Category Archives: IRS

IRS – not so “Neutral”.

And who is standing up against the IRS??
WSJ Aug. 20, 2015 7:41 p.m. ET

Nancy Pelosi famously said Congress had to pass ObamaCare so Americans could learn what was in it, but that rule applies to other regulatory monsters too. Take Fatca, the Foreign Account Tax Compliance Act, which was tucked into a 2010 jobs bill and is wreaking havoc on the finances of millions of Americans overseas. Now it faces an overdue challenge in court.

Fatca’s purpose is to combat tax evasion, but in Obama-era fashion it uses legally dubious means. Foreign banks, insurers and other financial firms must give the U.S. Internal Revenue Service details of any private or commercial account controlled by an American, or risk a 30% withholding tax on their U.S.-dollar business.

Some foreign banks and firms have spent huge sums to comply with Fatca, but others have stopped doing business with American clients. The latter is bad news for the 7.5 million Americans living overseas, most of whom are entrepreneurs, sales reps, lawyers, English teachers, retirees and the like, not billionaires on yachts trying to hide cash.

In a survey last year, the group Democrats Abroad found that 16% of American expatriates had lost bank accounts, mortgages and other basic financial services in their country of residence, while 22.5% were unable to open new savings or retirement funds. Many have lost promotions or startup opportunities because foreign companies don’t want to endure higher compliance costs and expose their books to the IRS because they have an American employee with signature authority over local accounts.

Foreign firms sometimes speak of avoiding “U.S. person pollution,” and some Americans are doing the same: A record 3,415 renounced their U.S. citizenship last year, up from 482 on average during the George W. Bush years. Many cited Fatca’s burdensome requirements and potentially ruinous penalties.

Fatca also violates Americans’ constitutional rights. That’s the claim now before a federal court in Ohio, where expatriates have sued the feds for invading their privacy and discriminating against them as non-U.S. residents.

The plaintiffs charge that by recording details of their financial holdings and transactions, rather than merely scrutinizing interest income via the standard 1099 tax form, Fatca “destroys the presumption of innocence” and without due process treats all overseas account holders as de facto criminal suspects.

Also suing is Republican Senator Rand Paul, who charges that in implementing Fatca the Obama Administration has exceeded its power and ignored Congress. His focus is the more than 70 intergovernmental agreements on Fatca-related information-sharing that the Administration has signed with other countries, none authorized by Congress.

The Justice Department says these agreements lawfully “facilitate the implementation of tax rules previously enacted by Congress.” But, as Mr. Paul’s filing notes, the agreements revise Fatca as much as they implement it, granting countries exemptions from various reporting and waiver requirements.

The Administration’s response is that the plaintiffs lack standing to sue due to insufficient injury, yet that’s hardly the case for the expatriates. Stopping tax cheats is a worthy aim, but Fatca’s guilty-until-proven-innocent approach hurts law-abiding Americans and the rule of law.


‘Lost’ IRS Emails Found

The Democrats’ midterm shellacking was in part a referendum on competence, which leads, naturally, to the all but unreported news that the IRS never “lost” emails after all. IRS Commissioner John Koskinen is pulling off the impossible task of destroying what little credibility that bureaucracy has left.

Treasury Department Inspector General Russell George recently informed Congress that his forensic investigation has turned up as many as 30,000 emails from the account of former IRS Exempt Organizations Director Lois Lerner—emails the IRS has insisted were destroyed. The emails cover the crucial period from January 2009 through June 2011 when the IRS was ramping up its targeting of conservative nonprofits.

Mr. Koskinen—hired nearly a year ago to clean up the IRS—has been at the center of that delay. In June the IRS buried in a letter to the Senate Finance Committee the bombshell news that nearly two years of Lerner emails were missing because her hard drive had crashed. This malfunction conveniently happened about 10 days after Congress alerted the IRS that it was looking into claims the agency was harassing conservative groups.

It later emerged that Mr. Koskinen had known about these missing emails in April—but hadn’t told Congress. He informed Congress only after a court case revealed the Lerner email record was incomplete.

Mr. Koskinen claimed in June that his agency had done everything humanly possible to recover the pesky documents: “We retraced the collection process for her emails. We located, processed and included email from an unrelated 2011 data collection for Ms. Lerner. We confirmed that backup tapes from 2011 no longer existed because they have been recycled, pursuant to the IRS normal policy. We searched email from other custodians for material on which Ms. Lerner appears as author or recipient.” (Our italics).

