Tag: irs

‘Vast Majority’ of Pandemic Employee Retention Credit Claims Are Likely Scams, Says IRS

You can add the Internal Revenue Service to the ranks of federal agencies conceding that raining taxpayer money on all and sundry to offset the negative effects of pandemic-era closures didn’t go as well as intended. Not only was a program meant to offset the cost of paying workers during lockdowns and voluntary social-distancing prone to being gamed, but the “vast majority” of claims submitted to the program show evidence of being fraudulent.

In the course of a detailed review of the Employee Retention Credit, “the IRS identified between 10% and 20% of claims fall into what the agency has determined to be the highest-risk group, which show clear signs of being erroneous claims for the pandemic-era credit,” the IRS announced June 20. “In addition to this highest risk group, the IRS analysis also estimates between 60% and 70% of the claims show an unacceptable level of risk.”

The Employee Retention Credit was offered to businesses that were shut down by government COVID-19 orders in 2020 or the first three quarters of 2021, experienced a required decline in gross receipts during that period, or qualified as a recovery startup business at the end of 2021. But it was clear early on that scammers were taking advantage of giveaways of taxpayer money, either to claim it for themselves or to pose as middlemen helping unwitting business owners file claims.

In March of 2023, the tax agency warned of “blatant attempts by promoters to con ineligible people to claim the credit.” In September of that year, it stopped processing claims amidst growing evidence that vast numbers of applications were “improper,” as the IRS delicately puts it. In March 2024, the agency announced that its Voluntary Disclosure Program had recovered $1 billion (since raised to over $2 billion) in improper payouts from participants who got to keep 20 percent of the take.

Ultimately, only “between 10% and 20% of the ERC claims show a low risk” for fraud, even by generous federal standards for throwing other people’s money at problems largely of government creation.

“We will now use this information to deny billions of dollars in clearly improper claims and begin additional work to issue payments to help taxpayers without any red flags on their claims,” commented IRS Commissioner Danny Werfel.

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CIA prevented investigators from interviewing Hunter Biden lawyer, new IRS whistleblower docs say

Anew cache of documents from the IRS whistleblowers released Wednesday by the House Ways and Means Committee show how the Central Intelligence Agency directly intervened to prevent the IRS investigators from interviewing Hunter Biden lawyer and benefactor Kevin Morris.

The CIA’s involvement in the case was first suggested in earlier this year when the House Judiciary and Oversight Committees wrote a letter to Director William Burns that revealed impeachment investigators had at least one whistleblower who alleged the spy agency tried to interfere with a witness interview in the case, Just the News previously reported.

“According to the whistleblower, in August 2021, when IRS investigators were preparing to interview Patrick Kevin Morris, an associate of Hunter Biden, the CIA intervened to stop the interview,” Chairmen Jim Jordan and James Comer wrote. “Two DOJ officials were allegedly summoned to CIA headquarters in Langley, Virginia for a briefing regarding Mr. Morris. At that meeting, it was communicated that Mr. Morris could not be a witness during the investigation.”

The new documents show IRS whistleblowers Gary Shapley and Joseph Ziegler provided documents to the committee detailing the CIA’s intervention.

According to Shapley’s affidavit of the incident, Assistant U.S. Attorney Lesley Wolf from the Delaware prosecutor’s office in charge of the case and the Department of Justice Tax Division Attorney Jack Morgan were summoned to CIA headquarters in Langley, Virginia, for a briefing.

At the meeting, the officials were given a classified briefing and were told by the CIA that the IRS “could no longer pursue” Kevin Morris as a witness in their case. Wolf did not share CIA’s reasoning with the IRS whistleblowers, who then requested their own briefing from the intelligence agency through Wolf.

According to Shapley’s account, Wolf ultimately failed to secure a briefing for the case investigators.

“Although AUSA Wolf initially appeared to be receptive to facilitating a briefing for me on the information, she ignored multiple attempts by me to arrange the briefing. Since obtaining this briefing was outside of my control, eventually I was forced to accept it would not happen,” Shapley wrote in his affidavit. “However, it served as yet another example of deviations from normal investigative processes in this matter.”

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Dirty Special Counsel Dave Weiss Retaliates Against Hunter Biden IRS Whistleblowers Gary Shapley and Joseph Ziegler, Falsely Suggests They Were Under Investigation by Govt Agency

Two months ago, Special Counsel Dave Weiss retaliated against Hunter Biden IRS whistleblowers Supervisory Special Agent Gary Shapley and Special Agent Joseph Ziegler by falsely suggesting they were under investigation by a government agency.

