IRS Whistle Blower Program a Complete Failure

In 2006 Congress created a whistleblower program in order to incentivize people to blow the whistle on companies who evade taxes. If the tipsters claims are warranted by the IRS, the whistle blowers are awarded a percentage of what the IRS collects from the company. Unfortunately, this program has become a graveyard for allegations of tax avoidance.

More than 1300 claims have been filed over the past 5 years, and only three awards have been paid out. It’s clear that the IRS has no problem attracting whistle blowers, rather it has a problem with processing and handling the claims. The investigations can take years and the current underfunding that the IRS is faced with does not contribute to the productivity of the program. It is feared that the programs unsuccessful track record will eventually deter tipsters from coming forward. The IRS is also concerned with being perceived by Congress as heavy handedly enforcing itself.

IRS officials haven’t denied that the program is failing to meet expectations. Rather, it is admittedly “working hard” to make improvements in order to see the program be as effective as possible. IRS officials have said that they are reluctant to follow up with whistle blowers as often as they’d like for fear of violating strict laws that attempt to protect taxpayer privacy. The IRS has also let it be known that successful whistle blowers can wait up to seven years before receiving their reward.

There are only 35 members in the IRS whistleblower office and a lot of the work is handed off to IRS auditors, 500 of whom were laid off over the past year. There are also sentiments amongst IRS officials that perusing every whistle blower case is an inefficient use of IRS resources.

The money collected from successful whistle blower investigations could be used to lessen the national debt, increase the IRS budget and even refund other taxpayers. It’s clear that the IRS needs to find a solution in order to bring this program to its intended potential.

If you or your company is being investigated by the IRS, contact JG Tax Group today to discuss your rights as a U.S. Taxpayer.

Should Tax Exempt Organizations Be Politically Motivated?

A group of Republican senators are urging the IRS to maintain the anonymity of political donors. This comes as the IRS has taken away the tax exempt status of several organizations, forcing them to make their donors public knowledge.

The IRS has stated that tax exempt, or 501(c) organizations, should not have a primary focus on politics. If the IRS finds that an organization is primarily politically motivated it will revoke its tax exempt status. Some legal analysts say the standard for determining whether or not an organization is primarily political is if they spend more than half of their total budget for political causes.

Many watchdog groups are claiming that organizations are abusing their tax exempt status in order to keep the donors of millions of dollars in campaign contributions private. The fear is that if donors have to reveal themselves they will be deterred from contributing.

Recently, the IRS revoked the tax exempt status of the organization Emerge. They train women to run for office in New Mexico. A spokesperson on behalf of the group stated that revocation “has not changed the scope of our mission or activity”.

If you or your organization face IRS tax problems, contact JG Tax Group today to asses and solve your situation.

IRS Violates Federal Law, Misuses Millions of Taxpayer Dollars

A new report published by the Treasury Inspector General for Tax Administration, otherwise known as TIGTA, claims that the Internal Revenue Service is being non-complaint with a federal law.

The law requires the IRS to disclose any improper payments made to taxpayers on behalf of the government, and eliminate them.

The Improper Payments Elimination and Recovery Act of 2010 was intended to increase accountability on behalf of federal programs that dispersed improper payments. The only program that the IRS reported on was the Earned Income Tax Credit Program, otherwise known as the EITC.

These allegations come at the same time as Senator Jerry Moran is offering an amendment to a bill that would prohibit the IRS from using appropriated funds in order to outsource public relation services.

It is Moran’s opinion that taxpayer dollars should not be used in order to promote a service which, by nature, is self-promotional to all who pay taxes. The amendment would help ensure that taxpayer dollars did not go to public relations and advertising and instead be put towards more productive services such as providing a simpler, fairer tax code.

The IRS has spent $17.5 million taxpayer dollars over the past 4 years for marketing and is seeking an additional $15 million over the next 4 years.

Do you think that the IRS could better utilize taxpayer dollars? JG Tax Group wants to hear from you. If you are facing IRS tax problems, contact our firm today and let us fight for your taxpayer rights.

IRS May Unfairly Tax Native Americans

John Yellowbird Steele, head of the Ogalala Sioux Tribe, declared that the IRS is failing to honor tribal sovereignty by attempting to tax government assisted entities like school clothing, housing, and burial funding that members receive from their tribes.

Addressing a Senate panel Thursday, Steele referenced the treaties between the U.S. and his South Dakota tribe while admonishing the IRS for what appears to be a stepped-up effort to tax tribal aid.

“We fix homes and they would like us to place a number on how much the lumber cost to patch a hole in a roof or put shingling on a floor. They would like us to put a put a number on that and give the individual a 1099 tax form” Steele claims. “The next year, where are those individuals going to find the means to pay the IRS?”

