IRS' "festering cultural rot"

[Catherine]

I have met Frank Agostino; a good guy.

https://taxprof.typepad.com/taxprof_blog/2023/08/irs-backdating-of-documents-highlights-festering-cultural-rot-if-the-irs-doesnt-play-by-the-rules-th.html

And for those who won't click links, 

Friday, August 25, 2023

IRS Backdating Of Documents Highlights Festering Cultural Rot: ‘If The IRS Doesn't Play By The Rules, They're The Mob’

By Paul Caron

Bloomberg, IRS Backdating Court Order Spotlights Culture, Attorneys Say:

An unusual Tax Court order requiring the IRS to report what it knew and when about misstatements in a conservation easement case, as well as mounting claims of backdating forms at the agency, are highlighting what some tax attorneys said are festering IRS cultural problems, years in the making.

The Tax Court this week ordered the IRS to identify when agency personnel found out about misstatements to the court about the date that a $15.2 million penalty against conservation easement donor LakePoint was approved. ...

Rod Rosenstein, former deputy attorney general under President Donald Trump, is representing LakePoint in a FOIA lawsuit against the IRS and told Bloomberg Tax he’s reached out to the Treasury Inspector General for Tax Administration.

He plans to refer to the watchdog claims made by three other partnerships—Arden Row Assets LLC, Basswood Aggregates LLC, and Delwood Resources LLC—who are asking the IRS to admit its staff backdated penalty approval forms in their cases as well.

“The question is whether we’re seeing one isolated case or whether were seeing evidence of a pattern of misconduct in IRS,” Rosenstein said. “I think if you’ve looked at these other three cases, it does suggest that there is a pattern.” ...

Tax attorneys say it’s the latest chapter highlighting festering issues of IRS culture being taken over by adversarial us-versus-them attitudes at the agency. Conservation easement cases have been especially contentious [Michelle Abroms Levin, a former Justice Department Tax Division attorney,] said.

“What they have now is a win-at-all-costs culture, and I hope we can shift back to a ‘Let’s find a right answer. Let’s find the correct amount,’” she said.

[Frank Agostino, a former IRS lawyer and Department of Justice criminal prosecutor] ... said this attitude is eroding much-needed trust in the institution and fueling attitudes among taxpayers that the agency is breaking the rules to extract as much money from them as it can.

“We’re not the mob, but that’s the worry,” he said of the agency. “The IRS, if they don’t play by the rules, gets the perception of being the mob.”

[Lee B]

As a practical matter, I doubt that conservation easements impact any of our clients.

It's one the areas that's been abused by the wealthy and their advisers.

The IRS has struggled to deal with this area due to the lack of expertise,

which it sounds like it has resulted in their belligerent approach to this issue.

To take one difficult area of tax law and apply that to the whole agency is an exaggeration which may make you feel good 

but frankly I don't appreciate it.

 

[Patrick Michael]

23 hours ago, cbslee said:

As a practical matter, I doubt that conservation easements impact any of our clients.

It's one the areas that's been abused by the wealthy and their advisers.

The IRS has struggled to deal with this area due to the lack of expertise,

which it sounds like it has resulted in their belligerent approach to this issue.

To take one difficult area of tax law and apply that to the whole agency is an exaggeration which may make you feel good 

but frankly I don't appreciate it.

 

It's not that the IRS is having trouble understanding and applying this particular area of tax law that is troubling and evidence of cultural rot.  It's that the IRS attorney's find it OK to back date court documents. If this was an isolated incident, you might conclude that this is a rouge employee stepping outside the rules.  "But there are other watchdog claims made by three other partnerships—Arden Row Assets LLC, Basswood Aggregates LLC, and Delwood Resources LLC—who are asking the IRS to admit its staff backdated penalty approval forms in their cases as well" (https://news.bloombergtax.com/daily-tax-report/irs-backdating-court-order-spotlights-culture-attorneys-say). If a DA filed a criminal indictment, and back dated the indictment to get around a statute of limitations problem, would that not destroy the public's confidence in the system? 

As I learned in auditing class, the fish usually starts rotting at the head.  The fact that these IRS employees felt it was OK to back date court documents should raise questions as to the integrity at the top.  If there was a culture in the organization that condoned and penalized this type of behavior it most likely wouldn't happen.  

