IRS

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Touchdown, IRS?

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It's Week Nine of the 2013 football season, and millions of Americans are following every play. The Kansas City Chiefs are still undefeated. The New York Giants have finally won a couple of games. And playoff races are already starting to take shape. (Bengals, anyone?) So, what does any of this have to do with taxes?

Today's National Football League is the biggest spectacle since the Romans packed the Coliseum to watch the Christians take on the Lions. (Needless to say, the Lions were heavy favorites — and usually covered the spread.) Last year, the league generated $9.5 billion in revenue from a combination of TV rights, ticket sales, stadium concessions, and licensing agreements. The biggest part of that cash geyser goes to the players (who naturally pay tax on their salaries). More chunks go to the owners (who pay tax on theirs), and stadium vendors (who pay tax on all those eight-dollar beers).

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Horsing Around with Tax Preparers

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This is a big week for taxes and technology. State "insurance exchanges" are scheduled to open for business under the Affordable Care Act, which lets consumers sign up for tax-subsidized individual health insurance. The White House has already announced that technological glitches will delay online enrollment on the small business ("SHOP") and Spanish-language sites. That's a decidedly 21st-century, "first world" problem. So, why on earth is the IRS lassoing an 1884 law dealing with lost Civil War horses to regulate tax preparers?

Right now, there are no industry-wide rules governing tax preparers. So, back in 2011, the IRS announced their new "Return Preparer Initiative," which required preparers to register with the IRS, pass a competency test, and take continuing education classes. The new rules apply to any tax preparer who isn't already regulated as an attorney, Certified Public Accountant (CPA), or Enrolled Agent (EA).

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When the IRS Comes a-Knockin'

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If you get an IRS audit notice, you probably expect to spend hours responding to endless document requests, visiting bland government offices, and meeting with faceless bureaucrats. You might hope you get lucky and find yourself assigned to a pleasant, friendly examiner, one who acknowledges how intrusive and annoying the audit process can be. But you certainly wouldn't expect to wind up in bed with the auditor!

Vincent Burroughs is a 40ish contractor and amateur motorcycle racer in Fall Creek, Oregon. When the economy collapsed in 2008, his business suffered and he got behind on his taxes. In 2011, the IRS came calling. The auditor, Dora Abrahamson, recognized him from his motorcycle racing, and apparently liked what she saw. Burroughs claims Abrahamson started flirting with him over the telephone and by text message ("[I] need a hug badly, do you have one?"), offered him massages, and even sent him a "selfie" in a revealing pose!

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Sentencing Reform

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Back in 2007, a Los Angeles judge sentenced actress Lindsay Lohan to one day in jail for misdemeanor drunk driving and cocaine charges. California's prisons are notoriously crowded, so Lohan walked out of the joint after just 84 grueling minutes. She didn't even have time to change into an orange jumpsuit. Lohan's "sentence" drew headlines as an example of lax justice. But now comes news that a judge has sentenced a 79-year-old widow to less than one minute of probation — for tax evasion, no less. Can the punishment possibly suit the crime?

First, a little background. The Justice Department has made cracking down on secret foreign bank accounts a top priority. Those efforts got a huge boost when Bradley Birkenfeld, a banker for Zurich-based UBS, blew the whistle on the bank's efforts to help U.S. depositors avoid tax on their accounts. UBS settled the case by paying a record 780 million dollar fine and turning over information on nearly 5,000 U.S. depositors.

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You Think You Got Audited?

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Getting an audit notice from the IRS isn't anyone's idea of a party. But it's not the end of the world. Usually the auditor just wants to make sure you're entitled to the breaks you've claimed. Did you really spend as much as you reported on meals & entertainment? Did you really spend enough hours managing your rental properties to qualify as a "real estate professional"? If the IRS finds a mistake, they issue a "deficiency notice" and bill you for what you owe. How bad can it really be?

Well, just ask Raymond J. Lane.

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Party Time at the IRS

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You probably don't think a conference for a bunch of IRS bureaucrats would be much fun. Apparently, though, the IRS knows how to throw a party. Back in 2010, they hosted an event dedicated to "Leading into the Future" for 2,609 executives and managers in the Small Business/Self-Employed division. (You're excited already, aren't you?) It turned into a $4.1 million boondoggle, complete with first-class air travel and Presidential Suites at three different hotels, that even Jay Gatsby might appreciate.

We'll never know how many of our friends at the party woke up hung over the next morning. But predictably, someone blew the whistle on "excessive spending," and now we have another IRS scandal on our hands. Last week, the party poopers at the Treasury Inspector General for Tax Administration released a 56-page report titled