the president’s son, multiple sources familiar with the matter told CNN.

The Hunter Biden legal team had reached out to Justice officials in recent weeks, asking for an update on the case. As is routine when lawyers request a status update, they were invited to meet next week, according to one source familiar with the meeting.

Weiss, the US Attorney in Delaware who was appointed by former President Donald Trump, is overseeing an ongoing criminal case into President Joe Biden’s son.

After prosecutors narrowed down the possible charges Hunter Biden could face last year, there haven’t been any public developments. According to sources familiar with the investigation, prosecutors are still weighing whether to bring two misdemeanor charges for failure to file taxes, one count of felony tax evasion related to the overreporting of expenses, and a false statement charge regarding a gun purchase.

The Justice Department did not comment. A spokesperson for the US attorney’s office in Delaware declined to comment.

Hunter Biden has not been charged with any crimes and has previously denied any wrongdoing.

The scheduled meeting comes as the Hunter Biden legal probe is back in the spotlight after an IRS supervisory special agent reached out to Congress, claiming to have information about alleged mishandling and political interference in the case. While a letter from the agent’s lawyer to Congress does not name Hunter Biden, as that could be a violation of the tax code, a source familiar with the matter previously told CNN that the case is the one involving the president’s son.

The agent is seeking whistleblower protections to share the information with Congress, according to a letter obtained by CNN.

The special agent also claims to have information that contradicts Attorney General Merrick Garland’s testimony before Congress, the source familiar with the matter told CNN. “I have pledged not to interfere with that investigation, and I have carried through on my pledge,” Garland testified in March.

The IRS agent worked on Hunter Biden’s criminal case and contends that the president’s son is being treated differently than other individuals would be in terms of violations of the tax code, sources familiar with the agent’s allegations said. The agent reported up the chain of command about his concerns of the treatment of Hunter Biden’s returns and tax filings, one of the sources added.

Congressional committees are in active conversations about when and how to interview the whistleblower. The IRS agent’s team wants him to do one interview with the committees, and have Democrats and Republicans present for it, the source said.

In recent months, as Republicans took control of the House and the federal case appeared to stall, Hunter Biden’s legal team decided to pursue a more aggressive and litigious approach to his defense, despite what one source described as objections from top White House advisers. For instance, one of Hunter Biden’s lawyers recently sued former Trump aide Garrett Ziegler, accusing him of harassment. Hunter Biden’s team also has accused in court a Delaware computer repair shop owner of trying to invade Hunter Biden’s privacy and wrongfully sharing his personal data for political purposes.

CNN has reached out to Ziegler for comment.

Sources close to Hunter Biden have attacked the IRS agent’s motives and note that even if the whistleblower has evidence of the investigation being mishandled, it would be about government conduct and not about Hunter Biden.

The IRS agent’s allegations are primarily focused on improper politicization of the case at the Justice Department and FBI instead of at the Treasury Department or IRS, according to a source familiar with the matter.

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April 21, 2023
Today is Tax Day. Here’s what you need to know if you haven’t filed your return yet — and even if you have | CNN Business
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Editor’s Note: This is an updated version of a story that originally ran on April 14, 2023.

New York
CNN
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It’s April 18, the official deadline to file your federal and state income tax returns for 2022. (It is also, apparently, National Animal Crackers Day for those who celebrate.)

Whether you have already filed your tax return or still need to, the good news is this tax filing season has gone much more smoothly than the past three, which were hurt by the pandemic.

“This is the first tax season since 2019 where the IRS and the nation were on normal footing,” IRS Commissioner Danny Werfel said in a call with reporters.

For instance, Werfel noted that since January, thanks to an infusion of some new funding after years of budget cuts, IRS employees have been able to answer 87% of calls from filers with questions. Last year, they answered fewer than 15%. And the wait times on those phone calls dropped to just 4 minutes this filing season from 27 minutes last filing season.

The agency also added a roster of new online tools for filers, he added.

Those online tools may be especially helpful today if you are scrambling to get your return in before midnight. Or, if you’ve come to the realization that you need to file for an extension. Either way, here are some key things to know:

Not everyone has to file on April 18: If you live in a federally declared disaster area, have a business there — or have relevant tax documents stored by businesses in that area — it’s likely the IRS has already extended the filing and payment deadlines for you. Here is where you can find the specific extension dates for each disaster area.

Thanks to many rounds of extreme weather in recent months, for instance, tax filers in most of California — which accounts for 10% to 15% of all federal filers — have already been granted an extension until Oct. 16 to file and to pay, according to an IRS spokesperson.

If you’re in the armed forces and are currently or were recently stationed in a combat zone, the filing and payment deadlines for your 2022 taxes are most likely extended by 180 days. But your specific extended filing and payment deadlines will depend on the day you leave (or left) the combat zone. This IRS publication offers more detail.

Lastly, if you made little to no money last year (typically less than $12,950 for single filers and $25,900 for married couples), you may not be required to file a return. But you may want to anyway if you think you are eligible for a refund thanks to, for instance, refundable tax credits such as the Earned Income Tax Credit. (Use this IRS tool to gauge whether you are required to file this year.) You also are likely eligible to use IRS Free File (intended for those with adjusted gross income of $73,000 or less) so it won’t cost you to submit a return.

Your paycheck may not be your only source of income: If you had one full-time job you may think that is the only income you made and have to report. But that’s not necessarily so.

Other potentially taxable and reportable income sources include:
Interest on your savings

Investment income (e.g., dividends and capital gains)

Pay for part-time or seasonal work, or a side hustle

Unemployment income

Social Security benefits or distribution from a retirement account

Tips

Gambling winnings

Income from a rental property you own
Organize your tax documents: By now you should have received every tax document that third parties are required to send you (your employer, bank, brokerage, etc.).

If you don’t recall receiving a hard copy of a tax form in the mail, check your email and your online accounts — a document may have been sent to you electronically.

Here are some of the tax forms you may have received:
W-2 from your wage or salaried jobs

1099-B for capital gains and losses on your investments

1099-DIV from your brokerage or company where you own stock for dividends or other distributions from their investments

1099-INT for interest over $10 on your savings at a financial institution

1099-NEC from your clients, if you worked as a contractor

1099-K for payments for goods and services through third-party platforms like Venmo, CashApp or Etsy. The 1099-K is required if you made more than $20,000 in over 200 transactions during the year. (Next year the reporting threshold drops to $600.) But even if you didn’t get a 1099-K you still must report all the income that you made over third-party platforms in 2022.

1099-Rs for distributions over $10 that you received for a pension, annuity, retirement account, profit-sharing plan or insurance contract

SSA-1099 or SSA-1042S for Social Security benefits received.
“Be aware that there’s no form for some taxable income, like proceeds from renting out your vacation property, meaning you’re responsible for reporting it on your own,” according to the Illinois CPA Society.

One very last-minute way to reduce your 2022 tax bill: If you’re eligible to make a tax-deductible contribution to an IRA and haven’t done so for last year, you have until April 18 to contribute up to $6,000 ($7,000 if you’re 50 or older). That will reduce your tax bill and augment your retirement savings.

