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News Briefings - DC Highlights
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Daniel Werfel, the current controller of the Office of Management and Budget (OMB), has been appointed by President Barack Obama to serve as the acting commissioner of IRS effective May 22, the White House announced on May 16. Werfel has agreed to serve in that capacity through Sept. 30, the end of the current fiscal year. He previously served in various career civil service capacities at OMB and was a trial attorney in the Justice Department's Civil Rights Division. He also did a 3-year stint as a member of the Federal Accounting Standards Advisory Board. The president praised Werfel for his professionalism, integrity and skill. "The American people deserve to have the utmost confidence and trust in their government, and as we work to get to the bottom of what happened and restore confidence in the IRS, Danny has the experience and management ability necessary to lead the agency at this important time," President Obama said.
Steven Miller, former acting IRS commissioner, apologized on May 17 for the "mistakes we made and the poor service we provided" related to the IRS scandal involving its targeting of conservative groups seeking tax-exempt status. "Partisanship or even the perception of partisanship has no place at the IRS," Miller testified at a House Ways and Means Committee hearing. "It cannot even appear to be a consideration in determining the tax exemption of an organization." However, he was quick to dismiss the notion that partisanship prompted the conduct of IRS employees charged with the responsibility of processing the applications for tax-exempt status from groups carrying "Tea Party" and "Patriots" in their names, as well as other organizations. "I do not believe that partisanship motivated the people who engaged in the practices described in the Treasury Inspector General's [Treasury inspector general for tax administration] report,"Miller said. "I have reviewed the Treasury Inspector General's report, and I believe its conclusions are consistent with that," he said. He attributed the conduct of IRS employees to "foolish mistakes" by those who were "trying to be more efficient in their workload selection." During questioning by committee members, Miller acknowledged that the question asked to Lois Lerner, director of Exempt Organizations at IRS, at a May 10 meeting of the American Bar Association Section on Taxation--which gave Lerner the leeway to put the scandal into the public domain before the release of the inspector general's auditâ€”was planted. On May 9, Lerner contacted Celia Roady, a tax attorney and member of IRS's Advisory Committee on Tax Exempt and Government Entities, and requested that she pose the question to Lerner. Roady subsequently said in a statement that Lerner made the request, she agreed to do it, and that she was not told how Lerner would answer the question. Several members of the congressional panel were disturbed by the fact that Lerner had appeared before a Ways and Means subcommittee hearing on May 8 and did not comment on the inspector general's report. However, it should be noted that the May 8 hearing was devoted to IRS's Colleges and Universities Compliance Project final report. Currently, there are two related congressional hearings set for this week. On May 22, the House Oversight and Government Reform Committee was scheduled to hear testimony from George, Lerner and Shulman (however, Lerner, while denying any wrong doing, asserted her Fifth Amendment right against self-incrimination and declined to testify before the Committee). Also requested to appear is Neal Wolin, deputy Treasury secretary. George has testified that he informed Wolin that his office was conducting an audit on the matter last June. It is expected that Republican members of the committee will want to learn if, and when, Wolin informed the White House of the inspector general's audit.
Fees collected by IRS for scheduled registered tax return preparer test appointments cancelled due to a Jan. 18 court injunction are being refunded, the agency said in a revised statement posted on its website. Furthermore, fees collected from return preparers who tested on or after Jan. 18 are also being refunded. "No additional refund or reimbursement requests related to registered tax return preparer regulation are being provided or considered at this time," the agency said. Those receiving refunds can expect an email notification that will explain the process. No action is necessary to receive the refund, IRS said, adding that a credit for the test fee will automatically be made to the account used to pay the fee. "It is anticipated that all refunds will be processed by July 19, 2013," IRS said. The revised statement can be found at http://www.irs.gov/uac/IRS-Statement-on-Court-Ruling-Related-to-Return-Preparers.
IRS has launched a discovery tool, known as the International Tax Topic Index, with the goal of creating "a gateway to international information." (e-News for Tax Professionals 2013-20) According to the agency, the index is specifically designed for taxpayers with international filing requirements. IRS tax experts mapped more than 500 agency web pages with international content. The web pages were then integrated with IRS forms, publications and frequently asked questions. The index can be found at http://taxmap.ntis.gov/taxmap/internationalindex.html.
IRS oversight of Code Sec. 501(c)(4) groups will be the subject of a new Treasury inspector general for tax administration (TIGTA) audit, J. Russell George, the inspector general, said during a May 21 hearing of the Senate Finance Committee. The new audit will come on the heels of TIGTA audit report number 2013-10-053, entitled "Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review," which was released on May 14. "We are continuing to look into whether any violations of the Internal Revenue Service Restructuring and Reform Act of 1998 have occurred and if any political influence caused the change in criteria" used to process applications for Code Sec. 501(c)(4), George said in his prepared remarks. During questioning by the Senate panel, George remarked: "Suffice it to say this matter is not over, as far as we are concerned." The Senate hearing also marked the first Capitol Hill appearance by Douglas Shulman, former IRS commissioner, to testify on the IRS scandal involving its targeting of conservative groups seeking tax-exempt status. Shulman did not add anything new to the information publicly available and he appeared to want to distance himself from the whole affair. He was prodded to offer an apology but would only say that "this happened on my watch and I bear much regret that it happened on my watch." On several occasions, in response to questions asking what actions he took in the matter, he said that it was "inappropriate" for a presidential appointee to get involved with individual cases with political overtones.
IRS was hit on May 21 with two lawsuits stemming from the IRS scandal involving its targeting of conservative groups seeking tax-exempt status. Both of the lawsuits were filed in the U.S. District Court for the District of Columbia. In one case, True the Vote, Inc., which applied for Code Sec. 501(c)(3) status as a charitable organization, alleges that IRS "developed and implemented a written and unwritten policy for identifying and subjecting applicants for tax-exempt status to additional review and scrutiny." The suit further alleges that True the Vote's application was targeted for additional review and scrutiny because of its affiliation with a group known as King Street Patriots, which has submitted an application for Code Sec. 501(c)(4) status as a social welfare organization. Various current and former agency employees also are named as individual defendants. True the Vote is asking the court to grant tax-exempt status to the group and award it financial damages. The second lawsuit was filed by Citizens for Responsibility and Ethics in Washington (CREW), which on its website describes itself as "a nonprofit 501(c)(3) organization dedicated to promoting ethics and accountability in government and public life by targeting government officials who sacrifice the common good to special interests." CREW is asking the court to compel the agency to initiate a rulemaking procedure to address conflicts between the requirements of Code Sec. 501(c)(4) and the implementing IRS regs. Current regs, promulgated in '59, grant tax-exempt status to groups "primarily engaged" in promoting social welfare while the underlying tax law requires such tax-exempt groups to be "operated exclusively" for social welfare purposes. In fact, this issue was raised by several senators, including Sen. Max Baucus (D-MT), at a May 21 hearing conducted by the Senate Finance Committee. On May 20, a California-based group called NorCal Tea Party Patriots filed a related lawsuit in the U.S. District Court in Cincinnati.
Through May 10, some 43.6 million individuals have self-prepared and e-filed their federal income tax returns, an increase of 4% over the comparable period in 2012, IRS said on May 20. (IR 2013-52) E-filed returns from tax professionals inched up to 70.4 million. IRS has issued more than 101 million refunds totaling almost $268 billion. To date, the IRS website has been accessed more than 300 million times, an increase of 25% over last year.
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