The Internal Revenue Service (IRS) was constantly in the news in 2013. We have picked a few of the news stories that we think will have a lasting impact. Have others? Let us know.
You may also want to see our posts:
3 Significant Tax Related Court Decisions of 2013
IRS Celebrates 100th Year
- Summary: February 2013 marked the 100th anniversary of the Sixteenth Amendment authorizing the collection of a national income tax and the creation of the Internal Revenue Service.
IRS Scandal Over Training Videos
- Summary: The IRS was the butt of many late night TV show jokes after training videos based on Gilligan’s Island, Star Trek, Mad Men among others were released. The IRS was also heavily criticized for wasting taxpayers’ dollars in producing the expensive training videos. You can see the videos and read more here:
- Significance: Public confidence in the IRS fell sharply in 2013. The agency will be under heavy scrutiny by both Congress and the public in 2014.
IRS Scandal Over the Targeting of Conservative Groups
- Summary: The Internal Revenue Service (IRS) came under intense scrutiny and condemnation when it was reported that it targeted conservative groups applying for tax-exempt status. Groups with select words such as “Tea Party” in the name had their applications delayed. The Director of the IRS Exempt Organizations division Lois Lerner initially claimed this was a small practice done by a single office. However further investigations revealed the widespread practice within the IRS and the scandal exploded. Lerner, who refused to resign, eventually retired from the IRS. The Acting Commissioner of the IRS Steven Miller was forced to resign. After investigating the scandal, the Federal Bureau of Investigation (FBI) reported it found no evidence warranting criminal charges.
- Significance: The IRS is under heightened public and Congressional scrutiny. Under the House and Senate 2014 budget, the IRS will receive $11.3 billion, which is $526 million below its 2013 budget and $1.7 billion less than President Obama requested. Additionally, the agreement requires the IRS to increase its reporting to Congress and it prohibits the use of any funds to single out groups based on their ideological beliefs or “to target citizens for exercising their First Amendment rights.”
Identity Theft Top Priority
- Summary: The IRS continued its crackdown on identity theft in 2013. “The national effort with the Justice Department and other federal, state and local agencies is part of a larger, comprehensive identity theft strategy the IRS has embarked on that is focused on preventing, detecting and resolving identity theft cases as soon as possible.”
More information is available on the IRS and Department of Justice (DOJ) websites here:
- IRS Identity Protection: http://www.irs.gov/uac/Identity-Protection
- DOJ Stolen Identity Refund Fraud: http://www.justice.gov/tax/Stolen_Identity_Refund_Fraud.htm
- Significance: Identity theft continues to be a wide scale problem. Combating it remains a priority for the IRS and DOJ.
Loving v. IRS Regarding IRS Regulation of Tax Preparers
- Summary: Several tax preparers sued the IRS over the IRS’s attempt to regulate tax preparers, requiring a competency exam, continuing education and an annual fee. The regulations did not apply to attorneys, CPAs or Enrolled Agents. The plaintiffs argued that Congress never gave the IRS authority to regulate tax preparers. In January 2013, the U.S. District Court for the District of Columbia issued an opinion agreeing with the tax preparers. The case is currently on appeal in the D.C. Circuit Court of Appeals
- Significance: Tax preparers have been spared the burden and expense of being regulated by the IRS.
John Koskinen Confirmed as New IRS Commissioner
- Summary: In December 2013, the Senate confirmed the nomination of John Koskinen as the new Commissioner of the IRS. The role had been vacant since Douglas Shulman stepped down in November 2012. The Acting Commissioner, Steven Miller was forced to resign after the IRS scandal regarding targeting political organizations.
- Significance: Koskinen is recognized as a corporate restructuring expert. He previously served as the Non-Executive Chair of Freddie Mac. The hope is that Koskinen will be able to restore confidence in the IRS as he did with Freddie Mac.