Proofread your return before submitting it: Do this whether you’re using tax software or working with a professional tax preparer.

Little mistakes and oversights delay the processing of your return (and the issuance of your refund if you’re owed one). You want to avoid things like having a typo in your name, birth date, Social Security number or direct deposit number; choosing the wrong filing status (e.g., married vs single); making a simple math error; or leaving a required field blank.

What to do if you can’t file by April 18: If you’re not able to file on time, fill out Form 4868 electronically or on paper and send it in no later than today. You will be granted an automatic six-month extension to file.

Note, however, that an extension to file is not an extension to pay. You will be charged interest (currently running at 7%) and a penalty on any amount you still owe for 2022 but haven’t paid by April 18.

So if you suspect you still owe tax — perhaps you had some income outside of your job for which tax wasn’t withheld or you had a big capital gain last year — approximate how much more you owe and send that money to the IRS by the end of today.

You can choose to do so by mail, attaching a check to your extension request form. Make sure your envelope is postmarked no later than April 18.

Or the more efficient route is pay what you owe electronically at IRS.gov, said CPA Damien Martin, a tax partner at EY. If you do that, the IRS notes you will not have to file a Form 4868. “The IRS will automatically process an extension of time to file,” the agency notes in its instructions.

If you opt to electronically pay directly from your bank account, which is free, select “extension” and then “tax year 2022” when given the option.

You can also pay by credit or debit card, but you will be charged a processing fee. Doing so, though, may become much more costly than just a fee if you charge your tax payment but don’t pay your credit card bill off in full every month, since you likely pay a high interest rate on outstanding balances.

If you can’t pay what you owe in full, the IRS does have some payment plan options. But it might be smart to first consult with a certified public accountant or a tax preparer who is an enrolled agent to make sure you are making the best choice for your circumstance.

If you still owe income taxes to your state, remember that you may need to go through a similar exercise of filing for an extension and making a payment to your state’s revenue department, Martin said.

Use this interactive tax assistant for basic questions you may have: The IRS provides an “interactive tax assistant” that can help you answer more than 50 basic questions pertaining to your individual circumstance on income, deductions, credits and other technical questions.

If you’ve already filed your return, you’re probably glad to have it in the rear view mirror. But you may still have a few questions about what’s ahead.

What about my refund? If you are due a refund, the IRS typically sends it within 21 days of receiving your return. When yours does arrive, it may be smaller than last year, even if your financial life didn’t change much. That’s because a number of Covid-related tax breaks expired.

So far, the average refund paid was $2,878 for the week ending April 7, down from $3,175 at the same point in last year’s filing season.

Will I be audited?: The reasons and methods for auditing a taxpayer can vary — and many audits result in “no change,” meaning you don’t end up owing anything more to the IRS. But one thing is common for the vast majority of US tax filers: Audit rates are exceedingly low.

For filers reporting incomes between $50,000 and $200,000, only 0.1% of them were audited in 2020, according to the latest data from the IRS. Even for very high income filers, audit rates were quite low: Just 0.4% for those reporting income of between $1 million and $5 million; 0.7% for those with income between $5 million and $10 million; and 2.4% for returns with income over $10 million.

Looking ahead, the IRS commissioner noted in a press call that the agency will be using money from the Inflation Reduction Act to bolster its compliance efforts to focus more on auditing high-income individuals — defined as making $400,000 or more. As for filers with income below that level, he said he did not anticipate any change in the likelihood they would be audited.
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April 18, 2023
Still haven’t filed your taxes? Here’s what you need to know | CNN Business
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New York
CNN
—

So far this tax season, the IRS has received more than 90 million income tax returns for 2022.

That means tens of millions of households have yet to file their returns. If yours is among them, here are some last-minute tax-filing tips to keep in mind as the Tuesday, April 18 deadline approaches.

Not everyone has to file on April 18: If you live in a federally declared disaster area, have a business there — or have relevant tax documents stored by businesses in that area — it’s likely the IRS has already extended the filing and payment deadlines for you. Here is where you can find the specific extension dates for each disaster area.

Thanks to many rounds of extreme weather in recent months, for instance, tax filers in most of California — which accounts for 10% to 15% of all federal filers — have already been granted an extension until Oct. 16 to file and to pay, according to an IRS spokesperson.

If you’re in the armed forces and are currently or were recently stationed in a combat zone, the filing and payment deadlines for your 2022 taxes are most likely extended by 180 days. But your specific extended filing and payment deadlines will depend on the day you leave (or left) the combat zone. This IRS publication offers more detail.

Lastly, if you made little to no money last year (typically less than $12,950 for single filers and $25,900 for married couples), you may not be required to file a return. But you may want to anyway if you think you are eligible for a refund thanks to, for instance, refundable tax credits such as the Earned Income Tax Credit. (Use this IRS tool to gauge whether you are required to file this year.) You also are likely eligible to use IRS Free File (intended for those with adjusted gross income of $73,000 or less) so it won’t cost you to submit a return.

Your paycheck may not be your only source of income: If you had one full-time job you may think that is the only income you made and have to report. But that’s not necessarily so.

Other potentially taxable and reportable income sources include:
Interest on your savings

Investment income (e.g., dividends and capital gains)

Pay for part-time or seasonal work, or a side hustle

Unemployment income

Social Security benefits or distribution from a retirement account

Tips

Gambling winnings

Income from a rental property you own
Organize your tax documents: By now you should have received every tax document that third parties are required to send you (your employer, bank, brokerage, etc.).

If you don’t recall receiving a hard copy of a tax form in the mail, check your email and your online accounts — a document may have been sent to you electronically.

Here are some of the tax forms you may have received:
W-2 from your wage or salaried jobs

1099-B for capital gains and losses on your investments

1099-DIV from your brokerage or company where you own stock for dividends or other distributions from their investments

1099-INT for interest over $10 on your savings at a financial institution

1099-NEC from your clients, if you worked as a contractor

1099-K for payments for goods and services through third-party platforms like Venmo, CashApp or Etsy. The 1099-K is required if you made more than $20,000 in over 200 transactions during the year. (Next year the reporting threshold drops to $600.) But even if you didn’t get a 1099-K you still must report all the income that you made over third-party platforms in 2022.

1099-Rs for distributions over $10 that you received for a pension, annuity, retirement account, profit-sharing plan or insurance contract

SSA-1099 or SSA-1042S for Social Security benefits received.
“Be aware that there’s no form for some taxable income, like proceeds from renting out your vacation property, meaning you’re responsible for reporting it on your own,” according to the Illinois CPA Society.

One very last-minute way to reduce your 2022 tax bill: If you’re eligible to make a tax-deductible contribution to an IRA and haven’t done so for last year, you have until April 18 to contribute up to $6,000 ($7,000 if you’re 50 or older). That will reduce your tax bill and augment your retirement savings.

Proofread your return before submitting it: Do this whether you’re using tax software or working with a professional tax preparer.

