IRS’s Ability to Protect Taxpayer Information in Question Following Cyberattack

Posted by Alexander Hendrie on Tuesday, May 26th, 2015, 6:51 PM PERMALINK

The IRS today announced that hackers have breached their system and stolen the personal information of over 100,000 taxpayers by accessing old returns. The breach should again raise questions about the ability of the agency to safely protect confidential taxpayer information especially given the increased responsibility the agency is being given in administering Obamacare.

According to the agency, hackers have used personal information of taxpayers to file fraudulent tax returns by exploiting a specific application known as “Get Transcript.” The final amount stolen has yet to be determined although Commissioner Koskinen hoped it would not reach $50 million.

In a statement, Senate Finance Chairman Orrin Hatch (R-Utah) said it is unacceptable that the IRS remains so vulnerable, and the agency has been “repeatedly warned” that it needed to do more to protect taxpayers.

At the same time, the Treasury Inspector General for Tax Administration (TIGTA) has repeatedly raised concerns about the agency’s ability to protect taxpayer information. A TIGTA report issued earlier this month found that the agency had failed to fire employees that “willfully violate tax law”, while a report issued in February found that the agency had rehired employees that had engaged inunauthorized access of taxpayer information.

Just last week, it was revealed that the agency had failed to test its system for administering Obamacare until a week before tax filing season began. Given its repeated failings, it should be alarming that the agency will now be handling the personal healthcare information of Americans.

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Florida Legislature Adjourns Without Action on Gov. Scott’s Tax Cuts

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Posted by Brad Hart on Tuesday, May 26th, 2015, 9:57 AM PERMALINK

Earlier this month the Florida legislature adjourned without passing a budget. This happened as a result of the state Senate’s demands that Florida expand Medicaid under Obamacare in exchange for a tax reduction package passed by the House. The House didn’t bite and sine die came and went. A special session to resolve their differences convenes on June 1.

In the last 20 years, Florida has been the leader of the nation in bringing in new families, businesses and retirees to the state. Yes, Florida is a beautiful state with amazing weather, but in recent years, it has been Gov. Rick Scott’s wide range of tax cuts that have made the Sunshine State even more appealing. His tax cuts have been both pro-family and pro-business. This provided relief to a wide range of residents.

 In Gov. Scott’s first term, the legislature passed 2 billion dollars in tax cuts. They aren’t resting on those laurels, however.  Florida has one of the nation’s highest communication-services taxes (CST) on cellphones, satellite TV and nonresidential landline phone services. In launching “Cut My Taxes Week,” this year he announced a proposal to reduce the states CST by a rate of 3.6%. This modest reduction will result in about 470 million dollars in annual savings for Florida taxpayers, who are increasingly relying on new technologies that have driven up the cost of these services.

 Before adjourning, the Florida House passed a “No Tax is Safe” plan that included the CST cut but the Senate failed to act on this tax reduction package before they adjourned.

Many in the state Senate have demanded a dramatic expansion of Medicaid instead of spending restraint and tax relief. This new spending program would expand in an unsustainable manner Obamacare’s Medicaid in Florida to a new group of middle class and in many cases childless adults.

This would reverse a trend that Florida has set in recent years. Thanks to Republican health care reforms, Florida has seen an enormous amount of Medicaid savings. Tax payers have saved 118 million annually since a launch of a private program in 2006 and over 1 billion in savings just last year when the program expanded statewide. This program raised the quality of coverage for low income Floridians by transitioning current Medicaid recipients in to a managed-care private program. This is just one of the reasons why Florida is leading the way in 21st century health-care reform.

