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IRS investigations are baaaaack!

September 12, 2013

Just like filmdom's persistent poltergeists, Congressional attacks on the Internal Revenue Service are back.


Fear BWHouse Republicans are hoping that new looks into IRS improprieties in dealing with applications for tax-exempt status will recapture public attention.

IRS email appetizers: The stage was reset by an unbylined outlook piece in the Wall Street Journal this week entitled "Lois Lerner's Own Words." House Ways and Means Chairman Rep. Dave Camp (R-Mich.) posted the column in full on the committee's website and sent out an "in case you missed it" notification of the article via email.

The newspaper looks at emails between Lerner, now on administrative leave from her IRS position as Director of Exempt Organizations, and her staff. These exchanges, says the WSJ, "raise doubts
about IRS claims that the targeting wasn't politically motivated and
that low-level employees in Cincinnati masterminded the operation."

Lerner, the former exempt organizations director in the IRS Tax-Exempt and Government Entities Division, responded to an email chain containing a monthly report with a note calling the Tea Party matter "very dangerous."

Lerner also noted the applications could be the vehicle for a court reexamination of the Supreme Court's Citizens United ruling that opened the door wide for such nonprofit groups.

In another email, Lerner speculated on Federal Election Commission (FEC) involvement sought by Democratic Senators into whether conservative groups should be treated as political committees or tax-exempt nonprofits.

"Perhaps the FEC will save the day," Lerner wrote. That response, argues the WSJ, suggests her political leanings, i.e., biased against conservative groups.

However, Lerner's reply also could be interpreted as a hope that the IRS would be off the 501(c)(4) review hook if the FEC issued a ruling that took the Tea Party and all political groups out of the tax status mix.

Ways and Means entree: Lerner's emails are the appetizer to the House Ways and Means Oversight Subcommittee entree to be served on Sept. 18.

That afternoon, the subcommittee will conduct a hearing on
the IRS Exempt Organizations Division's operations since being audited
by the Treasury Inspector General for Tax Administration (TIGTA).

Subcommittee Chairman Charles W. Boustany, Jr. (R-La.) wants to find out what, if any, changes the IRS division has made to its practices since the May TIGTA report on screening of some applications and the IRS' internal review of the situation.

TIGTA's audit specifically cited special IRS focus on Tea Party and conservative groups seeking 501(c)(4) nonprofit status. Additional investigation revealed other more liberal-oriented groups also were subject to added scrutiny.

"Four months after the IRS first admitted to targeting applicants for tax-exempt status there are still many outstanding questions about when the targeting started, who knew about it, and why it was allowed to continue," said Boustany in announcing the hearing.

"While the Committee continues to seek those answers, we have heard repeated promises of corrective action at the IRS," he said. "This hearing will provide the agency the opportunity to come before Congress and provide an update on what steps it is taking to ensure that this abuse — including interminable delays — never happens again."

Acting IRS head Daniel Werfel will be back on Capitol Hill as the hearing's only witness. I'm sure Werfel is more than ready for John Koskinen to be confirmed as the new IRS Commissioner!

The subcommittee is, however, accepting written testimony from interested parties.

The session will start at 2 p.m. Eastern next Wednesday, Sept. 18, in 1105 Longworth House Office Building. You'll also be able to watch it streaming online … as long as the transmission isn't interrupted by any scary static-filled messages during the hearing.

More inquiries underway: If you miss next week's hearings, don't worry. You get more chances to watch or read about Congressional investigations.

Boustany this week told Tax Analysts that the House Ways and Means Committee's investigation into the IRS and tax-exempt applications will extend into next year.

Hey, an early Christmas present for tax geeks and IRS haters!

Boustany told the tax publication that over the August Congressional recess, the tax-writing committee received more documents from the IRS concerning its handling of such applications, but only about half of what the committee had requested.

"We're working through those," Boustany said, as well as conducting transcribed interviews with people who were involved in the application review process."

"We're just systematically working our way up. The higher up you get, we want to make sure we've covered all the information," said Boustany. "You've got one shot at them. You want to make sure you're asking the right questions."

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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