Congressional Hearing on Protecting Small Business from IRS Abuses

On Wednesday, the day after an impeachment hearing for the IRS commissioner was held, the House Ways and Means committee held a hearing on protecting small business from IRS abuses.  The hearing largely focused on the IRS use of “structuring” laws to seize assets from many businesses who committed no crime but were merely engaged in businesses where significant amounts of cash were involved.  The structuring laws were passed as a means to track large amounts of cash and were intended to combat money laundering by criminals.  Many consumer advocates have complained about abuses of these laws by the IRS and also by numerous other law enforcement agencies.

For some basic information about structuring see here and here.  To date, I have not written much about structuring, but it is a problem that I hope congress will address.  Although the law was intended to allow law enforcement to track money laundering from criminal activities, it has been abused by IRS and numerous other law enforcement agencies with many instances of assets being seized from individuals and businesses simply because they deal with significant amounts of cash.

Impeachment hearing for IRS Commissioner

Yes, I know most people are bored stiff watching CSPAN. But, I watched the entire hearing yesterday. I was disgusted by each and every democrat who appeared trying to pretend that the targeting scandal never occurred. Various high level employees at the IRS were involved in the scandal and the cover up and absolutely no one has been held accountable. If you want more details about the scandal, I have blogged about it before and provided links to other sites that have covered this issue in far more detail than I have.
Using the IRS to harass ones political opponents is in my view appalling behavior. As I have mentioned in a previous post, this scandal is not the first instance of this type of abuse of power. Both parties have done it in the past. If there are no consequences for this type of behavior, it will only get worse in the future.

2 mistakes by taxing authorities causing headaches

Recent mistakes by both the IRS and FTB have caused my clients some recent problems.  I thought I would mention them for any others who have experienced these same problems.

  1. For taxpayers who were paying their tax debts to the IRS through direct debit from their bank account: in February, due to an IRS computer error, payments were not made in roughly 250,000 accounts.  The IRS immediately sent out default letters to these taxpayers and charged interest and penalties for failure to pay.  The IRS has since discovered the error and says that letters were mailed to each affected taxpayer and corrections have been made to their accounts.  If you are having difficulty with this or any other collection problem with the IRS, we can help.
  2. The FTB had a computer problem matching state withholding from employees wages and as a result, many California taxpayers did not get their complete CA refund.  FTB sent out Form 4743D requesting additional information from these taxpayers.  There is a phone number you can call on that notice.  If you were affected by this and have any questions on how to proceed, give us a call and we can help.

Attention 990N filers…

especially those who like to procrastinate.  If you are a small tax exempt organization that files on a calendar year basis, the due date to file your 990-n is Monday, May 16th.  Until last year these forms were filed through the Urban Institute’s website, but for this year it has switched over to a new IRS website.  To use this new site you will have to register with the IRS on their new site.  Due to the brilliant forethought of those at IRS this website is scheduled to be down for routine maintenance for roughly twelve hours tomorrow.  But the good news is that the registration process on the new site is simple and seems to be working just fine.  For details on this process, check here.