Demanding an expansion of Obamacare’s Medicaid at the cost of hard working taxpayers doesn’t make sense. If implemented Florida would reverse a positive trend in health care savings and taxpayer relief by bending the cost curve upward for years to come. All of this has occurred at the same time the federal Center for Medicare & Medicaid Services has demanded Medicaid expansion in Florida.  To cave to the masked demands of the Obama Administration by expanding Medicaid would not benefit taxpayers or current recipients of Medicaid

Decades of research suggest, that states with lower tax burdens grow faster. The Florida House and Gov. Scott’s modest 2015 tax cuts recognize this reality. When the Florida legislature reconvenes next month, the Senate should abandon demands for expansion of Medicaid in exchange for much needed tax relief by reducing the CST tax. 

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ATR Supports Creation of Obamacare Inspector General

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Posted by Alexander Hendrie on Thursday, May 21st, 2015, 4:14 PM PERMALINK

Americans for Tax Reform supports H.R. 2400, the “Special Inspector General for Monitoring the Affordable Care” (SIGMA) Act, introduced by Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-Ill). This legislation will help ensure stronger oversight over Obamacare and hold unelected bureaucrats accountable to the American people.

The SIGMA act creates a special inspector general to oversee and monitor Obamacare. While Obamacare’s many complex regulations and mandates span across numerous government agencies, no one inspector general has jurisdiction over these agencies.

H.R. 2400 would fix this problem by creating an inspector general that could knock on doors across the government, from the Department of Health and Human Services (HHS), to the Treasury Department, the Social Security Administration, the Pentagon, the Department of Homeland Security, the Veterans' Administration, the Department of Labor, and even the Peace Corps.  This would shine a much needed spotlight on the unaccountable actions of the Administration and provide Congress and taxpayers with reports on a regular basis.

The creation of an inspector general office for Obamacare follows in the footsteps of other recent predecessors for Iraq reconstruction, Afghanistan reconstruction, and the TARP bailout.  These inspectors general have recovered billions of dollars in savings for taxpayers, and resulted in prosecutions of hundreds of bad actors.

Already, Obamacare has cost taxpayers billions upon billions of wasted dollars. Since 2011, HHS gave almost $5.4 billion in grant money to states for the attempted construction of Obamacare exchange websites. This money was handed out with little oversight and no strings attached.

Unsurprisingly, several states wasted each and every dollar they received.

Oregon shut down its website and moved to the federal exchange earlier this year. Despite being given $305 million in grant money, the website failed to enroll anyone weeks after the November 2013 deadline and was forced to send out paper applications to individuals hoping to enroll. After failing to create a useable website, Oregon moved back to the federally run at the cost of $41 million. As a result, the actions of Oregon officials has become the subject of multiple federal investigations that remain ongoing.

In addition, Hawaii recently announced it plans to migrate to the federal exchange after failing to receive a $28 million bailout. The website failed to become financially viable because of lower than expected enrollment figures. In fact, the website enrolled just 8,592 individuals in year one despite spending $205 million constructing its exchange. This means it spent $23,899 per enrollee.

These two states are not on their own. Massachusetts, Maryland, Vermont, New Mexico, and Nevada have all been astonishing failures that have cost taxpayers millions of dollars.

If an Obamacare inspector general had existed in the past, perhaps taxpayers would have been spared from billions of dollars in waste, and unelected bureaucrats would be held accountable for their inappropriate conduct. ATR urges all members of Congress to support and vote for this important legislation.

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IRS Failed to Test Obamacare Changes Until Week Before Filing Season

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Posted by Alexander Hendrie on Thursday, May 21st, 2015, 2:44 PM PERMALINK

The IRS failed to test its Obamacare processing system until a week before filing season began, according to a report released today by the Treasury Inspector General for Tax Administration (TIGTA).

"The administration learned nothing from the failed rollout of Obamacare’s website and then repeated the lack of preparation with the IRS and forced that failure onto every American on tax filing season,” said Grover Norquist, president of Americans for Tax Reform.

The agency relies on what is called a Final Integration Test (FIT) to test its ability to deal with potential tax filing complications. However, according to the TIGTA report, the IRS failed to develop and test key systems to integrate Obamacare into the FIT program. As the report notes:

“key systems and programs were not sufficiently developed and tested before delivery to the FIT environment.”

