Former IRS Commissioner Concerned about IRS Shutdown

Washington, D.C. (October 7, 2013)

By Michael Cohn

Mortimer Caplin, who served as commissioner of the Internal Revenue Service in the Kennedy administration and the early months of the Johnson administration, sees problems ahead for taxpayers and practitioners from the government shutdown.

The IRS announced plans for cutting back all but essential functions during the shutdown, including stopping tax refunds and closing the Tax Court, but will still require the payment of taxes (see IRS Suspends Tax Refunds and Tax Court Operations). “The law is still in effect, and businesses and individuals should still continue to file their tax returns and make deposits,” Caplin pointed out. “For those engaged in tax litigation or coming into compliance with IRS regulations, they will have more time to prepare as the IRS and the U.S. Tax Court have suspended operations.”

TIGTA: Tighten Procedures on Tax Info Requests

Washington, D.C. (September 30, 2013)

By Daniel Hood

The IRS needs to tighten up its procedures for handling requests for tax account information, according to a recent report.

The report from the Treasury Inspector General for Tax Administration looked at how the IRS is following the mandates of the Freedom of Information Act, the Privacy Act of 1974, and Internal Revenue Code Section (§) 6103, to determine if the service properly denied written requests for tax account information.

As errors in this area can violate taxpayer rights and result in improper disclosures of tax information, TIGTA is required to conduct periodic audits to determine if the IRS properly denied written requests for tax account information.

Of 55 FOIA/Privacy Act information requests (from a population of 3,415 requests), TIGTA found nine (16.4 percent) in which the IRS improperly withheld or failed to adequately search for and provide information to requestors. In addition, the IRS failed to adequately search for and provide information in three (5.6 percent) of 54 sampled IRC Sec. 6103 information requests.

All of the FOIA/Privacy Act information requests sampled were responded to in a timely fashion. While there are no statutory time frames within which the IRS must respond to Sec. 6103 requests, for 15 (27.8 percent) of the 54 Sec. 6103 requests, the IRS took more than 30 calendar days to provide a response.

In addition, sensitive taxpayer information was inadvertently disclosed in response to nine (16.4 percent) of the FOIA/Privacy Act and four (7.4 percent) of the Sec. 6103 requests reviewed.

TIGTA recommended that the IRS require disclosure specialists to adhere to the general correspondence guidelines when processing Sec. 6103 requests by specifying these time frames in the disclosure section of the Internal Revenue Manual; and that it emphasize the importance of disclosure laws and regulations with disclosure specialists and their managers.

The IRS agreed with both recommendations.

This is TIGTA’s fourteenth review of denials of FOIA, Privacy Act, and Sec. 6103 information requests.

IRS Suspends Tax Refunds and Tax Court Closes during Government Shutdown

Washington, D.C. (October 2, 2013)

By Michael Cohn

The Internal Revenue Service has temporarily stopped sending out tax refunds, and the Tax Court has suspended operations during the federal government shutdown, as lawmakers in Congress continue their battle over delaying or defunding “Obamacare” for a year.

The IRS announced contingency plans for the government shutdown on Monday ahead of the looming shutdown (see IRS Releases Gov’t Shutdown Contingency Plan). On Tuesday, with the House and Senate failing to reach an agreement on a budget resolution to continue funding government operations—and with the impasse continuing over the insistence by Republican lawmakers that the health care reform law should be delayed as a necessary pre-condition for agreeing to a budget deal—the IRS elaborated on the shutdown plans on its Web site, including a temporary stoppage in tax refunds.

“Tax refunds will not be issued until normal government operations resume,” said the IRS. The IRS emphasized, however, that the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.