Little mistakes and oversights delay the processing of your return (and the issuance of your refund if you’re owed one). You want to avoid things like having a typo in your name, birth date, Social Security number or direct deposit number; choosing the wrong filing status (e.g., married vs single); making a simple math error; or leaving a required field blank.

What to do if you can’t file by April 18: If you’re not able to file by next Tuesday, fill out Form 4868 electronically or on paper and send it in by April 18. You will be granted an automatic six-month extension to file.

Note, however, that an extension to file is not an extension to pay. You will be charged interest (currently running at 7%) and a penalty on any amount you still owe for 2022 but haven’t paid by April 18.

So if you suspect you still owe tax — perhaps you had some income outside of your job for which tax wasn’t withheld or you had a big capital gain last year — approximate how much more you owe and send that money to the IRS by Tuesday.

You can choose to do so by mail, attaching a check to your extension request form. Make sure your envelope is postmarked no later than April 18.

Or the more efficient route is pay what you owe electronically at IRS.gov, said CPA Damien Martin, a tax partner at EY. If you do that, the IRS notes you will not have to file a Form 4868. “The IRS will automatically process an extension of time to file,” the agency notes in its instructions.

If you opt to electronically pay directly from your bank account, which is free, select “extension” and then “tax year 2022” when given the option.

You can also pay by credit or debit card, but you will be charged a processing fee. Doing so, though, may become much more costly than just a fee if you charge your tax payment but don’t pay your credit card bill off in full every month, since you likely pay a high interest rate on outstanding balances.

If you still owe income taxes to your state, remember that you may need to go through a similar exercise of filing for an extension and making a payment to your state’s revenue department, Martin said.

Use this interactive tax assistant for basic questions you may have: The IRS provides an “interactive tax assistant” that can help you answer more than 50 basic questions pertaining to your individual circumstance on income, deductions, credits and other technical questions.
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April 13, 2023
Taxes and adulting: What to know about filing taxes on your own for the first time | CNN Business

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New York
CNN
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For most people in their early- to mid-20s, filing taxes is right up there with having to pay rent and realizing you can’t take summers off anymore: an unwelcome fact of being an adult.

If you’re a recent graduate working your first full-time job or supporting yourself for the first time, this tax-filing season may indeed be your first experience doing your own taxes without the help of a parent.

So here are seven things to keep in mind.

If you’re confounded by filing your taxes, you may think it’s because you’re young and inexperienced. Nonsense. Tax filers of all ages get confused by tax rules and the intricacies of all the tax documents required. And it doesn’t help that tax provisions are tweaked frequently.

Your tax return is a financial snapshot of your life over a 12-month period, in this case 2022. And a lot can happen during that time that will have tax implications and need to be reported.

“Think about what went on in your life in the past year,” said Tom O’Saben, the director of tax content at the National Association of Tax Preparers.

For example, O’Saben asked, did you work more than one job? Did you move for a new job? Did you get laid off? Did you get married or have a child? Did you make student loan payments? Did you make money selling anything you own? Did you buy a home?

Next, pull together all necessary documentation. In addition to receipts and other paperwork you may have kept, you should also have tax forms that were either mailed to you or sent electronically — from your employers, brokerage firms, college, loan servicers, the state unemployment office, etc.

You’ll need the information on these forms to fill out your tax return accurately. Keep in mind, the IRS also has a copy of these “third-party” forms that were sent to you, so its systems will flag if there is any discrepancy between what is on the form sent to you and what you put on your return.

Most people realize what they earn at a full-time job is subject to income tax and that those taxes are automatically withheld by your employer.

But any side hustle income you generate, or money you make as a gig worker, is also taxable, even if you’re paid in cash or via a payment app. Ditto for tips. And often tax on that type of income is not withheld. You’re just paid a gross amount and will have to set aside money to cover the taxes owed on it.

Severance payments and unemployment benefits may be taxable too.

And so is investment income — meaning the profits (or “capital gain”) you make on the sale of an investment or property — which is basically the price for which you sell something minus the original price you paid for it. (Also worth noting: if you have investment income, also called “passive” income, it is taxed at a lower rate than your paycheck — i.e., “earned” income — assuming you held your investment longer than a year.)

Most dividends and interest payments are also taxable.

And remember all that lucrative fun you had betting on the SuperBowl or spending a weekend with friends in Vegas? Yup, your winnings from gambling and sports betting are considered taxable income. (The semi-good news is if you had any gambling losses last year, they can offset your wins, so it may be that you won’t owe tax on your winnings if your losses cancel them out.)

For many of these types of income you should have received forms from your employer (a W2 if you’re a full-time employee); from your clients if you’re a contract or gig worker (eg. a 1099-K, a 1099-NEC) or, starting next year, from the payment apps on which you get paid for your goods and services (e.g., a 1099-MISC). Meanwhile, banks and brokerage firms will send you 1099-INTs (for interest), 1099-DIVs (for dividends) and 1099-Bs (for your capital gains and losses).

If you live in Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming, you don’t have to file a state tax return because those states don’t impose an income tax. If you live in New Hampshire and Tennessee, you won’t have to file a return for your salary and wages. But you may have to file a return if you got income from dividends and interest during the tax year.

The standard deduction reduces your adjusted gross income. The amount for tax year 2022 is $12,950 for singles; $25,900 for married couples filing jointly; and $19,400 for heads of household (e.g., a single parent).

“That’s the amount of money you don’t have to pay tax on,” O’Saben noted.

The only filers who itemize their deductions are those whose deductions add up to more than the standard deduction. Itemized deductions include: charitable contributions, state and local income and property taxes, mortgage interest and casualty loss if you live in a federally declared disaster area.

But even if you just take the standard deduction you may also take in addition what are called “above-the-line” deductions. These include up to $2,500 in student loan interest that you paid in 2022 (your student loan servicer should send you a Form 1098-E); any contributions you made to a deductible IRA or to a Health Savings Account; and, if you’re a teacher, up to $300 of what you spent on school supplies and personal protective equipment for your classroom.

[For a fuller list of different types of taxable income (“additional income”) and above-the-line deductions (“adjustments to income”), see Schedule 1 to the federal 1040 form.]

A tax credit is a dollar-for-dollar reduction of your tax bill and if it’s a “refundable” credit, which some are, it can actually increase your refund.

Some credits to be aware of, especially if you’re not making a lot of income:

The Earned Income Tax Credit: The EITC is intended to help low- and moderate-income workers (defined in 2022 as those with earned income under $59,187), and especially filers with children.

The EITC is also available to earners without qualifying children and it’s worth $560 for 2022.

Education credits: If you were in school last year, footed the costs and are not claimed as a dependent on anyone else’s tax return, you may be eligible for an American Opportunity Tax Credit or a Lifetime Learning Credit. To see if you qualify, here’s an IRS table comparing the eligibility requirements and the value of each of those credits. Also, check to see if your educational institution sent you a Form 1098-T, which you will need if you claim one of these credits.