Instead, the process for integration was so chaotic that eight different builds were received, which meant the agency was only able to complete tests at the last minute. As the report notes:

“…the current procedures resulted in the FIT program receiving eight builds of the ACA 5.0 systems with the final build received by the FIT program less than one week before the start of the 2015 Filing Season.”

At the same time, the e-filing system was delivered to FIT with significant errors which increased the risk of processing errors during the filling season. As the report notes:

“Not completing the planned FIT execution on schedule prior to the 2015 Filing Season increases the risk of filing season processing errors that would have been identified and corrected during the FIT.”

In its recommendations TIGTA said that the IRS must ensure timely delivery of systems to the FIT environment. Failure to do so threatens taxpayers’ ability to file returns, receive refunds, and obtain adequate customer service.


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Grassley to IRS: Why Weren’t Law-Breaking Employees Terminated

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Posted by Alexander Hendrie on Wednesday, May 20th, 2015, 4:57 PM PERMALINK

Senator Chuck Grassley (R-Iowa) yesterday wrote to the IRS asking the agency to explain why it has not terminated employees that have willfully violated tax law.

The letter is in response to a Treasury Inspector General for Tax Administration (TIGTA) report that found the agency was not properly disciplining employees.

The Restructuring and Reform Act of 1998 (RRA 98) requires the IRS to terminate employees that have committed acts of misconduct including willful violations of tax law. In reality, only 25 percent of employees that had willfully violated tax law were terminated by the agency and more than 60 percent of employees were disciplined in a way that did not involve termination.

As Grassley notes in his letter, RRA 98 gave the IRS some discretion on personnel flexibility but outlined clear instances for employee termination including “willful violation of tax law.” As the letter states:

“These changes created a clear and direct path to termination for employees who commit ten specific offenses, two of which are the willful tax violations at issue here.”

Grassley notes that the IRS’s improper use of this discretion is problematic given the serious nature of the offense. As the letter states:

“Willful violation of tax law is a serious offense and the presumption is an employee guilty of the offense shall be terminated.”

Worse still, the TIGTA report found that many of the IRS employees soon received “promotions, performance awards, and permanent pay increases” after their noncompliance cases were closed. 

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ron smith

Defund the IRS until all tax cheats are gone…then start with the US Postal Service!!!

M. N.

Because they would sing like canaries and repercussions might actually be forced from the citizens who are tired of corruption in the government.

Libertarian Board

Because then they would rat out the ones who weren't caught. The IRS is simply corrupt. Giving any group, agency or government that much power is just asking for trouble. We should be more careful about never giving power that can be abused to anyone.

Hawaii Obamacare Enrolls ZERO People During Special Enrollment Period

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Posted by Alexander Hendrie on Wednesday, May 20th, 2015, 2:12 PM PERMALINK

The numbers are in: Hawaii’s Obamacare Exchange enrolled a grand total of ZERO — yes, zero people during its special enrollment period.

The Obama administration had implemented the special enrollment period from March 15 - April 30 to assist individuals who were unaware they would face a tax penalty for not having “qualifying” health insurance. In all, less than 250,000 individuals decided to enroll nationwide meaning that millions of Americans would rather pay the tax than enroll in Obamacare. 

While Hawaii enrolled zero individuals and is the worst performing state, it is not alone. Vermont signed up only 97 households, while Rhode Island enrolled just 25 households.

Hawaii’s dismal performance should not be surprising. The website cost taxpayers $205 million but could only enroll 8,592 individuals in year one. Cost to taxpayers per enroll: $23,899.

The state legislature recently rejected a $28 million bailout for the website meaning that a contingency plan to dismantle the exchange and migrate to the federal exchange will be implemented immediately. Unfortunately, taxpayers are not off the hook yet as it is expected that moving to the federally run will cost $30 million.