We can only imagine Mr. Koskinen’s shock in September when the Treasury IG said it had found 760 tapes that might hold Lerner emails. Or his further surprise when it took only a few weeks to identify and extract the specific Lerner documents—out of 250 million backup emails.

And we can only imagine Mr. Koskinen’s apology for his agency’s email failure—since he hasn’t given one. In response to the emails’ miraculous reappearance, the IRS explained: “The IRS welcomes TIGTA’s independent review and expert forensic analysis. Commissioner Koskinen has said for some time he would be pleased if additional Lois Lerner emails from this time frame could be found.”

This is an extraordinary statement, in that it suggests the only way an agency can be held accountable for producing subpoenaed documents is if an outsider tosses the joint. Either the IRS didn’t bother to investigate these tapes or, more alarming, it did and chose not to produce the results.

The IG is turning over the emails to the IRS, which is supposed to redact sensitive tax information before sending them to Congress. Mr. Koskinen needs to end the IRS stonewalling and turn the records over with dispatch without covering up incriminating evidence.
‘Lost’ IRS Emails Found – WSJ.


Stonewall Koskinen

I am not aware of a single Democrat who is speaking up.
Nine months have passed since President Obama installed John Koskinen as IRS Commissioner, charged with unearthing the agency’s targeting scandal and restoring its credibility. It’s about nine months past time to acknowledge that Mr. Koskinen is the problem, not the answer.

The 75-year-old former Fannie Mae FNMA +4.36% executive on Wednesday put in another superficial appearance before House investigators, spent another two hours dodging questions, jabbing at investigators, and excusing the misdeeds of the least-trusted organization in America. This from the guy brought in to clean up the mess—a man presented in confirmation as a “turnaround artist” and “reformer.”

The Koskinen fail is now becoming a central political focus, as Republicans and even some Democrats question his tenure. Mr. Obama had declared him someone who “knows how to lead in difficult times, whether that means ensuring new management or implementing new checks and balances.” Where are the sweeping changes? Where’s the accountability? When the best the IRS commissioner can promise America is that “whenever we can, we follow the law”—we’re in worse shape than nine months ago.

The only thing Mr. Koskinen has seemed remotely interested in turning around is his agency’s ugly story-line. He has yet to even accept his agency did anything wrong, spending a March hearing arguing that the IRS didn’t engage in “targeting” and claiming the Treasury inspector general agreed. This was so misleading the Washington Post gave Mr. Koskinen “three Pinocchios, ” noting the IG had testified to the exact opposite.

Under his management, the agency has ignored and strung out congressional demands for documents and witnesses. Mr. Koskinen waited months to tell Congress the IRS had “lost” the emails of Lois Lerner, the former IRS official at the center the probe, and arguably only did so because an outside lawsuit revealed that the email record was incomplete. He testified that there were no backup tapes with Lerner emails, but we have since learned there are 760 server drives that may contain copies.

The “reformer” has bristled at every question. He’s indignant that investigators might question how the Lerner emails were lost; indignant that they’d ask why her BlackBerry BB.T -2.90% was wiped after their investigation began; indignant that they’d wonder why he didn’t tell them about the lost email. We’re still waiting for him to show any indignation at the IRS employees who abused the law, and hid the fact.

The charitable explanation is that Mr. Koskinen has gone native. He’s shown signs from the start, when he put his focus not on reform but on getting his agency more money and improving “employee morale.” Mr. Koskinen is currently making the congressional rounds with a plea for the authority to offer higher pay—in excess of statutory caps—to certain IRS employees, including members of the IT department that can’t keep track of emails.

The more cynical explanation is that the president chose Mr. Koskinen as someone who could be trusted to stonewall congressional questions. That’s a fair conclusion given his lack of cooperation and the increasingly partisan language the IRS commissioner is hurling at Republicans. “There are some people who don’t want a straight story,” said Mr. Koskinen in July. “I’m not sure if people really want a special prosecutor,” he stated, because then “you wouldn’t be holding all these fun hearings every week or two.”

It’s also a fair conclusion given the “independent” commissioner’s embrace of partisan Obama policies, including the highly controversial regulation to formalize the targeting of 501(c)(4) nonprofit advocacy groups. Mr. Koskinen inherited that outrageous proposal, and the obvious course for anybody looking to restore IRS integrity would have been to immediately table it. Instead, Mr. Koskinen embraced it, defended it with administration talking points, and only decided to delay it after an avalanche of criticism.