The Saver’s Credit: The Saver’s Credit is a federal match for lower-income earners’ retirement contributions for up to $2,000 a year.

The Child Tax Credit: If you’re a parent you may claim a maximum child tax credit of $2,000 for each child through age 16 if your modified adjusted gross income is below $200,000 ($400,000 if filing jointly). Above those levels, the child tax credit starts to get reduced. And the portion of the credit treated as refundable — meaning it is paid to you even if you don’t owe any federal income tax — is capped at $1,500, and that is only available to those with earned income of at least $2,500.

And if you paid for child care in 2022, you may be eligible to claim a dependent care credit.

Your federal tax return is due on April 18. That is the day by which you must have filed your 2022 individual tax return and paid any remaining federal income taxes owed for last year. The only exceptions are for those who lived in federally declared disaster areas, in which case their deadlines are later.

But anyone can apply for — and will automatically be granted — a six-month extension until October 16, 2023 to file their return if they submit Form 4868 by April 18.

Note, though, that an extension to file is not an extension to pay if you still owe the IRS more in taxes for last year than you actually paid in 2022.

So, unless you have good reason to believe you will receive a refund, get a ballpark estimate of what more you think you’ll owe the IRS and send in that check by April 18 if you file for an extension. Otherwise you could be hit with a late payment penalty. And that could be compounded by a failure-to-file penalty if you didn’t file on time or didn’t get an automatic filing extension.

Sign up for CNN’s Adulthood, But Better newsletter series. Our seven-part guide has tips to help you make more informed decisions around personal finance, career, wellness and personal connections.

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April 4, 2023
Senate confirms Biden’s IRS nominee Daniel Werfel | CNN Politics

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The Senate voted Thursday to confirm Daniel Werfel, the former acting commissioner of the Internal Revenue Service, to lead the IRS.

He was approved on a bipartisan 54-42 vote.

Werfel’s confirmation to the agency comes after he was grilled by the Senate Committee on Finance last month on how he plans to utilize the money in new funding coming to the IRS over the next decade to revitalize the tax agency as taxpayers could see increased audit rates. Democrats approved the $80 billion for the agency last year when they approved the Inflation Reduction Act in a party-line vote. Democrats backed the funding in its bid to crack down on tax dodgers and to provide better services for taxpayers, arguing that the IRS could boost federal revenue by more than $100 billion over the 10-year time period if they collect more in taxes.

But Republicans have made the IRS and the new funding a political target, claiming that the money will create additional audits for taxpayers.

After Republicans took control of the House earlier this year, two of the party’s first legislative votes were aimed at the IRS. One bill called for rescinding roughly all the new funding for the agency and others called for abolishing the IRS altogether. However, it is highly unlikely that either bill will become law because Democrats still control the Senate.

Werfel said last month he would follow through on Treasury Secretary Janet Yellen’s previous directive that the IRS will not use the new funding to increase audit rates, relative to historic levels, for households making less than $400,000 a year.

“If I am fortunate enough to be confirmed, the audit and compliance priorities will be focused on enhancing the IRS’ capabilities to ensure that America’s highest earners comply with applicable tax laws,” Werfel said at the February hearing.

“If poor people are more likely to be audited than the wealthy, that is something I think potentially degrades public trust and needs to be addressed within the tax system,” he added.

But ranking Republican committee member, Republican Sen. Mike Crapo of Idaho, said at the time he remains “very concerned” about how twhe funds will be used to increase tax enforcement, pointing out that Yellen’s directive “leaves a lot of wiggle room.”

“I don’t expect to see wiggle room in this commitment,” Crapo told Werfel.

The Inflation Reduction Act states that the new investment going to IRS is not “intended to increase taxes on any taxpayer or small business with a taxable income below $400,000.” However, there is some uncertainty about how the IRS will decide how it will ramp up audits.

Moderate Democratic Sen. Joe Manchin of West Virginia voted against Werfel’s nomination. He has also opposed several of President Joe Biden’s other recent nominees.

Manchin said his vote against Werfel had to do with the Biden administration ignoring the “congressional intent” in implementing the Inflation Reduction Act.

“As far as the gentleman for the IRS, most qualified, he’ll do a good job. That was a message I’m sending because the president and his administration is not adhering to the piece of legislation called the Inflation Reduction Act,” Manchin said on “CNN This Morning” Thursday ahead of the vote, explaining his reasoning for voting against Werfel. “They have touted that as strictly an environmental bill.”

Werfel was the acting IRS commissioner for seven months in 2013 during a difficult time for the agency. His predecessor had resigned following revelations that the agency targeted conservative groups seeking tax-exempt status for extra scrutiny.

Before his stint at the IRS, Werfel worked for nearly 16 years at the White House’s Office of Management and Budget, where he served as deputy controller and later federal controller.

After he left government, Werfel joined Boston Consulting Group, where he is currently a managing director and partner on the federal and public sector teams.

This story has been updated with additional developments.

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March 9, 2023
Fact check: Biden makes false and misleading claims in economic speech | CNN Politics

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Washington
CNN
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President Joe Biden delivered a Thursday speech to hail economic progress during his administration and to attack congressional Republicans for their proposals on the economy and the social safety net.

Some of Biden’s claims in the speech were false, misleading or lacking critical context, though others were correct. Here’s a breakdown of the 14 claims CNN fact-checked.

Touting the bipartisan infrastructure law he signed in 2021, Biden said, “Last year, we funded 700,000 major construction projects – 700,000 all across America. From highways to airports to bridges to tunnels to broadband.”

Facts First: Biden’s “700,000” figure is wildly inaccurate; it adds an extra two zeros to the correct figure Biden used in a speech last week and the White House has also used before: 7,000 projects. The White House acknowledged his misstatement later on Thursday by correcting the official transcript to say 7,000 rather than 700,000.

Biden said, “Well, here’s the deal: I put a – we put a cap, and it’s now in effect – now in effect, as of January 1 – of $2,000 a year on prescription drug costs for seniors.”

Facts First: Biden’s claims that this cap is now in effect and that it came into effect on January 1 are false. The $2,000 annual cap contained in the Inflation Reduction Act that Biden signed last year – on Medicare Part D enrollees’ out-of-pocket spending on covered prescription drugs – takes effect in 2025. The maximum may be higher than $2,000 in subsequent years, since it is tied to Medicare Part D’s per capita costs.

Asked for comment, a White House official noted that other Inflation Reduction Act health care provisions that will save Americans money did indeed come into effect on January 1, 2023.

– CNN’s Tami Luhby contributed to this item.

Criticizing former President Donald Trump over his handling of the Covid-19 pandemic, Biden said, “Back then, only 3.5 million people had been – even had their first vaccination, because the other guy and the other team didn’t think it mattered a whole lot.”

Facts First: Biden is free to criticize Trump’s vaccine rollout, but his “only 3.5 million” figure is misleading at best. As of the day Trump left office in January 2021, about 19 million people had received a first shot of a Covid-19 vaccine, according to figures published by the Centers for Disease Control and Prevention. The “3.5 million” figure Biden cited is, in reality, the number of people at the time who had received two shots to complete their primary vaccination series.

