A new study found that black <a href="http://dailywire.com/topic/taxes" target="_blank" rel="noopener">tax</a> filers are several times more likely to be audited by the <a href="https://www.dailywire.com/topic/internal-revenue-service-irs" target="_blank" rel="noopener">IRS</a> than other tax filers, a revelation that comes as the agency prepares to double headcount and receive a deluge of funds to increase audit activity.
Stanford University law professor Daniel Ho partnered with other researchers, as well as economists in the Treasury Department’s Office of Tax Analysis, to examine more than 148 million tax returns. Though filers do not identify their race on their returns, the team was able to predict the probability that a given filer identified as black based on geography and their first and last names. The <a href="https://siepr.stanford.edu/publications/measuring-and-mitigating-racial-disparities-tax-audits" target="_blank" rel="noopener">research</a> concluded that black filers are between 2.9 and 4.7 times more likely to experience audits than non-black counterparts.
“The IRS should drill down to understand and modify its existing audit selection methods to mitigate the disparity we’ve documented,” Ho said in a <a href="https://law.stanford.edu/press/irs-disproportionately-audits-black-taxpayers/" target="_blank" rel="noopener">news release</a>. “And we’ve shown they can do that without necessarily sacrificing tax revenue.”
Audits from the agency disproportionately impact taxpayers who collect the Earned Income Tax Credit, which offers tax breaks to low and moderate income households. Black filers accounted for 21% of EITC claims but were impacted by 43% of the EITC audits.
Some 94% of audits among EITC claimants occurred via correspondence audit, which the IRS executes by mail, rather than a field audit, which requires the IRS to use more extensive resources. The agency feeds a “completely secret” algorithm with information from the Dependent Database to automatically generate audit letters to EITC claimants.
“Compared with labor-intensive field audits, correspondence audits of EITC claimants are easy to trigger, cost very little, and require minimal effort by IRS personnel,” the news release continued. “The burden of correspondence audits on EITC claimants is more likely to fall on lower income individuals whose tax returns are less complex and less likely to lead to litigation.”
Considering the magnitude of underreported income rather than the likelihood of underreported income would have resulted in more non-black filers receiving audits than black filers, according to the researchers. Evelyn Smith, a doctoral candidate at the University of Michigan who aided with the research, claimed that “the choice to focus on whether there is underreporting, as opposed to magnitude of underreporting, is connected to broader structural sources of economic inequality and racial justice.”
Whether the disparity in audit rates is ultimately attributable to purported inequities, the study comes as the IRS prepares to <a href="https://www.dailywire.com/news/irs-has-not-yet-finalized-how-middle-class-will-be-affected-by-80-billion-windfall" target="_blank" rel="noopener">expand</a> operations using $80 billion provided by President Joe Biden’s Inflation Reduction Act. The Treasury Inspector General for Tax Administration recently noted that the agency’s budget for enforcement activity will increase 69% over the next decade, while the budget for taxpayer services will increase 9%.
Treasury Secretary Janet Yellen has vowed that the resources will not be utilized to increase audit rates for American households earning less than $400,000 per year “relative to historical levels.” She <a href="https://www.dailywire.com/news/janet-yellen-vows-irs-audits-wont-rise-for-middle-income-americans-but-theres-a-catch" target="_blank" rel="noopener">failed</a> to clarify that “historical levels” of enforcement were far higher as recently as one decade ago: audit rates for Americans earning between $25,000 and $200,000 decreased 76% between 2010 and 2019, according to <a href="https://www.gao.gov/assets/gao-22-104960.pdf" target="_blank" rel="noopener">data</a> from the Government Accountability Office.

account

As IRS Expands, Study Shows The Agency Audits Black People At Least Thrice As Much As Other Racial Groups 

IRS Audits Black People At Least Thrice As Much As Other Racial Groups 

General

Internal Revenue Service (IRS)

Racial Bias

Taxes

U.S.

<a href="https://www.dailywire.com/topic/house-republicans" target="_blank" rel="noopener">Republican</a> lawmakers proposed a bill to replace the income, payroll, and estate <a href="http://dailywire.com/topic/taxes" target="_blank" rel="noopener">taxes</a> with a national sales tax while abolishing the <a href="https://www.dailywire.com/topic/internal-revenue-service-irs" target="_blank" rel="noopener">IRS</a>.
The Fair Tax Act, introduced by Rep. Buddy Carter (R-GA), is an attempt to simplify the tax code and the tax collection system. Similar legislation was first proposed in 1999 by former Rep. John Linder (R-GA); the <a href="https://buddycarter.house.gov/uploadedfiles/text_fairtax_act_118th.pdf" target="_blank" rel="noopener">current iteration</a> of the bill is also sponsored by House Freedom Caucus Chair Scott Perry (R-PA), as well as lawmakers such as Rep. Bob Good (R-VA), Rep. Jeff Duncan (R-SC), Rep. Thomas Massie (R-KY), and Rep. Kat Cammack (R-FL).
“As a former small business owner, I understand the unnecessary burden our failing income tax system has on Americans,” Duncan said in a <a href="https://buddycarter.house.gov/news/documentsingle.aspx?DocumentID=10824" target="_blank" rel="noopener">press release</a>. “The Fair Tax Act eliminates the tax code, replaces the income tax with a sales tax, and abolishes the abusive Internal Revenue Service. If enacted, this will invigorate the American taxpayer and help more Americans achieve the American Dream.”
The 23% national sales tax established by the bill would enter into effect by 2025. The federal income tax, created by the Sixteenth Amendment in 1913, currently accounts for 49% of total federal revenues, according to <a href="https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue/#:~:text=Sources%20of%20Federal%20Revenue&amp;text=Additional%20sources%20of%20tax%20revenue,taxes%20made%20up%20another%2035%25." target="_blank" rel="noopener">data</a> from the Treasury Department. Social Security and Medicare taxes constitute 35% of revenues, while corporate taxes provide 10% of revenues.
The Fair Tax Act would attempt to repeal the Sixteenth Amendment and sunset the national sales tax if the repeal is unsuccessful within a seven-year period.
The new legislation comes after President Joe Biden’s Inflation Reduction Act approved $80 billion for the IRS. Treasury Secretary Janet Yellen said that the funding will enable staff to <a href="https://www.dailywire.com/news/janet-yellen-a-strong-irs-is-critical-to-the-economic-success-of-this-country" target="_blank" rel="noopener">more easily assist</a> individuals and businesses seeking to file their taxes; a <a href="https://www.tigta.gov/sites/default/files/reports/2023-01/2023ier003fr.pdf" target="_blank" rel="noopener">report</a> from the Treasury Inspector General for Tax Administration, however, indicated that the agency has not yet <a href="https://www.dailywire.com/news/irs-has-not-yet-finalized-how-middle-class-will-be-affected-by-80-billion-windfall" target="_blank" rel="noopener">decided</a> how the funds will impact audit rates for middle-income taxpayers.
Critics of the national sales tax note the regressive nature of the policy. While the current federal income tax system is progressive, meaning that individuals tend to pay more as their income rises, sales taxes take a larger share of low-income households’ salaries since they utilize a larger portion of their wages for expenses, according to an <a href="https://www.taxpolicycenter.org/briefing-book/who-bears-burden-national-retail-sales-tax" target="_blank" rel="noopener">analysis</a> from the Tax Policy Center.
Biden <a href="https://twitter.com/POTUS/status/1617265849986949124?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1617265849986949124%7Ctwgr%5Ee5373506b4fcd5c42f3ac94d5174ba4d0ace5789%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.thenationalnews.com%2Fworld%2Fus-news%2F2023%2F01%2F23%2Fwhat-is-the-30-sales-tax-republicans-are-pushing%2F" target="_blank" rel="noopener">responded</a> to the proposal by asserting that the national sales tax would increase prices on “everything from groceries and gas to food and medicine.” His post neglected to mention that the bill would also repeal the income, payroll, and estate taxes while offering a number of refunds and rebates to families. Sen. Elizabeth Warren (D-MA) likewise failed to mention the repeal of the current tax regime when she <a href="https://twitter.com/SenWarren/status/1616449771975151616" target="_blank" rel="noopener">said</a> on social media that “it’s not fair to impose taxes on working people, while giving massive tax breaks to the ultra-rich.”
Republicans have often called for the abolition of the IRS and <a href="https://www.dailywire.com/news/new-republican-house-votes-to-repeal-the-democrats-army-of-87000-irs-agents" target="_blank" rel="noopener">voted</a> earlier this month to reverse the windfall offered to the agency by the Inflation Reduction Act. “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,” Carter said in the press release. “Armed, unelected bureaucrats should not have more power over your paycheck than you do.”