Weiss began retaliating against the whistleblowers in 2022, however, the special counsel filed a court document two months ago and falsely claimed Shapley and Ziegler were under investigation for potential misconduct.

Dave Weiss redacted information related to his claims against the whistleblowers under the guise of an “ongoing investigation.”

“Both SSA Shapley and SA Ziegler have filed whistleblower retaliation claims with OSC, and we understand OSC has requested related documents as part of an investigation into the retaliation claims. Specifically, SSA Shapley has alleged that now-Special Counsel David Weiss began retaliating against Shapley in November 2022 when Weiss learned Shapley had been making protected whistleblower disclosures about Weiss’s office to his IRS chain of command. Those disclosures included allegations Weiss’s office (the U.S. Attorney’s Office for the District of Delaware) engaged in prosecutorial misconduct in the Hunter Biden case by treating Mr. Biden more leniently than similarly situated taxpayers who were not politically connected.” Attorneys for the IRS whistleblowers wrote in a letter to the Acting Principal Deputy Special Counsel.

“Two months ago Special Counsel Weiss filed a document in one of the criminal prosecutions of Hunter Biden drafted and redacted carefully to lead the public to believe SSA Shapley and SA Ziegler were under investigation for potential misconduct. That March 11, 2024 filing opened by stating: “[T]wo IRS agents, Gary Shapley and Joseph Ziegler, . . . . have made unsubstantiated claims that prosecutors’ decision-making in this investigation was infected by politics.” The filing continued later: “[A]s described in the attached declaration, Exhibit 2 (filed under seal), the IRS has taken responsible steps to address Shapley’s and Ziegler’s conduct.” Over half of the next page was also redacted. The referenced Exhibit 2 stated the redactions were “to a potential ongoing investigation. . . and the government has filed three exhibits [under seal] that reference a potential ongoing investigation,” the letter stated.

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IRS Threatens to Target Biden’s Critics, Those Who Question Washington’s ‘Ability to Govern’

The Internal Revenue Service (IRS) is threatening to come after individuals or organizations who question Joe Biden or the federal government’s “ability to govern,” it has confirmed.

According to a report from independent journalist Ken Klippenstein, the IRS is planning to expand its investigative interests to those who threaten the federal government’s “ability to govern” or present a “threat to the public safety or national security interests of the United States.”

He wrote in his Substack:

The Internal Revenue Service (IRS) is positioned to do much more than just collect your taxes as it turns its attention to individuals who threaten the U.S. government’s “ability to govern,” a vague new criteria for criminal investigations, according to its own operating manual.

Buried in the fine print is the revelation that the IRS is pivoting away from its post-9/11 focus on financing of foreign terror groups like al Qaeda and criminal money laundering to a much broader and ill-defined “national security” threat. The shift, revealed in the latest versions of the voluminous Internal Revenue Manual, applies to IRS participation in dozens of federal government “national security” investigative task forces, which were previously referred to as “narcotics and terrorism” task forces until late last year.

Klippenstein goes on to make the case that such criteria is not typically within the investigative remit of a tax collecting agency:

Protecting stock markets and critical infrastructure, protecting the “ability to govern” — that is, the workings of United States officialdom– is hardly a mission historically associated with America’s tax collectors. Their inclusion as criteria to involve IRS special agents in federal investigations opens the door for overreach and abuse.

At a time when the IRS is subject to partisan political attack (the FY 2024 final budget reduced the $80 billion earmarked to the IRS by $20 billion), broadening the IRS mission does little to achieve what the agency says is its goal, which is forcing millionaires and billionaires to pay their fair share.

Earlier this month, the IRS demanded a further $20 billion from Congress to further expand its operations.

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‘Bitcoin Jesus’ Roger Ver Charged With $50 Million Tax Evasion

Authorities in Spain have arrested cryptocurrency entrepreneur Roger Ver, once known as “Bitcoin Jesus,” after the U.S. Department of Justice charged him with tax evasion.

Unsealed Monday, the indictment alleges that Ver evaded paying taxes to the tune of nearly $50 million, conducted mail fraud, and filed false tax returns.

The DOJ says in its indictment that Ver allegedly lied to the Internal Revenue Service (IRS) about how much Bitcoin he and his companies really owned. 