Someone could perhaps try to argue that completing a primary series is what Biden meant by “had their first vaccination” – but he used a different term, “fully vaccinated,” to refer to the roughly 230 million people in that very same group today. His contrasting language made it sound like there are 230 million people with at least two shots today versus 3.5 million people with just one shot when he took office. That isn’t true.

Biden said Republicans want to cut taxes for billionaires, “who pay virtually only 3% of their income now – 3%, they pay.”

Facts First: Biden’s “3%” claim is incorrect. For the second time in less than a week, Biden inaccurately described a 2021 finding from economists in his administration that the wealthiest 400 billionaire families paid an average of 8.2% of their income in federal individual income taxes between 2010 and 2018; after CNN inquired about Biden’s “3%” claim on Thursday, the White House published a corrected official transcript that uses “8%” instead. Also, it’s important to note that even that 8% number is contested, since it is an alternative calculation that includes unrealized capital gains that are not treated as taxable income under federal law.

“Biden’s numbers are way too low,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center at the Urban Institute think tank, though Gleckman also said we don’t know precisely what tax rates billionaires do pay. Gleckman wrote in an email: “In 2019, Berkeley economists Emmanuel Saez and Gabe Zucman estimated the top 400 households paid an average effective tax rate of about 23 percent in 2018. They got a lot of attention at the time because that rate was lower than the average rate of 24 percent for the bottom half of the income distribution. But it still was way more than 2 or 3, or even 8 percent.”

Biden has cited the 8% statistic in various other speeches, but unlike the administration economists who came up with it, he tends not to explain that it doesn’t describe tax rates in a conventional way. And regardless, he said “3%” in this speech and “2%” in a speech last week.

Biden cited a 2021 report from the Institute on Taxation and Economic Policy think tank that found that 55 of the country’s largest corporations had made $40 billion in profit in their previous fiscal year but not paid any federal corporate income taxes. Before touting the 15% alternative corporate minimum tax he signed into law in last year’s Inflation Reduction Act, Biden said, “The days are over when corporations are paying zero in federal taxes.”

Facts First: Biden exaggerated. The new minimum tax will reduce the number of companies that don’t pay any federal taxes, but it’s not true that the days of companies paying zero are “over.” That’s because the minimum tax, on the “book income” companies report to investors, only applies to companies with at least $1 billion in average annual income. According to the Institute on Taxation and Economic Policy, only 14 of the companies on its 2021 list of 55 non-payers reported having US pre-tax income of at least $1 billion.

In other words, there will clearly still be some large and profitable corporations paying no federal income tax even after the minimum tax takes effect this year. The exact number is not yet known.

Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, told CNN in the fall that the new tax is “an important step forward from the status quo” and that it will raise substantial revenue, but he also said: “I wouldn’t want to assert that the minimum tax will end the phenomenon of zero-tax profitable corporations. A more accurate phrasing would be to say that the minimum tax will *help* ensure that *the most profitable* corporations pay at least some federal income tax.”

There are lots of nuances to the tax; you can read more specifics here. Asked for comment on Thursday, a White House official told CNN: “The Inflation Reduction Act ensures the wealthiest corporations pay a 15% minimum tax, precisely the corporations the President focused on during the campaign and in office. The President’s full Made in America tax plan would ensure all corporations pay a 15% minimum tax, and the President has called on Congress to pass that plan.”

Noting the big increase in the federal debt under Trump, Biden said that his administration has taken a “different path” and boasted: “As a result, the last two years – my administration – we cut the deficit by $1.7 trillion, the largest reduction in debt in American history.”

Facts First: Biden’s boast leaves out important context. It is true that the federal deficit fell by a total of $1.7 trillion under Biden in the 2021 and 2022 fiscal years, including a record $1.4 trillion drop in 2022 – but it is highly questionable how much credit Biden deserves for this reduction. Biden did not mention that the primary reason the deficit fell so substantially was that it had skyrocketed to a record high under Trump in 2020 because of bipartisan emergency pandemic relief spending, then fell as expected as the spending expired as planned. Independent analysts say Biden’s own actions, including his laws and executive orders, have had the overall effect of adding to current and projected future deficits, not reducing those deficits.

Dan White, senior director of economic research at Moody’s Analytics – an economics firm whose assessments Biden has repeatedly cited during his presidency – told CNN’s Matt Egan in October: “On net, the policies of the administration have increased the deficit, not reduced it.” The Committee for a Responsible Federal Budget, an advocacy group, wrote in September that Biden’s actions will add more than $4.8 trillion to deficits from 2021 through 2031, or $2.5 trillion if you don’t count the American Rescue Plan pandemic relief bill of 2021.

National Economic Council director Brian Deese wrote on the White House website last week that the American Rescue Plan pandemic relief bill “facilitated a strong economic recovery and enabled the responsible wind-down of emergency spending programs,” thereby reducing the deficit; David Kelly, chief global strategist at J.P. Morgan Funds, told Egan in October that the Biden administration does deserve credit for the recovery that has pushed the deficit downward. And Deese correctly noted that Biden’s signature legislation, last year’s Inflation Reduction Act, is expected to bring down deficits by more than $200 billion over the next decade.

Still, the deficit-reducing impact of that one bill is expected to be swamped by the deficit-increasing impact of various additional bills and policies Biden has approved.

Biden said, “Wages are up, and they’re growing faster than inflation. Over the past six months, inflation has gone down every month and, God willing, will continue to do that.”

Facts First: Biden’s claim that wages are up and growing faster than inflation is true if you start the calculation seven months ago; “real” wages, which take inflation into account, started rising in mid-2022 as inflation slowed. (Biden is right that inflation has declined, on an annual basis, every month for the last six months.) However, real wages are lower today than they were both a full year ago and at the beginning of Biden’s presidency in January 2021. That’s because inflation was so high in 2021 and the beginning of 2022.

There are various ways to measure real wages. Real average hourly earnings declined 1.7% between December 2021 and December 2022, while real average weekly earnings (which factors in the number of hours people worked) declined 3.1% over that period.

Biden said he was disappointed that the first bill passed by the new Republican majority in the House of Representatives “added $114 billion to the deficit.”

Facts First: Biden is correct about how the bill would affect the deficit if it became law. He accurately cited an estimate from the government’s nonpartisan Congressional Budget Office.

The bill would eliminate more than $71 billion of the $80 billion in additional funding for the Internal Revenue Service (IRS) that Biden signed into law in the Inflation Reduction Act. The Congressional Budget Office found that taking away this funding – some of which the Biden administration said will go toward increased audits of high-income individuals and large corporations – would result in a loss of nearly $186 billion in government revenue between 2023 and 2032, for a net increase to the deficit of about $114 billion.

The Republican bill has no chance of becoming law under Biden, who has vowed to veto it in the highly unlikely event it got through the Democratic-controlled Senate.