Rep. Buddy Carter

Republicans Propose Bill To Replace Income, Payroll Taxes With National Sales Tax, Abolish IRS

Republicans Propose Tax System Overhaul

Congress

Elizabeth Warren

House Republicans

Joe Biden

A report from the <a href="https://www.dailywire.com/topic/internal-revenue-service-irs" target="_blank" rel="noopener">Internal Revenue Service</a> released last week indicated that officials are devoting much of the agency’s recent funding windfall toward audits even as the degree to which the actions will impact everyday <a href="http://dailywire.com/topic/taxes" target="_blank" rel="noopener">taxpayers</a> remains uncertain.
President Joe Biden’s <a href="https://www.dailywire.com/topic/inflation-reduction-act" target="_blank" rel="noopener">Inflation Reduction Act</a> recently approved $80 billion for the tax enforcement agency. Treasury Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> previously said that the funding will enable staff members to upgrade information technology systems and <a href="https://www.dailywire.com/news/janet-yellen-a-strong-irs-is-critical-to-the-economic-success-of-this-country" target="_blank" rel="noopener">more easily assist</a> individuals and small businesses seeking to file their taxes; a <a href="https://www.tigta.gov/sites/default/files/reports/2023-01/2023ier003fr.pdf" target="_blank" rel="noopener">report</a> from the Treasury Inspector General for Tax Administration, however, indicated that the agency has not yet decided how the actions enabled by the funds will impact audit rates for middle-income taxpayers.
The document noted that the Inflation Reduction Act earmarked $45.6 billion, the majority of the new funds, toward enforcement activities that will empower agents to “determine and collect taxes owed.” Some $3.2 billion will be used to aid taxpayers with “filing and account services, pre-filing assistance, and education,” while $4.8 billion will be used for business systems modernization that “can be invested” in customer service technology.
The agency’s budget for enforcement activity will therefore increase 69% over the next decade, while the budget for taxpayer services will increase 9%. The remainder of the new funding will be used to cover the costs of rent, facilities, and telecommunications.
Yellen has previously vowed that the new resources will not be utilized to increase audit rates for American households earning less than $400,000 per year “relative to historical levels.” She <a href="https://www.dailywire.com/news/janet-yellen-vows-irs-audits-wont-rise-for-middle-income-americans-but-theres-a-catch" target="_blank" rel="noopener">failed</a> to clarify that “historical levels” of enforcement were far higher as recently as one decade ago: audit rates for Americans earning between $25,000 and $200,000, for instance, decreased 76% between 2010 and 2019, according to <a href="https://www.gao.gov/assets/gao-22-104960.pdf" target="_blank" rel="noopener">data</a> from the Government Accountability Office.
The document from the Treasury Inspector General for Tax Administration likewise reveals that IRS officials “have not yet finalized what constituted the $400,000 income level or what historic audit level will be used for its metrics,” further indicating that such matters are “still being discussed between the IRS and the Treasury Department.” The agency nevertheless believes there is not “an immediate risk” of violating the commitment because “employee attrition and hiring challenges will limit its ability to conduct more audits.”
An analysis of the document from the House Ways and Means Committee provided to The Daily Wire concluded that “when they have the numbers, they’ll perform the audits.”
“At a time when Americans are facing the double threat of sky-high inflation and an economy in recession, top bureaucrats at the IRS are huddling over how to spend their $80 billion windfall, and what technicalities they can use to justify auditing families and small businesses,” Ways and Means Committee Chairman Jason Smith (R-MO) said in a statement provided to The Daily Wire. “President Biden and Secretary Yellen need to come clean with the American public about the true extent of their enforcement plans and exactly how many middle-class families will be swept up in their audit scheme. The American people are already dealing with 40-year high inflation; the last thing they need is a visit from the IRS.”

Panel Recommends Major Tax Law Changes

IRS Has ‘Not Yet Finalized’ How Middle Class Will Be Affected By $80 Billion Windfall

IRS Will Use Most Of $80 Billion Windfall For Audits. Officials ‘Have Not Yet Finalized’ How Middle Class Will Be Affected.

