The IRS this summer 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.
And the Biden-appointed IRS Commissioner under questioning from Congressman Gary Palmer (R-Ala.) recently admitted to congress there is “no specific penalty” if an agent were to commit such fraud against a taxpayer.
While testifying to on Oct. 24, IRS Commissioner Daniel Werfel declined to say whether anyone has been fired for this incident. It is suspected the backdating incident was not an isolated occurrence within the IRS.
This crime is another indication that the IRS still has an us vs. them mindset that is only going to get worse after getting rewarded with $80 billion from Democrats, with no new taxpayer protections or accountability measures for agents.
Here is the video clip and transcript of the key exchange during a joint hearing convened by the House Oversight Committee’s Subcommittee on Government Operations and the Federal Workforce and Subcommittee on Health Care and Financial Services:
Rep. Palmer: “If a tax filer, if a private citizen willfully concealed or manipulated a tax document, would that be considered a form of tax fraud?”
IRS Chief Werfel: “Yes based on the way you described it, if they willfully manipulated to misdirect or misreport, that could be considered tax evasion.”
Palmer: “And the penalty for that could be a fine up to $250,000 and up to five years in prison. Is that correct? And for a business it could be up to $500,000 and five years in prison. Let me ask you this, if government auditors were similarly found to be backdating or manipulating tax forms of private citizens, would that also be considered a form of tax fraud?”
Werfel: “It’s concerning.”
Palmer: “No, no. I asked you a direct question. If a private citizen altered information on a tax document, whether it’s a date or a signature from a supervisor, it would be considered tax fraud and it would be prosecuted. It is a felony. They could have to pay up to $250,000 in fines and they could serve up to five years in prison. So what are the penalties for IRS employees who do the same thing and possibly jeopardize a private citizen on their tax filing? So what’s the penalty?”
Werfel: “Yeah, there should be accountability.”
Palmer: “What is the penalty?”
Werfel: “If you allow me to elaborate, I can elab…”
Palmer: “I don’t want a long answer. I want you to tell me, what is the penalty?”
Werfel: “Well, there is no specific penalty. It depends on the circumstances.”
This is another indication there is a set of rules for the American taxpayer and a separate set of rules for IRS agents.
The IRS still will not reveal its internal decision memo detailing its decision to intentionally destroy 30 million tax forms submitted by taxpayers attempting to resolve their taxes. The documents were destroyed at the Ogden, Utah facility and the IRS tried to get away with it without notifying anyone. But they got caught during an onsite visit from the Treasury Inspector General for Tax Administration.
After getting caught, the IRS claimed that no taxpayer would face negative consequences as a result of the destruction of the 30 million documents. But as reported by Tax Notes on Aug. 28, 2023 taxpayers received audit letters wherein the IRS accused taxpayers of failing to file their tax forms — as in, the same forms the IRS had destroyed.
As noted by Tax Notes:
“The decision by the IRS to expunge 30 million information return documents — mostly third-party income reporting on Forms 1099 — meant the agency didn’t have records to match income reported by thousands of low- and middle-income taxpayers claiming EITCs. But it continued auditing those taxpayers for ‘missing’ Forms 1099 anyway.”
The volume of material destroyed by the IRS is considerable: if stacked in a single pile, 30 million pieces of paper would reach a height of two miles. IRS has not revealed the manner of destruction but possibilities include incineration, landfill dumping, or industrial shredding.
If a taxpayer intentionally destroyed an information return along the lines of what the IRS did, the taxpayer would face a penalty of $630 per destroyed form, with no limit. So if the IRS were to hold itself to the same standard, it would owe the taxpayers $18.9 billion in penalties (30,000,000 X $630).
But as the IRS chief has pointed out, it appears there is “no specific penalty” for this type of malfeasance either. In fact the agency was awarded with $80 billion from Biden and congressional Democrats, with no protections for taxpayers.