According to the feds, Ver was expected to file tax returns that reported capital gains from the sale of his “worldwide assets.” These assets included Bitcoin.

But the indictment alleges that despite Ver and his companies owning 131,000 Bitcoins, the crypto entrepreneur provided or caused to be provided false or misleading information—including the Bitcoin he personally owned—to a law firm and appraiser  helping him expatriate his American nationality. 

When he sold the Bitcoin in 2017, he allegedly did not inform the IRS about the gains he had made, despite the fact that the Bitcoins were held by U.S. corporations he was in charge of—named MemoryDealers and Agilestar.

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One Hundred Years of IRS Political Targeting

One hundred years ago, Senator James Couzens, a Michigan Republican, took to the Senate floor to denounce the Bureau of Internal Revenue for abusing its power and trampling innocent taxpayers. Couzens launched a sweeping Senate investigation of federal tax collectors. One year later, Internal Revenue Commissioner David Blair personally delivered a demand for $10 million in back taxes as Couzens stepped out of the Senate chamber. Couzens fought the case, and eventually proved that he had actually overpaid his taxes by roughly one million dollars, as David Burnham noted in his 1989 classic, A Law Unto Itself: The IRS and the Abuse of Power. But the precedent of the IRS exploiting its power to attack its critics was firmly established.

President Franklin Roosevelt used the IRS to harass newspaper publishers including William Randolph Hearst and Moses Annenberg, publisher of The Philadelphia Inquirer. FDR also dropped the IRS hammer on political critics such as Huey Long and Father Charles Coughlin and prominent Republicans like former Treasury Secretary Andrew Mellon. Perhaps Roosevelt’s most pernicious tax skulduggery occurred in 1944 when he spiked an IRS audit of massive illegal campaign contributions from a government contractor to Congressman Lyndon Johnson. LBJ’s career would likely have been destroyed if Texans had learned of his dirty-dealing. Instead, LBJ survived and scores of thousands of Americans and more than a million Vietnamese died as a result.

President John F. Kennedy raised the political exploitation of the IRS to an art form. Shortly after capturing the presidency, JFK denounced “the discordant voices of extremism” and derided people “who would sow the seeds of doubt and hate” and make Americans distrust their leaders.

At a news conference a few days later, a reporter sought his views on the legality of campaign contributions supporting ”right-wing extremist groups.” Kennedy replied “As long as they meet the requirements of the tax law, I don’t think that the Federal Government can interfere or should interfere with the right of any individual to take any position he wants. The only thing we should be concerned about is that it does not represent a diversion of funds which might be taxable to—for nontaxable purposes. But that is another question, and I am sure the Internal Revenue system examines that.”

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Don’t Forget To Claim Drug Dealing Income on Your Taxes

As just about every American adult knows and is dreading, Monday, April 15, is Tax Day. Each year, taxpayers scrounge together each income statement the government requires and any random receipt that may result in a modest deduction in the amount they’re expected to pay.

The IRS wants taxpayers to know that if you made money from anything illegal last year—stealing, selling illegal drugs, taking bribes—then that’s taxable, too.

Last year, Americans spent 6.5 billion hours doing their taxes, which translates to roughly $260 billion in lost productivity. That’s in addition to the $104 billion they spent in direct costs on the actual tax filing and preparation.

Much of that complexity stems from the amount of deductions and carve-outs the tax law allows, as well as the types of revenue required to be treated as taxable income.

IRS Publication 17 “covers the general rules for filing a federal income tax return.” In its most current edition, the IRS advises, “Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity.”

In other words, even if you engage in activity that the federal government is completely opposed to, like selling heroin on the corner, Uncle Sam still expects you to kick up a percentage.

The IRS advisory also includes a section about “stolen property,” which similarly cautions, “If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year.”

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Tax Day is just around the corner – here are the odds you will be audited based on your income

While the odds of getting audited by the IRS are low, Americans with certain incomes are more likely than others to face closer examination. 

Ultra-wealthy taxpayers with annual incomes exceeding $10 million are the most likely to face scrutiny from the IRS, most recent available data from the agency shows. 

But the second most likely group are those who claim a particular credit – who tend to be low and moderate-income taxpayers. 

Taxpayers who claim the Earned Income Tax Credit – a tax break for those earning below a certain threshold – are more than twice as likely as others to get audited, according to data reported by CBS. 