Biden said that “MAGA Republicans” in the House “want to impose a 30 percent national sales tax on everything from food, clothing, school supplies, housing, cars – a whole deal.” He said they want to do that because “they want to eliminate the income tax system.”

Facts First: This is a fair description of the Republicans’ “FairTax” bill. The bill would eliminate federal income taxes, plus the payroll tax, capital gains tax and estate tax, and replace it with a national sales tax. The bill describes a rate of 23% on the “gross payments” on a product or service, but when the tax rate is described in the way consumers are used to sales taxes being described, it’s actually right around 30%, as a pro-FairTax website acknowledges.

It is not clear how much support the bill currently has among the House Republican caucus. Notably, House Speaker Kevin McCarthy told CNN’s Manu Raju this week that he opposes the bill – though, while seeking right-wing votes for his bid for speaker in early January, he promised its supporters that it would be considered in committee. Biden wryly said in his speech, “The Republican speaker says he’s not so sure he’s for it.”

Biden claimed the unemployment rate “is the lowest it’s been in 50 years.”

Facts First: This is true. The unemployment rate was just below 3.5% in December, the lowest figure since 1969.

The headline monthly rate, which is rounded to a single decimal place, was reported as 3.5% in December and also reported as 3.5% in three months of President Donald Trump’s tenure, in late 2019 and in early 2020. But if you look at more precise figures, December was indeed the lowest since 1969 – 3.47% – just below the figures for February 2020, January 2020 and September 2019.

Biden said that the unemployment rates for Black and Hispanic Americans are “near record lows” and that the unemployment rate for people with disabilities is “the lowest ever recorded” and the “lowest ever in history.”

Facts First: Biden’s claims are accurate, though it’s worth noting that the unemployment rate for people with disabilities has only been released by the government since 2008.

The Black or African American unemployment rate was 5.7% in December, not far from the record low of 5.3% that was set in August 2019. (This data series goes back to 1972.) The rate was 9.2% in January 2021, the month Biden became president. The Hispanic or Latino unemployment rate was 4.1% in December, just above the record low of 4.0% that was set in September 2019. (This data series goes back to 1973.) The rate was 8.5% in January 2021.

The unemployment rate for people with disabilities was 5.0% in December, the lowest since the beginning of the data series in 2008. The rate was 12.0% in January 2021.

Biden said that fewer families are facing foreclosure than before the pandemic.

Facts First: Biden is correct. According to a report published by the Federal Reserve Bank of New York, about 28,500 people had new foreclosure notations on their credit reports in the third quarter of 2022, the most recent quarter for which data is available; that was down from about 71,420 people with new foreclosure notations in the fourth quarter of 2019 and 74,860 people in the first quarter of 2020.

Foreclosures plummeted in the second quarter of 2020 because of government moratoriums put in place because of the Covid-19 pandemic. Foreclosures spiked in 2022, relative to 2020-2021 levels, after the expiry of these moratoriums, but they remained very low by historical standards.

Biden said, “More American families have health insurance today than any time in American history.”

Facts First: Biden’s claim is accurate. An analysis provided to CNN by the Kaiser Family Foundation, which studies US health care, found that about 295 million US residents had health insurance in 2021, the highest on record – and Jennifer Tolbert, the foundation’s director for state health reform, told CNN this week that “I expect the number of people with insurance continued to increase in 2022.”

Tolbert noted that the number of insured residents generally rises over time because of population growth, but she added that “it is not a given” that there will be an increase in the number of insured residents every year – the number declined slightly under Trump from 2018 to 2019, for example – and that “policy changes as well as economic factors also affect these numbers.”

As CNN’s Tami Luhby has reported, sign-ups on the federal insurance exchange created by the Affordable Care Act, also known as Obamacare, have spiked nearly 50% under Biden. Biden’s 2021 American Rescue Plan pandemic relief law and then the 2022 Inflation Reduction Act temporarily boosted federal premium subsidies for exchange enrollees, and the Biden administration has also taken various other steps to get people to sign up on the exchanges. In addition, enrollment in Medicaid health insurance has increased significantly during the Covid-19 pandemic, in part because of a bipartisan 2020 law that temporarily prevented people from being disenrolled from the program.

The percentage of residents without health insurance fell to an all-time low of 8.0% in the first quarter of 2022, according to an analysis published last summer by the federal government’s Department of Health and Human Services. That meant there were 26.4 million people without health insurance, down from 48.3 million in 2010, the year Obamacare was signed into law.

Biden said, “And over the last two years, more than 10 million people have applied to start a small business. That’s more than any two years in all of recorded American history.”

Facts First: This is true. There were about 5.4 million business applications in 2021, the highest since 2005 (the first year for which the federal government released this data for a full year), and about 5.1 million business applications in 2022. Not every application turns into a real business, but the number of “high-propensity” business applications – those deemed to have a high likelihood of turning into a business with a payroll – also hit a record in 2021 and saw its second-highest total in 2022.

Trump’s last full year in office, 2020, also set a then-record for total and high-propensity applications. There are various reasons for the pandemic-era boom in entrepreneurship, which began after millions of Americans lost their jobs in early 2020. Among them: some newly unemployed workers seized the moment to start their own enterprises; Americans had extra money from stimulus bills signed by Trump and Biden; interest rates were particularly low until a series of rate hikes that began in the spring of 2022.

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January 28, 2023
Fact check: McCarthy’s false, misleading and evidence-free claims since becoming House speaker | CNN Politics

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Washington
CNN
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Since winning a difficult battle to become speaker of the House of Representatives, Republican Kevin McCarthy has made public claims that are misleading, lacking any evidence or plain wrong.

Here is a fact check of recent McCarthy comments about the debt ceiling, funding for the Internal Revenue Service, the FBI search of former President Donald Trump’s resort and residence in Florida, President Joe Biden’s stance on stoves and Democratic Rep. Adam Schiff.

McCarthy’s office did not respond to a request for comment.

McCarthy has cited the example of Rep. Nancy Pelosi, his Democratic predecessor as House speaker, while defending conservative Republicans’ insistence that any agreement to lift the federal debt ceiling must be paired with cuts to government spending – a trade-off McCarthy agreed to when he was trying to persuade conservatives to support his bid for speaker. Specifically, McCarthy has claimed that even Pelosi agreed to a spending cap as part of a deal to lift the debt ceiling under Trump.

“When Nancy Pelosi was speaker, that’s what transpired. To get a debt ceiling, they also got a cap on spending for the next two years,” McCarthy told reporters at a press conference on January 12. When Fox host Maria Bartiromo told McCarthy in a January 15 interview that “they” would not agree to a spending cap, he responded, “Well Maria, I don’t believe that’s the case, because when Donald Trump was president and when Nancy Pelosi was speaker, that’s exactly what happened for them to get a debt ceiling lifted last time. They agreed to a spending cap.”

Facts First: McCarthy’s claims are highly misleading. The deal Pelosi agreed to with the Trump administration in 2019 actually loosened spending caps that were already in place at the time because of a 2011 law. In other words, while congressional conservatives today want to use a debt ceiling deal to reduce government spending, the Pelosi deal allowed for billions in additional government spending above the pre-existing maximum. The two situations are nothing alike.