And it does impact our clients and society at large.  Maybe not directly, but it does erode any confidence that tax payers have that they would be treated fairly if they ever had an issue with IRS.  And it makes it easier for them to justify padding a deduction or not reporting the income from that side job if they feel, "if the IRS isn't playing by the rules, so why should I."

[BulldogTom]

On 8/26/2023 at 11:53 AM, cbslee said:

To take one difficult area of tax law and apply that to the whole agency is an exaggeration which may make you feel good 

but frankly I don't appreciate it.

 

cbslee is easily offended when you question the ethics of the IRS, but if they ever have a data breach, he will be posting about it for weeks.  

Tom
Longview, TX

[Lee B]

2 hours ago, BulldogTom said:

cbslee is easily offended when you question the ethics of the IRS, but if they ever have a data breach, he will be posting about it for weeks.  

Tom
Longview, TX

I apologize. I posted without reading all of the details. Thanks to Catherine and Patrick .

[BrewOne]

even before the decline of the USPS, I'd get 30 day letters from the IRS that were dated 3 weeks prior to receiving them, leaving little time to respond.  The postmark on our correspondence is the official record of the date received--maybe their correspondence should have a postmark as well?

[Medlin Software, Dennis]

"To take one difficult area of tax law and apply that to the whole agency is an exaggeration"

To me, this has nothing to do with the IRS or any other agency.  It is another sign of the moral decay of our society - period.  "Do the right thing" used to not be noticeable, because it was a matter of constant action, the expected action if you will.  Now when someone "does the right thing" it is unique enough it becomes the closing bit on the evening news.  Worse yet, the "right thing" often gets you chastised privately and publicly, so less and less will do the right thing when it can be seen, such as some/many? in politics, or even being a volunteer in a local service group (what, you are a member of X?  So is a real red/blue person, so you musty be red/blue too).

For those who have a desire to help, one place which usually does not bite politically is foster care / CASA.  The bite is you do have to become a little more self aware about town as you may run into a "parent" who believes you helped take their child from them, but in most cases, those folks don't bother seeking revenge.

[Lee B]

Dennis, I totally agree.

[Medlin Software, Dennis]

I have/had an avocation which was much needed, and in my case, I was not only an active participant, I was teaching others.  Unfortunately my participation was reflected to family in a negative way, and cost us some good friends, so after a couple of decades, I grew tired of burdening my family.  This was after switching to out of town work only, which helped, but a physical confrontation (even though I wore a hidden audio recorder) was the last straw.

So when I read about complaints about the poor quality or lack of people at all (no matter the quality) performing such a service, it is a sow/reap situation.

[Margaret CPA in OH]

For those who have a desire to help, one place which usually does not bite politically is foster care / CASA.  The bite is you do have to become a little more self aware about town as you may run into a "parent" who believes you helped take their child from them, but in most cases, those folks don't bother seeking revenge.

I just became a CASA last fall and finished my first case 3 weeks ago.  I get my second child/family this evening.  Definitely no politics.

For those unfamiliar, CASA is Court Appointed Special Advocate and the advocate is a trained volunteer for the child/children.  So many children need an advocate, someone just on their side only.

[Medlin Software, Dennis]

The KEY for CASA is the person is on the infant/child/teenager's side, and only on their side.  They have a "cleaner" influence than the social worker, "parent(s)", and even cleaner than any foster parent.  There is no "book" for getting the best result for the child, so their CASA worker is the one to speak for them and make sure they get all their needs met using whatever resources are available.  Interestingly, none of our fosters had a CASA worker that I can recall.  Lack of volunteers was the issue.  In the case of our first adopted, we petitioned the court to be declared de-facto parents, and became precedent setting our naive selves.  Somehow, the universe paired us up with an attorney who was looking for such a case!

One minute in the foster system can (state dependent) open up a lifetime of access to benefits for the child.  The child needs to learn these things too, as it may be up to only them some day.

While we are no longer active foster parents (we do emergency respite only), we do participate by helping foster families, adoptive families, and families with special needs children/adult children navigate the "system".