The IRS vs. the KKK

By Sam Brunson

My family’s summer vacation has already given me two posts (here and here), and it still promises a couple more, including this one.

As we drove across Alabama, we stopped by the Birmingham Civil Rights Institute. The BCRI is, in large part, a museum of the civil rights movement; it is not only interesting and informative, but it is deeply powerful and affecting to see how white Americans (mis)treated African Americans, what motivated civil rights activists, and what they faced in their activism.

I didn’t go in looking for taxes, but the Institute handed them to me anyway: Continue reading “The IRS vs. the KKK”

Satan, Tea Parties, and the IRS

By Sam Brunson

Did you hear that the IRS granted a Satanic cult tax-exempt status in ten days?!? Meanwhile, Tea Party groups’ exemption applications languished for months or even years?!?

I know, it sounds pure conspiracy theory: the IRS loves Satan and hates conservatives. But it’s true! Or, at least, kind of! But it needs to be contextualized, because comparing the exemption application of Reason Alliance, Ltd. (the putative Satanic cult) and Tea Party groups is inapposite.[fn1] Continue reading “Satan, Tea Parties, and the IRS”

Death, Taxes, and a Beach Read

51bm1qlqlzl-_sy344_bo1204203200_By: Leandra Lederman

Back in December 2011, I received a targeted mailing. It was the postcard below, which I received at the office. Tfullsizerender-1hus far, I haven’t found a Maurer colleague or tax friend who received this mailing. Some marketer apparently did his or her homework and identified me as someone with an interest in both tax and chick lit! I don’t get to read novels very often anymore, but this looked like exactly the kind of book I would enjoy. I even acted on the sticker on the reverse of the postcard, which said “A book makes a great holiday gift!” “Death, Taxes, and a French Manicure” was a great start to the Christmas list request I had recently received.

I received the book for Christmas and got hooked on the series. I’ve gotten through Book 10 so far. They’re a lot of fun. It never occurred to me to blog about them, though, until I read the first page of “Death, Taxes, and Cheap Sunglasses” while on a plane, and saw a link with tax issues I frequently write about. The opening paragraph reads:

“I slid my gun into my purse, grabbed my briefcase, and headed out to my car. Yep, tax season was in full swing once again, honest people scrambling to round up their receipts, hoping for a refund or at least to break even. As a taxpayer myself, I felt for them. But as far as tax cheats were concerned, I had no sympathy. The most recent annual report indicated that American individuals and corporations had underpaid their taxes by $450 billion. Not exactly chump change. That’s where I came in.”

I had just presented my latest tax compliance article, “Does Enforcement Crowd Out Voluntary Tax Compliance?” and here were tax gap figures showing up in a novel! “Death, Taxes, and Cheap Sunglasses” was published in 2015, when the annual federal tax gap was in fact estimated at $450 billion. (The updated tax gap figures, released in April 2016, and which I blogged about previously, are available here.)  Continue reading “Death, Taxes, and a Beach Read”

2017 Mini-Symposium on “The Future of Tax Administration and Enforcement”

By: Leandra Lederman

On January 7, 2017, I had the pleasure of moderating a Discussion Group I organized for the Association of American Law Schools (AALS) annual meeting. The topic of the discussion was “The Future of Tax Administration and Enforcement.” The topic was prompted by the funding crisis in which the IRS finds itself and the challenges that poses for tax administration, which I wrote about in two articles published last year, “The IRS, Politics, and Income Inequality,” 150 Tax Notes 1329 (Mar. 14, 2016) and “IRS Reform: Politics As Usual?,” 7 Columbia Tax J. 36 (2016) (the latter of which was part of a symposium Kristin Hickman organized on tax administration).

The AALS Discussion Group included experts on tax law, administrative law, and cybersecurity. The discussion spanned topics that included IRS resource and task priority issues, administrative law aspects of tax administration, and cross-border tax administration concerns. In the coming weeks, Surly Subgroup will be hosting a mini-symposium featuring posts by members of the Discussion Group. The first substantive post will be this Friday, January 20, and is by Christopher Walker from The Ohio State University, Michael E. Moritz College of Law, who is a member of the group but was unable to attend the discussion itself due to a flight cancellation. The panel on January 7 was as follows:

Over the next few weeks, watch for more Mini-Symposium posts! They will be categorized under “2017 Mini-Symposium on Tax Enforcement and Administration.”

Can His Fans #SaveNelly?

By Sam Brunson

Photo by reeb0k2008. CC BY 2.0
Photo by reeb0k2008. CC BY 2.0

I listened to Nelly’s “Hot in Herre” last night. And I’m not alone—apparently, over the last couple days, Nelly’s Spotify streams have tripled as compared with the week before.

Why? Taxes, of course.

Apparently, Nelly has joined the storied ranks of popular entertainers who don’t pay their taxes. (See also Willie Nelson, Lauryn Hill, MC Hammer, and Jerry Lee Lewis, among others.[fn1])  Continue reading “Can His Fans #SaveNelly?”

Trump Pays $2,500 Excise Tax: Is that Enough?