Shai Akabas, director of economic policy at the Bipartisan Policy Center think tank, said when asked about the accuracy of McCarthy’s claims: “I’m going to steer clear of characterizing the Speaker’s remarks, but as an objective matter, the deal reached in 2019 increased the spending caps set by the Budget Control Act of 2011.”

The 2019 deal, which was criticized by many congressional conservatives, also ensured that Budget Control Act’s caps on discretionary spending – which were created as a result of a 2011 debt ceiling deal between a Democratic president and a Republican speaker of the House – would not be extended past 2021. Spending caps vanishing is the opposite of McCarthy’s suggestion that the deal “got” a spending cap.

Pelosi spokesperson Aaron Bennett said in an email that McCarthy is “trying to rewrite history.” Bennett said, “As Republicans in Congress and in the Administration noted at the time, in 2019, Speaker Pelosi and Democrats were eager to reach bipartisan agreement to raise the debt limit and, as part of the agreement, avert damaging funding cuts for defense and domestic programs.”

In various statements since becoming speaker, McCarthy has boasted of how the first bill passed by the new Republican majority in the House “repealed 87,000 IRS agents” or “repealed funding for 87,000 new IRS agents.”

Facts First: McCarthy’s claims are false. House Republicans did pass a bill that seeks to eliminate about $71 billion of the approximately $80 billion in additional Internal Revenue Service funding that Biden signed into law in last year’s Inflation Reduction Act – but that funding is not going to hire 87,000 “agents.” In addition, Biden has already made clear he would veto this new Republican bill even if the bill somehow made it through the Democratic-controlled Senate, so no funding has actually been “repealed.” It would be accurate for McCarthy to say House Republicans “voted to repeal” the funding, but the boast that they actually “repealed” something is inaccurate.

CNN’s Katie Lobosco explains in detail here why the claim about “87,000 new IRS agents” is an exaggeration. The claim, which has become a common Republican talking point, has been fact-checked by numerous media outlets over more than five months, including The Washington Post in response to McCarthy remarks earlier this January.

Here’s a summary. While Inflation Reduction Act funding may well allow for the hiring of tens of thousands of IRS employees, far from all of these employees will be IRS agents conducting audits and investigations. Many other employees will be hired for the non-agent roles, from customer service to information technology, that make up the vast majority of the IRS workforce. And a significant number of the hires are expected to fill the vacant posts left by retirements and other attrition, not take newly created positions.

The IRS has not yet released a detailed breakdown of how it plans to use the funding provided by the Inflation Reduction Act, so it’s impossible to say precisely how many new “agents” will be hired. But it is already clear that the total won’t approach 87,000.

In his interview with Fox’s Bartiromo on January 15, McCarthy criticized federal law enforcement for executing a search warrant at Trump’s Mar-a-Lago resort and residence in Florida, which the FBI says resulted in the recovery of more than 100 government documents marked as classified and hundreds of other government documents. Echoing a claim Trump has made, McCarthy said of the documents: “They knew it was there. They could have come and taken it any time they wanted.”

Facts First: It is clearly not true that the authorities could somehow have come to Mar-a-Lago at any time, without conducting a formal search, and taken all of the presidential records they were seeking from Trump. By the time of the search, the federal government – first the National Archives and Records Administration and then the Justice Department – had been asking Trump for more than a year to return government records. Even when the Justice Department went beyond asking in May and served Trump’s team with a subpoena for the return of all documents with classification markings, Trump’s team returned only some of these documents. In June, a Trump lawyer signed a document certifying on behalf of Trump’s office that all of the documents had been returned, though that was not true.

When FBI agents and a Justice Department attorney visited Mar-a-Lago without a search warrant on that June day to accept documents the Trump team was returning in response to the subpoena, a Trump lawyer “explicitly prohibited government personnel from opening or looking inside any of the boxes that remained in the storage room,” the department said in a court filing after the August search. In other words, according to the department, the government was not even allowed to poke around to see if there were government records still at Mar-a-Lago, let alone take those records.

In the August court filing, the department pointedly called into question the extent to which the Trump team had cooperated: “That the FBI, in a matter of hours, recovered twice as many documents with classification markings as the ‘diligent search’ that the former President’s counsel and other representatives had weeks to perform calls into serious question the representations made in the June 3 certification and casts doubt on the extent of cooperation in this matter.”

McCarthy wrote in a New York Post article published on January 12: “While President Joe Biden wants to control the kind of stove Americans can cook on, House Republicans are certainly cooking with gas.” He repeated the claim on Twitter the next morning.

Facts First: There is no evidence for this claim; Biden has not expressed a desire to control the kind of stove Americans can cook on. McCarthy was baselessly attributing the comments of a single Biden appointee to Biden himself.

It is true that a Biden appointee on the United States Consumer Product Safety Commission, Richard Trumka Jr., told Bloomberg earlier this month that gas stoves pose a “hidden hazard,” as they emit air pollutants, and said, “Any option is on the table. Products that can’t be made safe can be banned.” But the day before McCarthy’s article was published by the New York Post, White House press secretary Karine Jean-Pierre said at a press briefing: “The president does not support banning gas stoves. And the Consumer Product Safety Commission, which is independent, is not banning gas stoves.”

To date, even the commission itself has not shown support for a ban on gas stoves or for any particular new regulations on gas stoves. Commission Chairman Alexander Hoehn-Saric said in a statement the day before McCarthy’s article was published: “I am not looking to ban gas stoves and the CPSC has no proceeding to do so.” Rather, he said, the commission is researching gas emissions in stoves, “exploring new ways to address health risks,” and strengthening voluntary safety standards – and will this spring ask the public “to provide us with information about gas stove emissions and potential solutions for reducing any associated risks.”

Trumka told CNN’s Matt Egan that while every option remains on the table, any ban would apply only to new gas stoves, not the gas stoves already in people’s homes. And he noted that the Inflation Reduction Act makes people eligible for a rebate of up to $840 to voluntarily switch to an electric stove.

Defending his plan to bar Democratic Rep. Adam Schiff from sitting on the House Intelligence Committee, a committee Schiff chaired during the Democratic majority from early 2019 to the beginning of this year, McCarthy criticized Schiff on January 12 over his handling of the first impeachment of Trump. Among other things, McCarthy said: “Adam Schiff openly lied to the American public. He told you he had proof. He told you he didn’t know the whistleblower.”

Facts First: There is no evidence for McCarthy’s insinuation that Schiff lied when he said he didn’t know the anonymous whistleblower who came forward in 2019 with allegations – which were subsequently corroborated – about how Trump had attempted to use the power of his office to pressure Ukrainian President Volodymyr Zelensky to investigate Biden, his looming rival in the 2020 election.