Over time, the IRS has narrowed its tax exemptions for state, federal and locally funded social welfare for tribe members so that only those with serious monetary need aren’t required to owe tax, the tribal leaders stated.

The agency has been meeting with tribes to develop and be more specific on what’s able to be taxed under the General Welfare Doctrine, which determines whether the help tribal members receive should be counted as earnings and be taxed. But as the conferences have gone on, tribe members are still receiving audit notices from the IRS.

“The IRS violates our treaties when it attempts to tax the basic services that our tribes provide our citizens,” Steele asserted in a written affidavit.

The IRS and Native American tribes are working to clarify the issues as they present themselves. Whether or not they will come to an amicable place is yet to be seen.

If you are facing an IRS audit or other tax problems, contact JG Tax Group today. We aggressively fight the IRS to uphold taxpayer rights and can help you secure your financial future.

JG Tax Group's Advanced Tax Quiz

1. Mr. and Mrs. Black purchased their primary residence in 1995 and lived in it until they sold it in the current year. They purchased the home for $250,000 and sold it for $650,000. Since their home was sold for more than the maximum exclusion of $500,000, they are required to report the sale of their home on their current year's tax return.

True
False

2. Jerry received two acres of land valued at $10,000 as a gift. The donor's adjusted basis was $12,000. Jerry subsequently sold the land for $20,000. For purposes of computing his gain, what is Jerry's basis in the land?

$8,000
$10,000
$12,000
$14,000


3. A married couple, who are both self employed, and work out of their home, purchased a new home in July 2008 for $420,000. In September 2008, they converted two bedrooms into office space where they meet clients in their home. In April 2010, they sold their home, on which they had taken $40,000 depreciation. Their home sold for $600,000. What amount of the gain is includable in their income on their joint return??

0
$222,000
$180,000
$40,000


4. Ho Jean is a U.S. citizen living and working in France for all of 2010. She received wages of $150,000, dividends of $10,000 and alimony of $20,000 in 2010. She decides to use the foreign earned income exclusion available to her and file Form 2555. What is the amount of Jean's foreign earned income before any limitations are applied?
   0
   $80,000
   $150,000
   $180,000
   
5. If you and your spouse each have separate businesses, you may each give a $25 business gift to the same person.

True
False

Dealing with IRS tax problems should't be as tricky as this challenging quiz. If you are in trouble with the IRS, contact JG Tax Group today to secure your financial future.

IRS Rules on “Obscure” Student Income

Delivering newspapers, babysitting, private tutoring and even lawn mowing are all a part of the inevitable side jobs some may take as a college student. It’s a source of much needed, extra cash and also empahsizes responsibility and preparedness for the “real world” upon graduation.

Albeit to most college students, part of this responsibility includes paying taxes on these services.

The IRS has very specific qualifications as to what counts as taxable income for college students.

According to the IRS, the following types of revenue that students often profit from are considered taxable:

 Self-Employed Income
 Income on an Investment
 Payment for Service Rendered
 Fellowships and Scholarships

For instance, if you receive a scholarship or fellowship for $10,000 and use $9,500 for fees, books and tuition, you are left with $500. Naturally, you’d use that for personal expenses. According to the IRS, the leftover $500, if used for personal spending, is 100% taxable.

Whether or not the IRS should tax income earned by students is still a hot topic. It may seem unfair to tax students who carry both work and school, and live off a ramen diet. Either way, it’s important as a student to understand the tax laws sooner rather than later.

For more useful tax advice, please subscribe to our blog where you can choose to receive email updates daily. If you’re interested in the more technical aspects of IRS procedures, visit our other blog, or the JG Tax Group website to find a wealth of helpful information.

IRS May Receive Much Needed Budget Increase

On Tuesday, a spending bill was approved by a Senate panel that would provide additional funding for the IRS. As we reported last week, the IRS currently has too much to do, with too little resources, and if the bill passes it could help alleviate the problems the IRS is facing.

The bill would appropriate funds for IRS taxpayer services and tax law enforcement as well as help monetary regulatory agencies enforce Wall Street reforms.

The bill has been approved by the Appropriations subcommittee on financial services and general government. It would provide $12.5 billion dollars to the IRS in 2013 (fiscal year starting in October). This is a six percent increase from 2012 yet still 2 percent less than what the White House has requested.

“Money provided will aid the IRS in meeting an increased demand for services and to make adjustments that will improve taxpayers access to automated self-service applications such as refund inquires, freeing staff to handle more complex tax law inquiries,” states the summary of the bill.

The House version of the bill would only allocate $11.8 billion in IRS funds, which is the same as the current allotment.

The full Appropriations Committee will vote on the Senate bill this Thursday.

While the IRS faces its own unique set of problems, so do United States taxpayers. If you are dealing with an IRS tax problem, contact JG Tax Group today and let us evaluate and resolve your situation.