By: Philip Hackney

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A couple of months ago, I wrote about the tax consequences of the Donald J. Trump Foundation paying $25,000 to the Pam Bondi campaign for attorney general in Florida in 2013. While most folks are focused on whether the payment was a bribe, I still see signs of a mismanaged charitable organization. I suggested that the political contribution could lead to the Foundation losing its exempt status and should require it to pay some excise taxes. I also said that there was enough questionable information for the IRS to open an audit of the Foundation. Well, last week, David Fahrenthold reported that Donald Trump recently paid $2,500 to the IRS as a tax for that impermissible political contribution made by the Foundation. This action leaves a lot of odd unanswered questions that I write about here.

Jeffrey McConney, the senior vice president and controller of the Foundation, told the Washington Post that Trump himself filed paperwork with the IRS alerting them to the improper political contribution from the Foundation, paid a 10% excise tax, and returned the $25,000. McConney states that the Foundation believes this should end the problem because the Foundation has done everything it has “been instructed to do”. While some have assumed that the IRS had communicated with the Foundation, it is not clear who did the instructing. Continue reading “Trump Pays $2,500 Excise Tax: Is that Enough?”

DC Circuit Seems to have Decided IRS Violated Constitution Before Trial in True the Vote Appeal.

By: Philip Hackney

graphics-882729_1280In 2014, a District Court dismissed (based on 12(b)(6) and 12(b)(1) motions) the complaint of a number of conservative organizations who alleged that the IRS “targeted” them by subjecting them to greater scrutiny in their applications for tax exemption. The lead organization, True the Vote, sought 501(c)(3) charitable organization status; the others primarily sought 501(c)(4) social welfare organization status. The world became aware of this targeting controversy in May 2013 when Lois Lerner, the head of the Exempt Organizations division of the IRS apologized to the Tea Party and other conservative groups for how the IRS treated their applications. To this day Taxprof Blog continues the IRS Scandal post over three years later dedicated at least in part to this controversy.

The primary complaints were the second and fifth claims: (2)  the IRS violated the organizations First Amendment rights to freedom of speech, and (5) the IRS violated the Administrative Procedures Act. The District Court concluded that because the IRS had granted exempt status to these organizations, the complaints were moot. True the Vote appealed this dismissal to the DC Circuit Court of Appeals.

Last week the Circuit Court breathed new life into claims 2 and 5. Though the Court found that some of the complaints were moot (including Bivens complaints against IRS employees and a claim of violation of 6103 disclosure rules), it allowed claims 2 and 5 forward because it found that the IRS had not voluntarily ceased its unlawful actions.

In reading the opinion, I find astonishing that the Circuit Court appears to have already concluded, without trial, that the IRS acted unconstitutionally. I recognize that for a 12(b)(1) motion the court is to assume the complaint true, but the court appears to have done much more than make assumptions. I focus on this issue. Continue reading “DC Circuit Seems to have Decided IRS Violated Constitution Before Trial in True the Vote Appeal.”

Examination of Allegations Against Clinton Foundation Part II

By: Philip Hackney

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A week ago I considered one of three allegations Rep. Marsha Blackburn made against the Bill, Hillary & Chelsea Clinton Foundation in a letter Blackburn sent to the IRS, FBI, and FTC. I found the first allegation stated nothing of significance to the IRS. I now look at the other two and find them significantly wanting as well. Recently, IRS Commissioner Koskinen sent a letter indicating the IRS would investigate these complaints. I conclude they fail to state any complaint actionable by the IRS.

The second and third Blackburn allegations seem to come from a book by Peter Schweizer called Clinton Cash. Both allegations suggest that Sec. Clinton provided large governmental benefits in exchange for donations to the Clinton Foundation and payments to Bill Clinton. Both of the claims, already made by Presidential candidate Donald Trump, regarding Laureate University and Uranium One have been rated False and Mostly False by Politifact. Thus, it is difficult to take these allegations seriously.

Nevertheless, there are two things I do in this post. First. I discuss the factual conclusions of others regarding whether there was a quid pro quo arrangement associated with the second and third allegations. Then, I look at how the tax law might treat such arrangements were they true. Continue reading “Examination of Allegations Against Clinton Foundation Part II”

Examination of Allegations Against the Clinton Foundation

By: Philip Hackney

book-863418_1280Back in June I wrote disapprovingly of some actions of the Donald J. Trump Foundation. In that piece I promised to write about the Bill, Hillary & Chelsea Clinton Foundation too. Recently, Rep. Marsha Blackburn sent a letter that was scheduled to be sent to the FBI, the FTC, and the IRS. That letter makes a number of allegations about the misuse of the Clinton Foundation, and I figured these allegations would be a good place to analyze the performance of the Foundation that I had promised.

Blackburn alleges a number of things, but I am going to focus on her first allegation in this post because it is the only one that is a pure tax exemption question. She alleges that the Foundation is illegally operating outside the scope of its initial application for tax exemption to the IRS.  For reasons explained in the post below, I conclude there is very little involved in this claim and it is a misunderstanding of the law. There could be problems with the Foundation but this is not one of them.

UPDATE: I look at the remaining two Rep. Blackburn allegations here.

Continue reading “Examination of Allegations Against the Clinton Foundation”

IRS Announces More 2016 LITC Grants

By:  Francine Lipman

There has not been a great deal of good news lately about underserved communities or the IRS. But today America received some great news about nine new Low-Income Taxpayer Clinics (LITCs) in underserved areas across America. Five of the nine are in law schools. Continue reading “IRS Announces More 2016 LITC Grants”