Hawaii is not the first website to implode. Oregon’s $305 million exchange was officially abolished earlier this year at an additional cost and of $41 million. The exchange is currently under investigation by numerous federal organizations for how it wasted so much money.

In all, states received $5.4 billion from the federal government for state-based Obamacare exchanges with no strings attached and zero oversight over spending decisions.

With so much money being wasted, the American people deserve an explanation.

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The numbers for Hawaii's special enrollment period are better than I expected.


there must be a way to blame this on global warming ....

Ben Dover

Sounds like racism to me...Maybe they should riot...too soon?

Congressional Democrats: We Aren’t Being Paid Properly

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Posted by Alexander Hendrie on Wednesday, May 20th, 2015, 9:00 AM PERMALINK

Senior Democrats are pushing for a pay raise for those who deserve it most - Members of Congress.

House Minority Whip Steny Hoyer (D-Md.) raised the issue at Tuesday’s Democratic Caucus meeting and has said he plans to ask Speaker John Boehner (R-Ohio) to give members a pay raise.

Members of Congress already earn $174,000 a year – far greater than the $47,230 that the average US worker earns a year. In fact, according to the Bureau of Labor Statistics, Congressmen earn more than the average lawyer ($133,470), Dentist ($170,940), Engineer ($93,630), and ‘Top Executives’ ($122,060).

Congressional salary has been frozen since 2009 because of tough economic conditions and rising federal deficits. However, Hoyer believes that if Congressional pay is not raised it will mean that “the only people who can serve are the rich”.

He is not alone in this view. Congressman Alcee Hastings (D-Fla.) recently argued “we aren’t being paid properly”, during consideration of FY 2016 Legislative Branch spending levels.

Fortunately for taxpayers, sanity prevailed and the Republican Majority again voted against giving themselves a pay raise.

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What Steny and Alcee mean is that they need more money so that they can spend more time hobnobbing with the real rich, that is, those who have earned their money by actually working.

Libertarian Board

Yes, they should all quit and go try to start a business in this toxic anti-business environment they have created where taxes and government red tape makes it difficult to actually manage your business!


You don't actually expect two liberals to shmooz with real working people now do you? The would only schmooz with union members. 'Nuff said.

Taxpayer Bailout of Puerto Rico Can Be Avoided with Bankruptcy Solution

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Posted by Ryan Ellis on Tuesday, May 19th, 2015, 5:02 PM PERMALINK

If there's one thing the financial crisis taught taxpayers, it's that a bailout is one of the easiest ways to grow government and increase the corruption of crony capitalism in our system.

One such bailout may be brewing in Puerto Rico unless Congress acts soon.

Puerto Rico's insular electric company is out of money. In fact, its bonds have fallen to junk status. For any state municipality outside Puerto Rico (which is a territory, not a state), the next step would be obvious--apply for a structured bankruptcy settlement under Title IX of the federal bankruptcy code. That would be the best way for an ailing government entity to hit the reset button, pay debts equitably, and avoid a taxpayer bailout to keep it going. Investors would take a hit, but then life would go on without the need for extraordinary government measures.

Unfortunately, Puerto Rico does not have that option. Municipalities there were not included in the federal bankruptcy law, and the courts have said that the island cannot establish its own bankruptcy laws, either. That means Puerto Rico is stuck with a municipal power company with no money, a ton of debt, and no way out.

Why should taxpayers in the rest of the United States care?

The most likely outcome of this no-win scenario is a Congressional bailout of Puerto Rico and her ailing government-sponsored enterprises, starting with the power system. With no way to pay bills, and no bankruptcy option to get out of its insurmountable debt, the power company would be forced to shut down operations. This would immediately transform Puerto Rico into something less than a developing nation, a fate that is unimaginable in a territory owned and protected by the United States, and where 3.5 million U.S. citizens live and work.