Biden Administration

Economy

Inflation Reduction Act

Janet Yellen

<a href="https://www.dailywire.com/topic/house-republicans" target="_blank" rel="noopener">Republican</a> members of the House Ways and Means Committee blasted <a href="https://www.dailywire.com/topic/house-democrats" target="_blank" rel="noopener">Democratic</a> colleagues for publishing the <a href="http://dailywire.com/topic/taxes" target="_blank" rel="noopener">tax</a> returns of former President <a href="https://www.dailywire.com/topic/donald-trump" target="_blank" rel="noopener">Donald Trump</a>.
The powerful body <a href="https://www.dailywire.com/news/breaking-house-democrats-vote-to-release-years-of-trumps-tax-returns" target="_blank" rel="noopener">voted along party lines</a> last week to release the tax returns after the Supreme Court spurned the former commander-in-chief’s request to bar the IRS from giving the records to lawmakers. The <a href="https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/wysiwyg_uploaded/Attachment_E.zip" target="_blank" rel="noopener">documents</a>, redacted to withhold sensitive information such as Social Security numbers, cover the years 2015 to 2020 and include both individual and business returns.
A minority <a href="https://gop-waysandmeans.house.gov/wp-content/uploads/2022/12/2022.12.20-Executive-Session-Dissenting-Views.pdf" target="_blank" rel="noopener">report</a> released for the first time on Friday by Republican lawmakers said that the action from their colleagues establishes that lawmakers can release the tax returns of any given private citizen.
“Committee Republicans are concerned that this politically motivated action unleashes a dangerous new political weapon reaching far beyond the former President and overturns decades of privacy protections for average Americans,” the report said. “Going forward, the new precedent is that the Chairman of the House Ways and Means Committee and the Senate Finance Committee have nearly unlimited power to target and make public the tax returns of private citizens, political enemies, business or labor leaders, or even Supreme Court justices.”
Trump, who announced a third bid for the White House last month, has also contended that the release of his tax records was politically charged, remarking in a Friday statement that the move will “led to horrible things for so many people.” Presidential candidates generally choose to publicize their tax returns, even though doing so is not a requirement for seeking the office.
“Despite warnings about the long-term negative consequences, Democrats moved forward anyway,” the minority report added. “This development will simply make our politics more divisive and partisan. Even Democrats will come to regret this. And they may regret it sooner than they think.”
The report claimed that Democrats laid out stringent conditions under which Republican staffers could view the tax returns, only permitting them access to the documents in an offsite location during business hours. On the first day Republicans were permitted to conduct their reviews, Democratic officials purportedly failed to properly notify IRS agents of their arrival, leading to significant delays. Republican staffers were allowed to see the completed tax returns, which span more than 6,000 pages, during a six-hour window on December 19 before lawmakers voted on “an unprecedented disclosure of confidential tax information by Congress.”
Democrats, among other abuses, allegedly withheld scheduling information regarding a final business meeting on the tax returns despite numerous requests for details. They ultimately scheduled the meeting five days before the Christmas holiday.
Ways And Means Committee Chairman Richard Neal (D-MA), who <a href="https://waysandmeans.house.gov/media-center/press-releases/neal-floor-statement-hr-9640-presidential-tax-filing-and-audit" target="_blank" rel="noopener">introduced</a> legislation that would require annual audits for the sitting commander-in-chief, insisted that the head of state is “no ordinary taxpayer” and should therefore be subject to different standards. “They hold power and influence unlike any other American. And with great power comes even greater responsibility,” he said in a <a href="https://waysandmeans.house.gov/media-center/press-releases/ways-and-means-committee-votes-release-investigation-irs-s-mandatory" target="_blank" rel="noopener">press release</a>. “Our work has always been to ensure our tax laws are administered fairly and without preference, because at times, even the power of a president can loom too large.”

Donald Trump

‘A Dangerous New Political Weapon’: House Republicans Lay Out Dissent On Democrats Releasing Trump Taxes

House Republicans Lay Out Dissent On Democrats Releasing Trump Taxes

House Democrats

Politics

The House Ways and Means Committee released the <a href="http://dailywire.com/topic/taxes" target="_blank" rel="noopener">tax</a> returns of former President <a href="https://www.dailywire.com/topic/donald-trump" target="_blank" rel="noopener">Donald Trump</a> on Friday following a lengthy legal battle to keep the documents sealed.
The powerful committee <a href="https://www.dailywire.com/news/breaking-house-democrats-vote-to-release-years-of-trumps-tax-returns" target="_blank" rel="noopener">voted along party lines</a> last week to release the tax returns after the Supreme Court rejected the former commander-in-chief’s request to block the IRS from giving the records to lawmakers. The <a href="https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/wysiwyg_uploaded/Attachment_E.zip" target="_blank" rel="noopener">documents</a>, redacted to omit information such as Social Security numbers, cover the years 2015 to 2020 and include both individual and business filings.
The newly released records provide about 6,000 pages of information on how Trump handled his taxes; he often used various deductions and business losses to decrease the amount he owed to the federal government. A <a href="https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/JCTreport_0.pdf" target="_blank" rel="noopener">report</a> released last week by the Joint Committee on Taxation revealed how much Donald and Melania Trump, filing a series of joint returns, owed in taxes for each of the six years. The couple paid a combined $1.1 million in 2018 and 2019, as well as $750 in 2017.
“A president is no ordinary taxpayer. They hold power and influence unlike any other American. And with great power comes even greater responsibility,” Ways And Means Committee Chairman Richard Neal (D-MA) said in a <a href="https://waysandmeans.house.gov/media-center/press-releases/ways-and-means-committee-votes-release-investigation-irs-s-mandatory" target="_blank" rel="noopener">press release</a>. “Our work has always been to ensure our tax laws are administered fairly and without preference, because at times, even the power of a president can loom too large.”
Members of the House Ways and Means Committee previously argued that the IRS failed to adhere to the agency’s own guidelines by neglecting to audit Trump during his first two years in office and only started examining Trump’s 2015 income tax return on the same day in 2019 that the panel requested the information. “The former President’s individual income tax returns filed in 2018, 2019, and 2020 were not selected for examination until after he left office and only the 2016 tax return was subject to a mandatory examination,” the lawmakers’ <a href="https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2022.12.20%20Final%20Report%20House%20Ways%20and%20Means.pdf" target="_blank" rel="noopener">report</a> said.
Trump contested the release of the documents, which did not provoke charges of illegality from lawmakers, in a Friday statement. “The Democrats should have never done it, the Supreme Court should have never approved it, and it’s going to lead to horrible things for so many people,” he said. “The ‘Trump’ tax returns once again show how proudly successful I have been and how I have been able to use depreciation and various other tax deductions as an incentive for creating thousands of jobs and magnificent structures and enterprises.”
Ways and Means Committee Ranking Member Kevin Brady (R-TX) said in an emailed statement that the efforts to publicize the documents were political in nature, adding that the release of the tax returns will enable future lawmakers to target private citizens with impunity.
“Americans now have confirmation that there was never a legislative purpose behind the public release of these confidential records and that the IRS was conducting audits prior to Democrats’ request,” he remarked. “Despite these facts, Democrats have charged forward with an unprecedented decision to unleash a dangerous new political weapon that reaches far beyond the former president, overturning decades of privacy protections for average Americans that have existed since Watergate.”
Trump, who announced a third bid for the White House last month, has also contended that the release of his tax records was politically motivated. Presidential candidates generally publicize their tax returns, although the move is not required by law.
Neal <a href="https://waysandmeans.house.gov/media-center/press-releases/neal-floor-statement-hr-9640-presidential-tax-filing-and-audit" target="_blank" rel="noopener">introduced</a> the Presidential Tax Filing and Audit Transparency Act, which would require annual audits for the commander-in-chief. The House of Representatives greenlit the bill last week, with Rep. Adam Kinzinger (R-IL), Rep. Liz Cheney (R-WY), and three other Republicans joining their Democratic colleagues in favor of the legislation.