It’s a fair conclusion, too, as evidence mounts that the entire administration is working toward a cover-up. The Justice Department initially tried to quell the targeting uproar by announcing an investigation. Then we heard that leading that probe was the Civil Rights Division’s Barbara Bosserman, an Obama donor. So Justice reassured Congress that its Public Integrity unit was also involved.

We now know the head of Public Integrity, Jack Smith, worked with Ms. Lerner in 2010 to potentially build criminal cases against 501(c)(4) nonprofits. His subordinate, Richard Pilger, head of the election crimes branch, worked with her to obtain a massive database on those groups. That file landed with the FBI, implicating it in the Lerner circle. Justice isn’t investigating; it’s stonewalling.

Which gets back to what to do about Mr. Koskinen. Republicans have largely refrained from calling for his resignation, in the belief that any replacement would be more of the same. What’s become clear is that the administration is determined to squelch the IRS probe through 2016. The public is better off understanding that, and realizing, too, that Mr. Koskinen is walking point.

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Kim Strassel: Stonewall Koskinen – WSJ.


Where’s Jim Comey?

Where is the “all concerned about Americans’ rights” press?????????
Congressional investigators keep uncovering troubling facts in the IRS political targeting scandal, which makes us wonder: Where is that independent and intrepid G-Man James Comey ?

The FBI director told the HouseJudiciary Committee on June 11 that his agency’s IRS investigation—ordered a year ago by Attorney General Eric Holder —is still “very active” and “something I get briefed on a regular basis.” We’d like to know how he defines “regular” because two days later the IRS finally disclosed that it had “lost” emails sent by former IRS tax-exempt chief Lois Lerner and six other IRS employees. Mr. Comey failed to disclose this mysterious loss of evidence in his testimony.

Some in Congress are beginning to wonder if there is any investigation at all. Ohio Rep. Jim Jordan noted in a letter to Mr. Comey last month that “one of the FBI’s first actions in its criminal investigation” should be “to identify and seize all documents relating to Ms. Lerner.” Had it done so, the FBI would have known a year ago that Ms. Lerner’s emails had gone walkabout.

We now know that the IRS told Treasury and the White House about the missing emails in April—yet the Obama Administration withheld that information from Congress and the public. Did the FBI know too?

IRS Commissioner John Koskinen has testified that he didn’t tell the FBI about the missing emails. But if that’s the case, why aren’t the G-men shouting to high heaven? If the FBI discovered a private company had withheld documents in the course of a federal investigation, the handcuffs would be flashing. The FBI’s gumshoes seem to be remarkably relaxed about getting IRS answers.

Ditto the rest of the Justice Department. Congress learned in January that Justice assigned the IRS probe to an Obama donor, Barbara Bosserman, an attorney in the Civil Rights Division. Justice has refused to reassign the case—despite her political conflict of interest—and Ms. Bosserman has so far turned up nothing.

Then there’s the House’s May 7 contempt citation against Ms. Lerner. The section of the U.S. code governing contempt is clear: The House votes and then the Speaker sends the citation to the appropriate U.S. Attorney, “whose duty it shall be to bring the matter before the grand jury for its action.” U.S. Attorney for the District of Columbia Ron Machen has possessed that citation for eight weeks, yet his spokesman told us in late June that the matter is “still under review.”

What’s to review? Under the statute, Mr. Machen—an Obama appointee—has no role in analyzing the merits of the citation. His duty is to get it to a grand jury. Administrations have in the past directed U.S. Attorneys not to proceed—as the Obama White House did in a citation against Mr. Holder, and the Bush Administration did in citations against Harriet Miers and Josh Bolten. But unless the Obama White House is now stepping up to give Ms. Lerner special immunity from prosecution—she took the Fifth rather than testify to Congress—Mr. Machen’s job is clear.

Mr. Jordan is asking Mr. Comey to explain what the FBI knew and when, and that’s the least he owes the taxpaying public. In his Judiciary testimony, Mr. Comey said Americans should trust his agency “because of what they know about the FBI.” On the public evidence so far, Mr. Comey should worry that he is damaging his reputation—and the FBI’s.

Where’s Jim Comey? – WSJ.