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Tax Blawg

Tax Talk for Tax Pros

Introduction

Welcome to TaxBlawg, a resource from Chamberlain Hrdlicka for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention.

The Wall Street Journal's Tax Blog gives “tips and advice for filers,” and Paul Caron’s legendary TaxProf Blog is an excellent clearinghouse for academic and policy-oriented news. Yet, tax practitioners still lack a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.

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TIGTA’s Criticism of IRS Exempt Organization Division Hits A Tree, But Misses the Forest

Have you ever played darts?  Where the dart hits the board is very important to your score, but some rookies are happy if their dart hits the board at all.  That would be a fair characterization of The Inspector General for Tax Administration’s (“TIGTA”) January 21, 2020 report entitled “IRS Should Better Identify Noncompliant Exempt Orgs.”

In this report, TIGTA is very much like a rookie darts player, who declares himself a winner because his first dart hit the board.  In this regard, the Report is accurate about one thing:  the IRS does have problems identifying non-compliant exempt organizations that are required to reveal their existence to the Government under the Protecting Americans from Tax Hikes Act of 2015.  However, the Report glosses over the most important problems the IRS faces here. 

The IRS’ response to many of the “recommendations” pointed out that there are resource issues.  The IRS simply does not have enough people to jump through all of the hoops that TIGTA suggests it should be jumping through.  Moreover, with an aging workforce, a great deal of experience is walking out the door at the IRS every day.

The second problem with the Report, which the IRS did not discuss, but TIGTA should consider, has to do with “who” sets the IRS budget priorities?  Let me give you a hint:  It’s the same folks that gave us the investigation of steroids in baseball several years ago, who are now debating the impeachment of President Trump.  That’s right, the United States Congress, which sets the priorities for the IRS every time it passes a budget.  It’s not as if the Commissioner of Internal Revenue is in a position to override that and divert resources to the problems identified in this Report. 

The third reason, which involves “human nature,” can be summed up in a two word blast- from-the-past: Lois Lerner.  Ever since problems were discovered in the examination of applications for tax exempt status, IRS employees in the Exempt Organization Function have literally been having to “walk on eggshells.”  Whenever an applicant is denied exempt status or asked for additional information, the employee knows that if the Organization Sponsor goes to its Congressman, there will likely be a letter criticizing that employee and the IRS generally, which could have a deleterious effect on that person’s career.

One of these days, instead of just complaining about I.R.S. systems and performance, TIGTA will get to the real causes of problems faced by the I.R.S. in its efforts to carry out its duties.  Specifically, I would like to see TIGTA send a very straightforward letter to the people in Congress who oversee activities by the IRS and say this: 

“Here’s what you need to do to enable the IRS to carry out all of the functions and responsibilities it has under the Internal Revenue Code.” 

 Unfortunately, I don’t expect that to happen very soon.   

Tags: tax
  • George W. Connelly, Jr.
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    George Connelly is recognized as one of the leading federal tax litigators in the United States.  His practice focuses on IRS audit, collection and criminal matters including civil and criminal tax litigation matters, for clients ...