Donald Trump And America First Policy Institute Make Joint Announcement In NJ

House Committee Releases Trump Tax Returns After Years Of Legal Battles

House Lawmakers Release Trump Tax Returns

The <a href="https://www.dailywire.com/topic/internal-revenue-service-irs" target="_blank" rel="noopener">Internal Revenue Service</a> (IRS) delayed a rule that would require Americans to report transactions above $600 made through third-party payment settlement organizations.
A <a href="https://www.irs.gov/businesses/understanding-your-form-1099-k" target="_blank" rel="noopener">webpage</a> updated by the IRS earlier this month had informed taxpayers who use platforms such as PayPal and Venmo that they could expect to receive a copy of Form 1099-K for “gross payments for goods or services” that exceed $600, no matter how many transactions occurred. On Friday, however, a <a href="https://www.irs.gov/newsroom/irs-announces-delay-for-implementation-of-600-reporting-threshold-for-third-party-payment-platforms-forms-1099-k" target="_blank" rel="noopener">statement</a> posted by the agency announced that the current calendar year will instead mark a “transition period” for the platforms, which are still required to report transactions above $600 beginning in the 2023 tax year.
&#8220;The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan,&#8221; Acting IRS Commissioner Doug O&#8217;Donnell remarked. &#8220;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.&#8221;
The reporting requirements prior to the 2022 tax year only applied to taxpayers with more than 200 payments above $20,000. “You may receive a Form 1099-K from each payment settlement entity from which you received payments in settlement of reportable payment transactions,” the agency had said before the policy was delayed. “A reportable payment transaction is defined as a payment card transaction or a third-party network transaction.”
Beyond the amended reporting requirement enacted under the American Rescue Plan, a stimulus measure passed last year in response to economic fallout from the lockdown-induced recession, the Inflation Reduction Act more recently greenlit $80 billion in new funding for the IRS, which the agency will use to hire 87,000 new employees over the next decade. Officials have said that more than doubling the agency’s headcount is intended to <a href="https://www.dailywire.com/news/janet-yellen-a-strong-irs-is-critical-to-the-economic-success-of-this-country" target="_blank" rel="noopener">decrease wait times</a> for phone calls and help centers, as well as upgrade information technology used by agents.
Treasury Secretary Janet Yellen has likewise vowed that the new resources will not be utilized to increase audit rates for American households earning less than $400,000 per year “relative to historical levels.” She neglected to <a href="https://www.dailywire.com/news/janet-yellen-vows-irs-audits-wont-rise-for-middle-income-americans-but-theres-a-catch" target="_blank" rel="noopener">clarify</a> that “historical levels” of audits were far higher as recently as one decade ago: Overall audit rates fell 72% between 2010 and 2019, while those earning less than $25,000 saw audit rates fall by 61%, according to a <a href="https://www.gao.gov/assets/gao-22-104960.pdf" target="_blank" rel="noopener">report</a> from the United States Government Accountability Office.
Former IRS Commissioner Charles Rettig, who the Biden administration plans to <a href="https://www.dailywire.com/news/biden-nominates-new-irs-chief-as-the-agency-prepares-to-double-in-size" target="_blank" rel="noopener">replace</a> with consulting executive Daniel Werfel, said in a <a href="https://www.dailywire.com/news/irs-we-will-absolutely-not-target-everyday-americans-with-new-army-of-agents" target="_blank" rel="noopener">letter</a> to lawmakers that the additional resources will be used for auditing “large corporate and global high-net-worth taxpayers” while serving as an aide to middle-class taxpayers and small businesses.
“These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” he wrote. “Other resources will be invested in employees and IT systems that will allow us to better serve all taxpayers, including small businesses and middle-income taxpayers. Enhanced IT systems and taxpayer service will actually mean that honest taxpayers will be better able to comply with the tax laws, resulting in a lower likelihood of being audited and a reduced burden on them.”