Schiff said last week in a statement to CNN: “Kevin McCarthy continues to falsely assert I know the Ukraine whistleblower. Let me be clear – I have never met the whistleblower and the only thing I know about their identity is what I have read in press. McCarthy’s real objection is we proved the whistleblower’s claim to be true and impeached Donald Trump for withholding millions from Ukraine to extort its help with his campaign.” Schiff also made this comment to The Washington Post, which fact-checked the McCarthy claim last week, and has consistently said the same since late 2019.

The New York Times reported in 2019 that, according to an unnamed official, a House Intelligence Committee aide who had been contacted by the whistleblower before the whistleblower filed a formal complaint did not inform Schiff of the person’s identity when conveying to Schiff “some” information about what the person had said. And Reuters reported in 2019 that a person familiar with the whistleblower’s contacts said the whistleblower hadn’t met or spoken with Schiff.

McCarthy could have fairly repeated Republican criticism of a claim Schiff made in a 2019 television appearance about the committee’s communication with the whistleblower; Schiff said at the time “we have not spoken directly with the whistleblower” even though it soon emerged that the whistleblower had contacted the committee aide before filing the complaint. (A committee spokesperson said at the time that Schiff had been merely trying to say that the committee hadn’t heard actual testimony from the whistleblower, but that Schiff acknowledged his words “should have been more carefully phrased to make that distinction clear.”)

Regardless, McCarthy didn’t argue here that Schiff had been misleading about the committee’s dealings with the whistleblower; he strongly suggested that Schiff lied in saying he didn’t know the whistleblower. That’s baseless. There has never been any indication that Schiff had a relationship with the whistleblower when he said he didn’t, nor that Schiff knew the whistleblower’s identity when he said he didn’t.

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January 24, 2023
House GOP keeps up attacks on IRS with bill to abolish the agency | CNN Politics

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The Republican-controlled House has made the Internal Revenue Service a political target after Democrats bolstered the agency with new funding last year.

Within the first week of the new Congress, a dozen GOP lawmakers introduced a bill that would abolish the IRS altogether and replace the entire federal tax code with a national sales tax.

Separately, the House voted to rescind nearly $80 billion in funding for the agency that Democrats approved last year – with many top Republicans repeating the misleading claim that the money will be used to hire 87,000 auditors.

“Instead of adding 87,000 new agents to weaponize the IRS against small business owners and middle America, this bill will eliminate the need for the department entirely by simplifying the tax code with provisions that work for the American people and encourage growth and innovation,” said Rep. Earl “Buddy” Carter, a Republican from Georgia who introduced the Fair Tax Act earlier this month.

It’s highly unlikely that either bill will become law, given that Democrats still control the Senate. But the measures highlight how America’s two major political parties have very different strategies when it comes to addressing the embattled tax collection agency – which has seen its budget shrink by more than 15% over the past decade and has struggled to not only process returns on time but also answer taxpayers’ questions. Just 13% of phone calls were answered last year.

Democrats have taken a different approach, making funding the IRS a priority. The Inflation Reduction Act, which passed along party lines last year, approved $80 billion for the IRS over 10 years. By using the money to crack down on tax cheats, it’s estimated that the agency could boost federal revenue by more than $124 billion over that time period.

The Republicans’ Fair Tax Act is not a new idea. A version was first introduced in Congress in 1999. It’s never had enough support to become law, but it puts forth an appealing message to those Americans who love to hate the federal tax agency.

It would get rid of the complicated federal tax system, doing away with the annual task of filing tax returns. Instead, the bill would replace federal taxes on individual and corporate income with a national 23% sales tax in 2025, allowing for adjustments to the rate in later years. Americans would pay Uncle Sam whenever they bought a new good or service for personal consumption.

The bill calls for abolishing the IRS and directing states to collect the new federal tax.

While every consumer would pay the same tax at the cash register, the bill provides for a monthly tax rebate payment, based on the poverty rate and family size. It’s meant to help offset the tax levy on low-income Americans who tend to spend a higher share of their paycheck on goods and services.

A national sales tax appears very simple: one rate all Americans pay on new goods and services they buy.

But some policy experts say the Fair Tax Act is more complicated than it looks.

“Moving away from taxing income and toward taxing consumption is a step in the right direction for a pro-growth and simpler tax code,” said Garrett Watson, a senior policy analyst at the Tax Foundation, an independent tax policy nonprofit.

But there could still be complications. First, the tax rate would likely have to be higher than 23% in order for the federal government to pull in the same amount of tax revenue that it does now. One estimate found that a tax rate of about 30% would more likely be able to generate the same amount of revenue – or 44%, if measured the way state sales taxes are typically presented.

Second, a nationwide sales tax could leave low- and middle-income people worse off. The current tax system is progressive, meaning it takes a larger percentage of income from high-earners than low-income groups. Even with the monthly tax rebate, a national sales tax would still be less progressive.

A 2011 independent analysis of a similar national sales tax found that, on average, most income groups would pay more tax than they did under the federal tax system at the time – except the top 5% of earners who would see a tax cut.

Additionally, it’s hard to imagine that lawmakers would pass a bill that does not exclude some things from the sales tax, like health care costs, for example.

“The basic income tax is simple too,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.

It’s the deductions, credits and exclusions – like for retirement savings and charitable giving – that make it complicated.

Plus, Americans would likely have to file some paperwork to some tax collection entity in order to receive the rebate, Gleckman said. The administration cost may be less than it is now, but it wouldn’t be zero.

Tax filing season opens Monday and National Taxpayer Advocate Erin Collins expects IRS services for taxpayers to improve this year – in part due to the funding increase provided by Congress.

Since the Inflation Reduction Act was passed in August, the IRS has hired 5,000 new customer service agents. The agency has also worked to improve its technology so that taxpayers can ask questions via an automated service online, said Treasury Deputy Secretary Wally Adeyemo on a call with reporters last week.

The IRS started the year with about 400,000 unprocessed paper individual returns and about 1 million unprocessed business returns. But it’s in much better shape than the prior year, when it had a backlog of 4.7 million unprocessed individual returns and 3.2 million unprocessed business returns, according to the taxpayer advocate’s annual report to Congress.

Taxpayer service, like answering the phones and processing returns in a timely manner, has suffered as the IRS’ budget has shrunk.

The Covid-19 pandemic brought even more challenges for the IRS. It was tasked with administering several rounds of stimulus payments to millions of Americans with a lot of its staff working from home. This caused long delays for many taxpayers who filed a paper return. The IRS is starting to implement a scanning system so that returns filed by paper can quickly be made digital. Previously, paper returns had to be entered manually into the agency’s computer system.

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January 23, 2023
5 reasons why the Republican claim about 87,000 new IRS agents is an exaggeration | CNN Politics

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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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January 11, 2023
IRS delays rule change for people who get paid on Venmo, Etsy, Airbnb and other apps | CNN Business

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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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December 28, 2022
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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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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December 8, 2022
IRS inspector general says intensive audits of former FBI Director Comey and deputy were random | CNN Politics

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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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December 2, 2022
Who is Jack Smith, the special counsel named in the Trump investigations | CNN Politics

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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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November 19, 2022