The Obama Administration’s New Financial Crimes Taskforce, H.R. 4172 and the DUH Factor.
By Stacie Clifford Kitts, CPA
The announcement of a new financial crimes task force by the Obama administration has inspired a new installment of the DUH Factor.
The DUH Factor is my take on events, or laws (generally tax) that are so obviously absurd that they fall into the DUH category.
Among the reasons why this new task force qualifies for my DUH Factor is Treasury Secretary Timmy Geithner’s involvement. Of all the people who could have been selected to announce a new financial crimes task force, I think Geithner would have been a little lower on my list.
Why?
Lets begin with this quirky post Has Properly Paying My Income Tax Prevented Me From Getting A Job In the Obama Administration? In this post, I mention that Geithner did not calculate and pay the proper amount of self-employment taxes on income that he received. The unpaid taxes as it turns out were related to self employment compensation received from the International Monetary Fund (IMF).
Because of Geithner’s tax oops, some interesting legislation is proposed, H.R.4172 or the Geithner Penalty Waiver Act. Here is what has been introduced:
1st Session
H. R. 4172
To provide the same penalty rate for taxpayers who voluntarily disclose
unreported income from offshore accounts as was afforded Timothy Geithner with
respect to his failure to pay self-employment taxes with respect to his
compensation from the International Monetary Fund.
December 2, 2009
Mr. CARTER (for himself, Mr. WESTMORELAND, and Mr. BURGESS) introduced the
following bill; which was referred to the Committee on Ways and Means
A BILL
To provide the same penalty rate for taxpayers who voluntarily
disclose unreported income from offshore accounts as was afforded Timothy
Geithner with respect to his failure to pay self-employment taxes with respect
to his compensation from the International Monetary Fund.
Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled,
SECTION 1. ZERO PENALTY RATE FOR OFFSHORE VOLUNTARY DISCLOSURE PROGRAM.
The penalty assessed under the Internal Revenue Service special voluntary
disclosure program for unreported income from hidden offshore accounts shall not
exceed the penalty imposed with respect to Timothy Geithner’s failure to pay the
tax imposed under section 1401 of the Internal Revenue Code of 1986 on his gross
income derived from employment with the International Monetary Fund.
Now granted, we, the public are not privy to the specifics behind exactly why the penalties were waved. Maybe it was perfectly legit.
But come on, the guy who has inspired “fairness” legislation, because it “appears” that he has received special treatment concerning his financial dealings and the incorrect application of certain tax laws, is probably not the right guy to be introducing a new financial crimes task force. DUH
For some more interesting coverage of this proposed legislation, check out the Wandering Tax Pro’s blog.
Know Someone Who is Not Paying Their Income Tax? The IRS Will Pay You to Tattle
In an effort to encourage you to turn in tax evaders, the IRS is offering a pretty nice cash incentive.
From the IRS:
The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.
Who can get an award?
The IRS may pay awards to people who provide specific and credible information to the IRS if the information results in the collection of taxes, penalties, interest or other amounts from the noncompliant taxpayer.
The IRS is looking for solid information, not an “educated guess” or unsupported speculation. We are also looking for a significant Federal tax issue – this is not a program for resolving personal problems or disputes about a business relationship.
What are the rules for getting an award?
The law provides for two types of awards. If the taxes, penalties, interest and other amounts in dispute exceed $2 million, and a few other qualifications are met, the IRS will pay 15 percent to 30 percent of the amount collected. If the case deals with an individual, his or her annual gross income must be more than $200,000. If the whistleblower disagrees with the outcome of the claim, he or she can appeal to the Tax Court. These rules are found at Internal Revenue Code IRC Section 7623(b) – Whistleblower Rules.
The IRS also has an award program for other whistleblowers – generally those who do not meet the dollar thresholds of $2 million in dispute or cases involving individual taxpayers with gross income of less that $200,000. The awards through this program are less, with a maximum award of 15 percent up to $10 million. In addition, the awards are discretionary and the informant cannot dispute the outcome of the claim in Tax Court. The rules for these cases are found at Internal Revenue Code IRC Section 7623(a) – Informant Claims Program, and some of the rules are different from those that apply to cases involving more than $2 million.
If you decide to submit information and seek an award for doing so, use IRS Form 211. The same form is used for both award programs.
More Information
What Happens to a Claim for an Informant Award (Whistleblower)Procedures used and the criteria followed to identify and process informant cases
History of the Whistleblower/Informant ProgramHistorical information on the evolution of the concept of paying for leads from its inception up to the current law followed today
Whistleblower LawA brief synopsis of what the new whistleblower law entails. This is the most significant change to the Services’ approach to informant awards in 140 years
How Do You File a Whistleblower Award ClaimStep by step procedures to follow to file an informant claim for award
Confidentiality and Disclosure for WhistleblowersThe rules governing confidentiality of informant information
IRC Section 7623(b) – Whistleblower RulesThe requirements of the new rules enacted in IRC Section 7623(b), the Whistleblower Program
IRC Section 7623(a) – Informant Claims ProgramThe requirement of the rules governing claims that do not meet the requirements of the provisions in the whistleblower program under IRC Section 7623(b). These claims are part of the Informant Claims Program
IRS Form 211Application for Award for Original Information
News Release IR-2007-201Procedure Unveiled for Reporting Violations of the Tax Law, Making Reward Claims
Notice 2008-4 Guidance to the public on how to file claimsClaims Submitted to the IRS Whistleblower Office under Section 7623
Whistleblower Office At-a-Glance
2008 Report to Congress on the Whistleblower Program
Reporting other information to the IRS
If you have information about tax noncompliance but are not interested in an award, or you have other information you believe may be of interest to the IRS:
For information on how to Report Suspected Tax Fraud Activity, if you have information about an individual or company you suspect is not complying with the tax law, and you do not want to seek an award . You can remain anonymous
The IRS sets professional standards for attorneys, certified public accountants and enrolled agents who represent taxpayers before the IRS. To learn more about those professional standards, or how to report a violation, see Office of Professional Responsibility At-a-Glance – Report Circular 230 Violations – email OPR@irs.gov
Report Fraud, Waste and Abuse to Treasury Inspector General for Tax Administration (TIGTA), if you want to report, confidentially, misconduct, waste, fraud, or abuse by an IRS employee or a Tax Professional, you can call 1-800-366-4484 (1-800-877-8339 for TTY/TDD users). You can remain anonymous.
Stacie's Tax Stuff 