A Christmas Miracle: IRS Delays $600 Reporting Rule For PayPal And Venmo

IRS Delays $600 Reporting Rule For PayPal And Venmo

President <a href="http://dailywire.com/topic/biden-administration" target="_blank" rel="noopener">Joe Biden</a> nominated consulting executive Daniel Werfel to lead the <a href="https://www.dailywire.com/topic/internal-revenue-service-irs" target="_blank" rel="noopener">Internal Revenue Service</a> months after Congress greenlit funding to double the agency’s size.
The term of IRS Commissioner Charles Rettig, an appointee of former President Donald Trump, is set to expire at the end of the week. Werfel previously served as IRS acting commissioner under President Barack Obama.
“In the wake of an Inspector General report alleging various forms of mismanagement and bias in the determination of tax-exempt status for non-profit organizations, President Obama appointed Werfel to serve as Acting Commissioner of IRS in 2013,” according to a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/11/10/president-biden-announces-key-nominee-3/" target="_blank" rel="noopener">statement</a> from the White House. “Werfel provided immediate stability to the IRS, effectively responding to numerous Congressional investigations, successfully launching the Affordable Care Act technology that IRS was responsible for, and navigated the IRS through a multi-week government shutdown.”
Werfel also oversaw the implementation of the American Recovery and Reinvestment Act, an emergency stimulus package passed in response to the 2008 recession, as controller of the Office of Management and Budget. He has spent the past nine years leading the North American public sector practice at Boston Consulting Group.
“I strongly support President Biden’s intent to nominate Daniel Werfel to serve as the next Commissioner of the IRS,” Treasury Secretary Janet Yellen said in a <a href="https://home.treasury.gov/news/press-releases/jy1095" target="_blank" rel="noopener">statement</a>. “Danny’s prior service under both Democratic and Republican administrations, his deep management experience, and his work directing significant transformation efforts, make him uniquely qualified to lead the agency at this critical juncture.”
The Biden administration’s Inflation Reduction Act recently approved $80 billion in funding for the IRS, which the agency will leverage to hire 87,000 new employees over the next decade. More than doubling the agency’s payroll is intended to <a href="https://www.dailywire.com/news/janet-yellen-a-strong-irs-is-critical-to-the-economic-success-of-this-country" target="_blank" rel="noopener">decrease wait times</a> for phone calls and in-person help centers, as well as upgrade information technology used by agents.
Yellen has vowed that the new resources will not be utilized to increase audit rates for American households earning less than $400,000 per year “relative to historical levels.” However, she <a href="https://www.dailywire.com/news/janet-yellen-vows-irs-audits-wont-rise-for-middle-income-americans-but-theres-a-catch" target="_blank" rel="noopener">failed to clarify</a> that “historical levels” of audits were far higher as recently as one decade ago. Rettig likewise <a href="https://www.dailywire.com/news/irs-we-will-absolutely-not-target-everyday-americans-with-new-army-of-agents" target="_blank" rel="noopener">said</a> in a letter to members of Congress that the resources “are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” contending that new technology and staff will induce a “lower likelihood of being audited” as taxpayers are able to more quickly process their returns.
The agency is dealing with a <a href="https://www.dailywire.com/news/the-irs-is-far-behind-self-prescribed-pace-to-clear-tax-return-backlog-republicans-want-to-know-why" target="_blank" rel="noopener">backlog</a> of individual tax returns that Rettig vowed to process by the end of the year. Republican members of the House Ways and Means Committee sent a letter to Rettig this week asking for a status update on the bottlenecks.
IRS National Taxpayer Advocate Erin Collins, who is charged with representing taxpayer interests within the agency, raised similar concerns in her most recent <a href="https://www.dailywire.com/news/tens-of-millions-of-americans-are-still-waiting-for-tax-refunds-as-irs-drowns-under-backlog" target="_blank" rel="noopener">midyear report</a>, which noted that the agency delivered refunds to paper filers within four to six weeks prior to the pandemic, while refund delays now generally surpass six months. According to Collins, the IRS processed 205,000 individual income tax returns per week during the month of May, falling short of the pace required to completely eliminate the backlog by the end of the year.

US-POLITICS-CONGRESS-IRS

Biden Nominates New IRS Chief As The Agency Prepares To Double In Size

Biden Taps Obama Administration Alum To Lead IRS

Executive

Republican members of the House Ways and Means Committee requested details from Treasury Department officials on how the <a href="https://www.dailywire.com/topic/irs" target="_blank" rel="noopener">IRS</a> is handling millions of unprocessed <a href="http://dailywire.com/topic/taxes" target="_blank" rel="noopener">tax</a> returns, according to a <a href="https://gop-waysandmeans.house.gov/wp-content/uploads/2022/11/11.03.22-IRS-Backlog-Letter-FINAL.pdf" target="_blank" rel="noopener">letter</a> first shared with The Daily Wire.
IRS Commissioner Charles Rettig <a href="https://home.treasury.gov/news/press-releases/jy0648" target="_blank" rel="noopener">vowed</a> in March to clear the backlog before the end of this year. However, the letter from Rep. Kevin Brady (R-TX) and Rep. Darin LaHood (R-IL) noted that the agency still has more than 7.9 million unprocessed returns and a total of 17.2 million returns less than two months before the deadline.
“We continue to conduct oversight on this matter and request a status update on Commissioner Rettig’s commitment to clear the backlog by the end of 2022,” the lawmakers wrote. “We are also requesting a written plan for the IRS to maintain healthy inventories and avoid large backlogs going forward.”
Another message sent earlier this year “questioned why increased unobligated funds allocated to the IRS had not been used to reduce the backlog and called for a report on significant actions that will be taken to mitigate the crisis,” according to the lawmakers. The IRS said that the agency was struggling under “the pandemic and legislative changes,” adding that officials “would share the efforts being taken to ‘reduce inventory to healthy levels’ in a verbal briefing.” The lawmakers, in turn, claim that the response was “inadequate” and “shows an unacceptable disregard” for the persistent bottlenecks.
IRS National Taxpayer Advocate Erin Collins, who is charged with representing taxpayer interests within the agency, has raised similar concerns. The official said in her most recent <a href="https://www.dailywire.com/news/tens-of-millions-of-americans-are-still-waiting-for-tax-refunds-as-irs-drowns-under-backlog" target="_blank" rel="noopener">midyear report</a> that the agency delivered refunds to paper filers within four to six weeks prior to the pandemic, while refund delays now generally surpass six months. According to Collins, the IRS processed 205,000 individual income tax returns per week during the month of May, falling short of the pace required to completely eliminate the backlog by the end of the year.
Brady and LaHood requested a status update on the backlog, an evaluation of the March plan to reduce the backlog, and a proposal to better manage inventories moving forward. “Ways and Means Republicans have sounded the alarm and urged the IRS to take significant action to get ahead of the problem,” the lawmakers concluded. “It is important for us to understand what worked and what did not.”
The backlog persists months after the Biden administration’s Inflation Reduction Act greenlit $80 billion in additional funding toward the IRS, which the agency will use to hire 87,000 new employees over the next decade. Among other objectives, more than doubling the agency’s payroll is intended to <a href="https://www.dailywire.com/news/janet-yellen-a-strong-irs-is-critical-to-the-economic-success-of-this-country" target="_blank" rel="noopener">decrease wait times</a> for phone calls and in-person help centers, as well as upgrade information technology used by agents.
Treasury Secretary Janet Yellen and other officials have promised that the new funding will not be leveraged to increase audit rates for American households earning less than $400,000 per year “relative to historical levels.” However, she <a href="https://www.dailywire.com/news/janet-yellen-vows-irs-audits-wont-rise-for-middle-income-americans-but-theres-a-catch" target="_blank" rel="noopener">failed to clarify</a> that “historical levels” of audits were far higher as recently as one decade ago.
Indeed, a <a href="https://www.cbo.gov/publication/57444" target="_blank" rel="noopener">report</a> from the Congressional Budget Office based on an earlier proposal to hire 87,000 new agents found that audit rates “would rise for all taxpayers,” even as higher-income taxpayers “face the largest increase.” Another <a href="https://gop-waysandmeans.house.gov/americans-chances-of-audit-more-than-doubles-as-newly-supercharged-irs-targets-lower-middle-income-earners/" target="_blank" rel="noopener">analysis</a> from Republican members of the House Ways and Means Committee found that the new agents would be capable of 1.2 million more individual audits per year, with nearly half impacting Americans earning less than $75,000.