Before this plunge into the dark ages, Congress would no doubt rush through emergency resources to prevent Puerto Rico from falling into a humanitarian calamity. This expenditure of funds--reasonable conservatives would call this a bailout--only has to happen because a structured bankruptcy is not an option.

This bailout scenario has been actively pushed for by Big Labor (the SEIU, UAW, and AFSCME), who has been lobbying the Obama Treasury Department to buy or guarantee Puerto Rican bonds. Some Puerto Rican Democrats would love to see a taxpayer bailout check from the Beltway. 

Another option very much on the table is for Puerto Rico to raise taxes, including the creation of a value-added tax, or VAT. That, too, would be a disaster for U.S. taxpayers as bad fiscal solutions on the island could easily spread north.

Thankfully, there is another way. H.R. 870, the "Puerto Rico Chapter 9 Uniformity Act of 2015," would allow Puerto Rican municipalities to do what the thousands of municipalities in the upper 50 states can already do--declare bankruptcy. Doing so would allow for a structured wind-down of this crisis under the administration of bankruptcy courts.

Clearly, that's a far better alternative than another bailout coming from Washington. Congress should pass H.R. 870 for the sake of avoiding a bailout of Puerto Rico.

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or maybe utility rates should be raised to levels comparable to other island utilities.


that is entirely too simple for the simpletons that run the US government


The power company is a corporation. The corporation sells its assets in a bulk sale to a third party. The third party is an entity that believes it can run the utility at a profit. The corporation has the sales proceeds and also has its obligations that it will not/cannot pay. It simply lets the creditors sue and collect what they might. You don't need a bankruptcy proceeding to accomplish that result.

ATR Supports Rep. Tom Cole’s FDA Deeming Authority Clarification Act of 2015

Posted by Paul Blair on Tuesday, May 19th, 2015, 3:21 PM PERMALINK

Congressman Tom Cole (R-Okla.) recently introduced H.R. 2058, the “FDA Deeming Authority Clarification Act of 2015.” This legislation would prevent the Food and Drug Administration (FDA) from banning tobacco products (like cigars) and 99 percent of the innovative vapor and electronic cigarette products that have hit the market since 2007.

The FDA is finalizing a regulatory framework for premium cigars and vapor products that stands to require pre-market approval for all products that have hit the market since February 15, 2007. Any product on the market prior to that date would largely be exempt and any product that has hit the market since then would be given two years to apply for approval.

H.R. 2058 moves up the 2007 date to the date of the announced “deeming regulation,” which is likely to occur later this year. This would permit products that have hit the market since 2007 to remain on the shelves, pending approval. This is important for a number of reasons. First, nearly every vapor product on the market today did not exist in 2007. The thousands of e-liquids and countless versions of electronic cigarettes available to smokers looking for an effective way to quit would be banned pending FDA approval without a change to the Federal Food, Drug, and Cosmetic Act or subsequent Tobacco Control Act of 2009, which established the 2007 date.

That Act was intended to apply to cigarettes, smokeless tobacco, and roll your own products. The FDA’s attempt to categorize new products under the authority given to them by that legislation lays out two pathways to “legalization” for new products on the market. The first is “substantial equivalence,” whereby a manufacturer must file for a tobacco product application, which includes clinical trials and would be relatively expensive for small and medium sized businesses.

Rep. Cole’s common-sense legislation moves up this substantial equivalence 2007 date to date of deeming regulation in 2015 and would prevent countless companies from having to cease operations given the cost of compliance for products that are already being sold to consumers.

If this legislative change if not made, and for the companies who could afford compliance, the FDA would be inundated with applications that the agency is not equipped to fast-track for approval. For combustible cigarette smokers looking to or considering quitting with e-cigarettes, this would be a tragedy as countless innovative smoking cessation devices would be at risk of never being sold.

