In a prior post I commented about a report by the Treasury Inspector General for Tax Administration (TIGTA) that reviewed cases of willful violation of tax laws by IRS employees for a 10 year period (FY 2004-2013). The review found 1,580 IRS employees who willfully understated their Federal tax liability or willfully filed their tax return late. Of these, roughly two thirds of these tax cheats kept their jobs at the IRS (about 14% have now resigned or retired).
Former Senate Finance and current Senate Judiciary Committee Chairman Charles E. Grassley, R-Iowa, is now asking the IRS Commissioner to explain how and why the Service uses discretion to avoid terminating employees for willful violations of tax law. A copy of his letter to the IRS Commissioner can be found here.
"Willful violation of tax law is a serious offense and the presumption is an employee guilty of the offense shall be terminated," wrote Grassley in letter dated May 19 to IRS Commissioner John Koskinen. Grassley said the Commissioner’s "discretion to mitigate the penalty of termination was intended to be a safety valve, not a tool to be used routinely to frustrate the intent of Congress."
The report found that a major portion of employees who willfully violated tax law remain employed at the IRS and experienced only minor punishments. The IRS gives discretion to the Commissioner on termination in such cases, and Grassley is seeking details on how and when that discretion is used.
The sole recommendation TIGTA made in the report was for the IRS to document its analysis of evidence and basis for its decision on whether or not to mitigate penalties to something less than termination, wrote Grassley. "The IRS doesn’t necessarily offer discretion on severe penalties to average citizens found in violation of tax law," he said. "There might be a double standard for the IRS’ own employees."
The good news is that Congress has initiated an oversight hearing into the matter. Hopefully there will be some change because this does not sit well.
If you need assistance concerning taxes or an IRS investigation, do not hesitate to contact a tax lawyer in Orange County. The Orange County Tax Attorneys at Wilson Tax Law Group have experience in federal tax prosecutions and IRS and state tax matters. You can reach the Wilson Tax Law Group at 714-463-4430.
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