U.S. Trade Rep. Tai Testifies Before House Ways And Means Committee

The IRS Is Far Behind Self-Prescribed Pace To Clear Tax Return Backlog. Republicans Want To Know Why.

IRS Still Has Millions Of Unprocessed Returns Despite Vow To Clear Backlog By End Of The Year, Republicans Say

Kevin Brady

The vast majority of American <a href="https://www.dailywire.com/topic/small-businesses" target="_blank" rel="noopener">small business</a> owners are concerned about an expanded <a href="https://www.dailywire.com/topic/internal-revenue-service-irs" target="_blank" rel="noopener">IRS</a>, according to survey results from the Job Creators Network Foundation exclusively provided to The Daily Wire.
The Inflation Reduction Act, signed into law by President Joe Biden two months ago, allocated $80 billion for officials to hire up to 87,000 new IRS employees over the next decade, thereby <a href="https://www.dailywire.com/news/bidens-inflation-reduction-act-would-allow-irs-to-hire-up-to-87000-new-employees-raise-taxes-report">more than doubling</a> the agency’s size. A poll of 500 small business owners conducted by the Job Creators Network Foundation, a nonprofit organization devoted to promoting economic freedom, discovered that roughly 70% oppose doubling the size of the agency.
&#8220;No one likes getting audited by the IRS, especially those who can&#8217;t afford to fight it,” Job Creators Network Foundation President Elaine Parker said in a statement provided to The Daily Wire. “The easiest audit for the IRS is one without a fight, where they send out a letter and squeeze more money out of those who won&#8217;t challenge them. Why else do you think the IRS audits the poor at five times the rate of everyone else?”
While correspondence audits involve the IRS sending a request for the provision of more tax information, field audits are more extensive. The former is less costly for the IRS, yet the latter tends to <a href="https://www.dailywire.com/news/how-joe-bidens-new-irs-army-will-impact-your-taxes">yield more revenue</a>, especially for higher earners. As of 2019, only 11% of correspondence audits resulted in the IRS concluding that the taxpayer had accurately covered their liability, according to <a href="https://www.irs.gov/statistics/soi-tax-stats-examination-coverage-recommended-and-average-recommended-additional-tax-after-examination-irs-data-book-table-17b-discontinued">data</a> from the agency.
“The tax code is already convoluted and intentionally difficult to navigate. For small businesses, it is even more so,” Parker continued. “Big businesses can afford high-priced accountants to navigate the complex system, but many small businesses handle their taxes themselves. If an audit comes, they&#8217;ll be woefully unprepared. The simplest move is to just pay up rather than engage in a time-consuming fight they&#8217;re unlikely to win. More IRS agents will mean more audits, more audits mean more targeting of small businesses and poor Americans.”
Officials in the Biden administration have nevertheless vowed that the expansion of the IRS would not translate to more audits for lower-class and middle-income taxpayers. Treasury Secretary Janet Yellen, for instance, promised that new funding would not be directed to increase audits for American households earning less than $400,000 per year “relative to historical levels.” However, she <a href="https://www.dailywire.com/news/janet-yellen-vows-irs-audits-wont-rise-for-middle-income-americans-but-theres-a-catch">failed to clarify</a> that “historical levels” of audits were far higher as recently as one decade ago. According to a <a href="https://www.gao.gov/assets/gao-22-104960.pdf">report</a> from the Government Accountability Office, audit rates for Americans earning between $25,000 and $200,000 fell 76% between 2010 and 2019, while those earning less than $25,000 saw audit rates fall by 61%.
“A strong IRS is critical to the economic success of this country,” she commented during a recent <a href="https://www.dailywire.com/news/janet-yellen-a-strong-irs-is-critical-to-the-economic-success-of-this-country">speech</a> in Maryland, “and I am heartened that we are finally reflecting that in our funding decisions.”
IRS Commissioner Charles Rettig likewise sought to ease lawmakers&#8217; concerns regarding heightened tax burdens. “As an extremely proud American, I’m grateful for your support of the IRS and our dedicated employees,” he said in a <a href="https://www.dailywire.com/news/irs-we-will-absolutely-not-target-everyday-americans-with-new-army-of-agents">letter</a>. “I cannot be forceful enough in emphasizing that these resources will be transformative for the agency and for American taxpayers.”

Packed boxes in closed cafe, small business lockdown due to coronavirus.