The FDA has claimed that it does not have the power to modify the February 15, 2007 date, making a Congressional solution imperative. Americans for Tax Reform supports H.R. 2058 and urges more members to join on as co-sponsors in the coming weeks. This legislation will encourage innovation and teardown an unnecessary federal barrier to the sale of many products that stand to improve public health. 

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I contacted my reps about it. Good reply from my state senator (Washington State) who is actually on the committee. Sure hope I'll wind up being happy I voted for her. I, of course, am a CASAA member and all for it. Best wishes, Tom Cole and sponsors.

No Hope for American Free Trade without Trade Promotion Authority

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Posted by Alexander Hendrie on Tuesday, May 19th, 2015, 1:27 PM PERMALINK

Congress is currently considering Trade Promotion Authority (TPA), legislation that is essential to the prospect of any US free trade agreement. Although the US Constitutional system of checks and balances makes TPA essential, no other country has the same reliance on a TPA type mechanism. This reliance puts the US at a disadvantage in the global competition to lower trade barriers and hurts local exporters. As a result, approval of TPA is not only a precondition for US trade, it is essential if America wants to be viewed as a genuine trading partner by the rest of the world.

While free trade opponents are characterizing TPA as Congress recklessly ceding its authority to the President, nothing could be further from the truth. Congress has delegated trade authority to the President since 1934, and has granted TPA to Republican and Democrat Presidents five times over the past 30 years. The proposed TPA bill contains strong oversight provisions and ensures that Congress always has the final say.

But TPA’s importance goes beyond providing the President with a set of guidelines and rules. Without TPA, trade agreements stand little chance of approval because members of Congress can, and will continually offer amendments when an agreement is being considered. This forces US negotiators to go back to table and restart negotiations on an otherwise concluded agreement.

TPA solves this problem by requiring Congress to consider trade agreements on an up-or-down vote, with no amendments allowed. However, the fact that TPA is needed at all puts the United States at a disadvantage in the global race for trade.

It goes without saying that having 535 negotiators, all with their own parochial objectives, does not work. In fact, no other country grants each and every representative such broad influence over trade agreements. At best, this uncertainty makes the US a difficult partner, at worst it discourages other nations from negotiating an agreement with them altogether.

Most countries already grant their executive the authority to negotiate trade agreements, or have mechanisms that allow the executive to secure approval in a straightforward way. Countries in the European Union have an efficient process that delegates negotiating authority to the European Commission and approval authority (with no amendments allowed) to the European Council. In fact, this streamlined process shortens the negotiating process substantially, with many EU trade agreements taking two to three years.

Parliamentary systems like Australia and Canada link their executive and legislative branches, and so the trade minister has clear authority from the political majority, making approval of trade agreements a streamlined process.

America’s method of approving trade agreements is convoluted and complex by comparison. In fact, the need for TPA puts the US at a significant disadvantage, because it makes the complexity of negotiating with the US a difficult partner to negotiate with. According to the World Trade Organization, over 400 trade agreements are in effect around the world. But despite being the world’s largest economy, the US is only part of 14 agreements with 20 other countries. In contrast, the EU has agreements with over 50 countries. As a result, the EU is the top trading partner for 80 countries while the US is the top trading partner for just over 20 countries. Clearly, America is falling behind.

When the US does not have barriers with a trading partner, the economic benefits are enormous. America’s 20 free trade partners purchased 12.8 times more US goods per capita compared to non-free trade partners. In addition, 46 percent of US exports go to a free trade partner, despite these agreements not covering some of the largest markets in the world such as China, India, Japan, Germany, and the United Kingdom. Despite substantial barriers existing with these and other major markets, trade already accounts for 1 in 5 jobs in America. Clearly, if the US had more free trade agreements, the economy would be much, much stronger.

If Congress is serious about free trade, TPA is an absolute necessity. It will provide strong guidelines and structure around the approval of pro-growth free trade agreements. But without TPA, the United States will continue to fall behind in the world economy. 

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