It comes after the IRS pledged to increase the number of audits for Americans earning more than $400,000 a year in a bid to crack down on tax dodgers.

As part of new efforts under the Biden Administration’s landmark Inflation Reduction Act, the IRS also vowed to ‘add new fairness safeguards’ for those claiming the EITC. 

‘Audit rates of those receiving the EITC remain at high levels in recent years while rates dropped precipitously for those with higher income, partnerships and others with more complex tax situations,’ the agency said in a statement in September last year. 

While the majority of tax returns are accepted, some face closer inspection from the IRS in the form of an audit. This is to check whether income, expenses, credits and deductions have been reported correctly – and to help deter tax fraud. 

According to latest IRS data from the 2020 tax year, only 0.2 percent – or around 1 in 500 – of all individual income tax returns triggered an audit, CBS reported. 

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Surprise! The IRS Lied About Who Those 80,000 New Agents Would Target

“Never trust a man who lays his hand on his heart when he assures you of anything,” goes the old axiom. That’s why I never trust a Democrat who makes any promise ever about a federal agency or program.

Take Medicare. In 1966 when Medicare began, it cost $3 billion. The House Ways and Means Committee estimated that Medicare would cost about $12 billion by 1990. Instead, it cost $107 billion and today costs the government close to a trillion dollars.

So when Joe Biden and the Democrats assured Americans and Republicans in Congress that the $80 billion the president wanted to augment the IRS tax-collecting ability was only going to target “the rich,” everyone with two brain cells working knew it was a lie.

It will surprise no one that an audit by the Treasury Inspector General For Tax Administration found that “President Biden’s plan to hire a new army of tax collectors is falling flat, and the agents already at work are targeting the middle class.”  

“As of last summer, 63% of new audits targeted taxpayers with income of less than $200,000,” reports the Wall Street Journal. “Only a small overall share reached the very highest earners, while 80% of audits covered filers earning less than $1 million.”

Bank robber Willie Sutton supposedly responded to the question of why he robs banks by saying with a shrug, “That’s where the money is.” So, too, the IRS audits well-off but not “rich” taxpayers because they can’t afford the army of tax attorneys that the super-rich can bring to the table. 

Here’s a gentle reminder of the assurances given to us by the Biden administration and Democrats in Congress.

“These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans. As we’ve been planning, our investment of these enforcement resources is designed around the Department of the Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000,” wrote IRS commissioner Charles Rettig in an August 2022 letter to concerned senators.

Janet Yellen was even more adamant. “Contrary to the misinformation from opponents of this legislation, small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited,” she wrote in a letter to Rettig.

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Is IRS using AI to infringe upon our financial privacy?

The House Judiciary Committee has opened an inquiry to whether the IRS is using artificial intelligence to invade Americans’ financial privacy after an agency employee was captured in an undercover tape suggesting there was a widespread surveillance operation underway that might not be constitutional.

Committee Chairman Jim Jordan, R-Ohio, and Rep. Harriet Hageman, R-Wyo., sent a letter last week to Treasury Secretary Janet Yellen demanding documents, and answers as to how the agency is currently employing artificial intelligence to comb through bank records to look for possible tax cheats.

The inquiry comes after the same panel has been exploring why the FBI was obtaining Americans’ bank records, including those of Jan. 6 suspects, without using search warrants or subpoenas.

Hageman told Just the News that lawmakers are increasingly concerned that federal law-enforcement agencies are no longer abiding by constitutional protections, including prohibitions against search and seizure without a warrant. 

The congressional inquiry was prompted by a September 2023 announcement that the IRS is using AI to “help IRS compliance teams better detect tax cheating, identify emerging compliance threats and improve case selection tools.”

The Treasury Department has since acknowledged it has “implemented an enhanced process using AI to mitigate check fraud in near real-time by strengthening and expediting processes to recover potentially fraudulent payments from financial institutions’ since late 2022.”

Jordan’s and Hageman’s letter said lawmakers have evidence and reason to believe that the IRS and Department of Justice (DOJ) are actively monitoring millions of Americans’ private transactions, bank accounts, and related financial information—without any legal process—using the AI-powered system.

“This kind of pervasive financial surveillance, carried out in coordination with federal law enforcement, into Americans’ private financial records raises serious doubts about the IRS’s—and the federal government’s—respect for Americans’ fundamental civil liberties,” the letter said.

You can read the letter here: 2024-03-20 JDJ HH to IRS re AI surveillance.pdf

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