Poll: 7 In 10 Small Businesses Oppose Expanding The IRS

7 In 10 Small Businesses Oppose Expanding The IRS

Small Businesses

Five current or former employees of the <a href="https://www.dailywire.com/topic/internal-revenue-service-irs" target="_blank" rel="noopener">IRS</a> have been charged with scheming to defraud hundreds of thousands of dollars in <a href="https://www.dailywire.com/topic/covid" target="_blank" rel="noopener">COVID</a> relief.
The Department of Justice announced in a <a href="https://www.justice.gov/opa/pr/five-current-or-former-irs-employees-charged-defrauding-federal-covid-19-relief-programs" target="_blank" rel="noopener">press release</a> Tuesday that the five individuals had each been charged with separate counts of wire <a href="https://www.dailywire.com/topic/fraud" target="_blank" rel="noopener">fraud</a> after they defrauded the federal Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program, which provided economic relief to small business owners and individuals affected by the COVID pandemic. The fraudulent loans ranged from as little as $11,000 to more than $170,000.
“These individuals – acting out of pure greed – abused their positions by taking government funds meant for citizens and businesses who desperately needed it,” U.S. Attorney for the Western District of Tennessee, Kevin G. Ritz, said in a statement. “I thank our law enforcement partners for rooting out this fraud. Our office will not hesitate to pursue and charge individuals who steal from our nation’s taxpayers.”
The first suspect was employed by the IRS as a Program Evaluation and Risk Analyst in the Human Capital Office. According to the criminal indictment, the suspect filed four fraudulent EIDL applications, seeking more than $500,000 in funds; he received a total of $171,400 in funds. The suspect allegedly spent the relief money on a Mercedes-Benz and placed the rest of his funds into a personal investment account. He is charged with two counts of wire fraud and an additional two counts of money laundering.
The second suspect worked for the IRS as a contact representative in the Wage and Investment Service Centers Department. According to the indictment, she allegedly sought at least $32,500 in loans from multiple PPP and EIDL applications; she received $11,500 in funds. She spent the funds on manicures, massages, and luxury clothing. She also obtained more than $16,050 in fraudulent unemployment insurance benefits from the Tennessee Department of Labor. She is charged with three counts of wire fraud.
The third suspect worked as a Management and Program Assistant in Information Technology. According to the DOJ, she allegedly submitted EIDL applications for a fashion business, seeking more than $300,000 in loans and obtaining $28,900. She allegedly spent the loan funds on Gucci apparel and a vacation in Las Vegas. She plead guilty to one count of wire fraud Tuesday.
The fourth suspect worked as a Contact Representative in the Wage and Investment Service Centers Department. He allegedly applied for four PPP and EIDL loans, seeking more than $113,000; he received $66,666 in funds. He allegedly spent the money on a Gucci satchel and other personal items. He plead guilty to a single count of wire fraud in August.
The fifth suspect worked as a Lead Management and Program Assistant in the Human Capital Office. She allegedly applied for four PPP and EIDL loans, seeking more than $133,000 in loans; she received more than $123,000. She then allegedly spent the funds on jewelry and trips to Las Vegas. She also plead guilty to one count of wire fraud in July.
Each wire fraud count carries a maximum penalty of 20 years in prison. The first suspect could also face up to 10 years in prison for each money laundering charge.
The five IRS agents are just the latest in a cast of characters convicted of millions of dollars in COVID-related fraud in 2022 alone. So far this year, <a href="https://www.dailywire.com/news/twin-brothers-ran-1m-covid-19-scheme-bought-camaro-and-crypto-doj" target="_blank" rel="noopener">twin brothers</a> in Maryland, a pair of <a href="https://www.dailywire.com/news/two-charged-with-running-alleged-3-3-million-fraudulent-covid-scheme" target="_blank" rel="noopener">New Jersey</a> residents, hundreds of foreign nationals from <a href="https://www.dailywire.com/news/nigerian-prince-alert-feds-coronavirus-loan-program-paid-1-billion-to-people-who-applied-from-other-countries">Nigeria, Pakistan, Mexico, and India</a>, a <a href="https://www.dailywire.com/news/convicted-murderer-led-2-million-pandemic-related-unemployment-scheme-in-california-prosecutors-say" target="_blank" rel="noopener">convicted murderer</a> serving a life sentence, an <a href="https://www.dailywire.com/news/previously-deported-illegal-alien-pleads-guilty-to-covid-relief-fraud-other-charges" target="_blank" rel="noopener">illegal alien</a>, and the <a href="https://www.dailywire.com/news/power-rangers-star-austin-st-john-arrested-as-part-of-covid-fraud-scheme" target="_blank" rel="noopener">Red Power Ranger</a> have all been prosecuted for COVID fraud.

Views Of The IRS Headquarters During Tax Filing Season

Current, Former IRS Employees Took Thousands In Fraudulent COVID Relief, Spent It On Gucci, A Mercedes, And Trips To Vegas: Report

COVID

Department of Justice

Fraud

Treasury Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> lauded the <a href="http://dailywire.com/topic/biden-administration" target="_blank" rel="noopener">Biden</a> administration’s efforts to provide the Internal Revenue Service (<a href="https://www.dailywire.com/topic/internal-revenue-service-irs" target="_blank" rel="noopener">IRS</a>) with an $80 billion raise.
The Inflation Reduction Act provides funds to hire 87,000 new IRS employees over the next decade — <a href="https://www.dailywire.com/news/bidens-inflation-reduction-act-would-allow-irs-to-hire-up-to-87000-new-employees-raise-taxes-report" target="_blank" rel="noopener">more than doubling</a> the agency’s size. During a Thursday <a href="https://home.treasury.gov/news/press-releases/jy0952" target="_blank" rel="noopener">speech</a> at the New Carrollton Federal Building in Maryland, Yellen remarked that “adequately funding the IRS is core to our success.”
“It raises the revenue for us to make important investments in our economic strength,” she said. “It makes sure that all Americans are playing by the same rules. It avoids misallocation of resources in the economy at large. And it does so by deterring taxpayers from shifting their activities toward more opaque sources or engaging in tax evasion.”
Yellen repeated her promise that the new funding will not be directed to increase audits for Americans households earning less than $400,000 per year “relative to historical levels.” However, she <a href="https://www.dailywire.com/news/janet-yellen-vows-irs-audits-wont-rise-for-middle-income-americans-but-theres-a-catch" target="_blank" rel="noopener">failed to clarify</a> that “historical levels” of audits were far higher as recently as one decade ago. According to a <a href="https://www.gao.gov/assets/gao-22-104960.pdf" target="_blank" rel="noopener">report</a> from the Government Accountability Office, audit rates for Americans earning between $25,000 and $200,000 fell 76% between 2010 and 2019, while those earning less than $25,000 saw audit rates fall by 61%.
“In all, a strong IRS is critical to the economic success of this country — and I am heartened that we are finally reflecting that in our funding decisions,” Yellen added.
A <a href="https://www.cbo.gov/publication/57444" target="_blank" rel="noopener">report</a> from the Congressional Budget Office based on an earlier proposal to hire 87,000 new agents found that audit rates “would rise for all taxpayers,” even as higher-income taxpayers “face the largest increase.” According to Republican members of the House Ways and Means Committee, the new agents would be <a href="https://gop-waysandmeans.house.gov/americans-chances-of-audit-more-than-doubles-as-newly-supercharged-irs-targets-lower-middle-income-earners/" target="_blank" rel="noopener">capable</a> of carrying out 1.2 million more individual audits per year, with nearly half impacting Americans earning less than $75,000.
Noting that the average American takes 13 hours to file a tax return, Yellen said that many of the new resources will exist to decrease wait times and facilitate access to IRS services. Beyond increasing the number of staff available to answer phones, Yellen emphasized in-person help centers. “By next year, every single center will be fully staffed,” she said. “As a result, we will triple the number of Americans served at these centers.”
Yellen also discussed the need to make &#8220;sure that everyone pays their fair share” — observing that wealthy Americans were estimated to have underpaid their taxes by $160 billion in 2019. Accessing the funds would allow for higher levels of investment in government programs.
The economic agenda of President Joe Biden has indeed hinged upon the creation of new federal initiatives and a higher degree of government intervention into the economy. A <a href="https://www.dailywire.com/news/white-house-releases-massive-document-detailing-bidens-economic-achievements" target="_blank" rel="noopener">handbook</a> recently published by the White House emphasized the administration’s legislative victories and claimed that they are responsible for a purported economic recovery.
“President Biden’s agenda has contributed to the strongest and most equitable economic and labor market recovery in modern history, and catalyzed a resurgence in public investment that will help ensure a strong, innovative, clean energy future that is made in America,” the report said. “Together with generational investments in infrastructure, clean energy, and advanced manufacturing, the Biden economic agenda has coupled historic job creation with a long-term strategy to ensure that good jobs of today and tomorrow are created in America.”

