IRS and Tax Questions for Yellen

Biden’s Treasury Secretary Janet Yellen will testify at least twice on Thursday March 21.

Taxpayers deserve answers to the following questions:

Inflation eroding Biden’s $400,000 pledge to taxpayers

President Biden has repeatedly promised that he would not raise taxes on individuals earning less than $400,000 and Yellen herself instructed the IRS by letter to not increase audit rates for households making under $400,000 annually.

However, since the President took office inflation has eroded the value of the President’s tax pledge. According to BLS data, a household today would have to earn nearly $75,000 more to have the same purchasing power as a household earning $400,000 when the President was sworn into office.

Question: Will you commit here today that the President’s pledge to taxpayers will account for this inflation? How many fewer households are covered by the President’s $400K pledge due to inflation compared to when President Biden took office?

Biden budget $5 trillion tax hike

The Biden budget imposes dozens of tax increases totaling $5 trillion.

Question: Is a $5 trillion Biden tax increase what this country needs right now?

IRS not in compliance with TikTok ban on government devices

The IRS is not in compliance with the No TikTok on Government Devices Act, according to a recent Treasury Inspector General for Tax Administration (TIGTA) report.

As the official IRS watchdog, TIGTA examined the criminal investigation (CI) division of the IRS, a unit which frequently handles highly sensitive personal taxpayer data.

The report stated:

“The IRS does not comply with the OMB’s mandate as computers and mobile devices assigned to CI [criminal investigation] employees continue to have the functionality to access TikTok and other related websites. For example, TIGTA identified more than 2,800 mobile devices used by CI that could access TikTok’s website and approximately 900 CI employees that had the ability to get access to TikTok’s website via computers assigned to CI.”

Question: Why was the IRS not in compliance with the No TikTok on Government Devices Act? TIGTA has expressed concern about the screenshot capabilities of “Bring Your Own Device” devices used by IRS agents. How many BYOD devices in the IRS currently have screenshot capability?

Biden’s Budget pushes for a corporate tax rate higher than communist China

U.S. employers would face a higher tax rate than China under President Biden’s budget plan released earlier this month. Biden wants to hike the current 21% federal corporate income tax rate to 28%. The combined federal-state average rate under the Biden proposal is 32%, much higher than communist China’s 25%. (Industry sectors of strategic use to the Chinese government pay an even lower rate of 15% or 10%.)

American workers will bear the brunt of Biden’s corporate tax increase.

The non-partisan Joint Committee on Taxation affirmed in congressional testimony that corporate tax rate hikes hit “labor, laborers.” A study compiled by the Tax Foundation found that “labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome.”

Question: Why should American businesses subjected to a tax rate higher than communist China?

Biden’s Budget Pushes for a capital gains tax rate more than twice as high as communist China

Biden’s budget calls for a top capital gains and dividends tax rate of 44.6%

Here is a direct excerpt from the Treasury green book:

“Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.”

China’s capital gains tax rate is 20%.

Question: Why does President Biden want to saddle the USA with a capital gains tax more than twice as high as communist China?

Global tax cartel with 21% minimum tax rate

Biden wants to yoke the U.S. to an international tax cartel and impose a 21% global minimum tax on American businesses. This would be a devastating blow to U.S. competitiveness and sovereignty and eliminate healthy tax competition between countries.

The Biden administration has for years pursued a misguided international tax regime under the control of the Paris-based Organisation for Economic Co-Operation and Development (OECD). The OECD wants to stamp out tax competition.

Biden’s plan would go well beyond the OECD’s framework for a 15% global minimum tax and instead increase the rate to 21%. And the tax rate will only go up from there since bloated governments won’t have to compete.

Questions: Why should we trust China to comply with the OECD global minimum tax? And isn’t the 21% rate an admission that this cartel is designed to target the U.S. from lowering our tax burden in the future?

IRS thief

Questions: How many individuals and entities had their information stolen? Can you provide a specific number for each?

Have you asked ProPublica to return the stolen information? 

Can you confirm the thief worked for Booz Allen Hamilton while he committed the theft?

IRS recently inked a contract worth up to $2.6 billion with Booz Allen Hamilton. Do you expect taxpayers to trust this decision?

1099-K

Questions: Specifically, from where do you derive your authority to wave a wand and ignore statute?

What is the limiting principal of this power you declare? 

IRS has done this wand-waving for two years. Could you do it for ten years? Why or why not?

Could a future IRS Commissioner in 2026 simply declare that parts of TCJA did not expire because doing so would cause a lot of headaches and administrative difficulties? 

Direct File

Your IRS commissioner Daniel Werfel repeatedly asserted to congress and the American people that the IRS was simply doing a “Direct File” feasibility study as authorized by the Inflation Reduction Act. He assured congress and the American public that the administration would wait for the report and “reflect” with congress before making any decisions. In reality, the IRS was secretly working the entire time on building a prototype software system with plans for a 2024 launch, as revealed in a Washington Post scoop on May 15, 2023.

Questions: Did Werfel lie to congress? Why didn’t the IRS tell congress that they were already working on building the Direct File system?

Biden budget scraps provision to protect taxpayers from rogue IRS agents

The Biden budget scraps a key taxpayer protection against rogue IRS agents who use the threat of penalties as an intimidation tactic against taxpayers, to get them to give up or settle.

Last year the Biden IRS got caught illegally backdating penalty documents and signatures in U.S. Tax Court in order to run up the bills on taxpayers. The court caught the IRS lying. U.S. Tax Court is generally very deferential to IRS neglect but in this case the court was rightly furious.

Due to reforms enacted by Republicans in 1998, IRS agents are currently required to get written approval from their immediate supervisor before imposing penalties on taxpayers. This is designed to protect taxpayers from agent chicanery.

Congressional investigators discovered years of abuse by IRS agents running up the penalty score as an intimidation tactic against taxpayers. Agents would use the threat of penalties as a bargaining chip. The IRS has a history of targeting people who do not have the means to fight back, and unethical agents at employee review time could point to all the penalties they imposed on people who perhaps did not deserve it. So, in 1998 congressional Republicans enacted a taxpayer protection (Section 6751) which requires agents to get personal written approval from their immediate supervisor before sending written penalty letters to taxpayers.

But the Biden budget allows IRS agents to shop around for sympathetic supervisors anywhere in the building. Biden also wants to scrap the written approval requirement altogether for many penalty scenarios. Agents will abuse this and taxpayers will be the victim.

From the Biden budget: “In addition, the proposal would expand approval authority from an ‘immediate supervisor’ to any supervisory official, including those that are at higher levels in the management chain or others responsible for review of a potential penalty.”

Questions: Has any agent been punished for getting busted by the tax court for backdating documents? Why does the President want to weaken taxpayer protections against rogue IRS agents who will simply shop around the building for the supervisor with an axe to grind against taxpayers?