President Biden Meets With CEOs And Remarks On The Economy

Janet Yellen: ‘A Strong IRS Is Critical To The Economic Success Of This Country’

Janet Yellen Celebrates $80 Billion In New IRS Funds

The Department of Treasury&#8217;s internal watchdog will audit the <a href="https://www.dailywire.com/topic/internal-revenue-service-irs" target="_blank" rel="noopener">Internal Revenue Service</a> to ensure that its own agents are paying their taxes.
The audit was initiated at the request of Sen. Joni Ernst (R-IA) following a Democrat plan for <a href="https://www.dailywire.com/news/bidens-inflation-reduction-act-would-allow-irs-to-hire-up-to-87000-new-employees-raise-taxes-report">87,000</a> new employees at the tax enforcement agency. The Treasury Inspector General for Tax Administration has previously found that hundreds of IRS employees may have failed to pay their own taxes, with some offering excuses such as they didn&#8217;t know how. Some were even re-hired for a second stint at the agency after being fired for &#8220;willful failure to properly file their Federal tax returns.&#8221;
&#8220;Ironically, hundreds of employees at the IRS itself may have willfully failed to pay their taxes. More than 300 of these were repeat offenders, yet the tax agency did little to discipline the tax offenders on its payroll,&#8221; Ernst said Wednesday. &#8220;Before Biden&#8217;s army of auditors starts harassing innocent taxpayers, let&#8217;s first make sure the tax collectors have paid their own taxes.&#8221;
Ernst wrote to Inspector General J. Russell George this summer voting that his office found in 2019 that 1,250 IRS employees had not paid their tax bills in full or on time, including hundreds of whom were willfully delinquent or repeat offenders, and that the tax collecting agency had &#8220;done little to discipline these tax cheats on its own payroll.&#8221;
With Democrats and President Biden ramming through legislation to double the size of the IRS workforce, conservatives and even the nonpartisan Congressional Budget Office expects more aggressive audits of middle class taxpayers.
&#8220;Innocent, hardworking Americans should not be subjected to unfair and costly IRS audits when the agency is ignoring tax cheats on its own payroll,&#8221; Ernst wrote.
The IG responded that at her request, it would audit the department to find out how many employees are not &#8220;fully compliant on their Federal tax obligations&#8221; and the number of current workers who were brought back after being fired or retiring following performance issues, including failure to fully pay their taxes.
The plan to dramatically expand the Internal Revenue Service was part of Democrats&#8217; Inflation Reduction Act, whose recent passage Biden celebrated Tuesday. The Biden administration said new auditors would <a href="https://www.dailywire.com/news/irs-we-will-absolutely-not-target-everyday-americans-with-new-army-of-agents">focus</a> on the wealthy and corporations, but Ernst told The Daily Wire she is skeptical.
&#8220;The chances [of that] are very slim,&#8221; Ernst said. &#8220;Eighty-seven thousand agents and Joe Biden said no one making under $400,000 would be audited, but we know that&#8217;s not true. They will go after the low-hanging fruit, and that&#8217;s hard-working Americans.&#8221;
The 2019 IG report said that IRS agents are required to be removed from their jobs for &#8220;willfully&#8221; failing to file or understating their taxes. But following a bureaucratic process filled with union protections, out of 1,250 cases in 2017, the IRS found that only 90 were &#8220;willful,&#8221; meaning the IRS agents &#8220;should have known&#8221; how to file their taxes properly.
For 15 of the offenders in 2017, it was not their first time being caught for tax misconduct, but they were not fired previously because the IRS said it wasn&#8217;t &#8220;willful.&#8221; Some employees said that they &#8220;forgot&#8221; to claim Form 1099 income, and &#8220;four employees cited an inability to properly use e-file software, such as TurboTax,&#8221; the report said.
The IRS&#8217; Labor Relations department did not seem to try very hard to get rid of bad employees, the report said. For example, it failed to include evidence of past misconduct in paperwork that would determine whether the employees would be fired or not.
In a <a href="https://www.treasury.gov/tigta/auditreports/2017reports/201710035fr.pdf" target="_blank" rel="noopener">2017</a> report, the IG found that the IRS&#8211;which cross-references databases to catch ordinary Americans underreporting their income&#8211;did not bother to integrate a database showing HR issues of past employees. As a result, more than 200 employees who were fired for past misconduct &#8212; including failing to pay their taxes or falsification of government records &#8212; were hired a second time in 2015 or early 2016. &#8220;Some of these employees held positions with access to sensitive taxpayer information,&#8221; the report said.
&#8220;Some employees repeated past violations upon being rehired,&#8221; it said.

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