Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 133 Comments

Shulman went through the first of at least two testimonies he is required to give concerning the #IRS scandal. Today, he appeared before the Senate Finance Committe. It did not go well for Mr. Shulman. He said he was “dismayed” and “saddened ” after reading the IG’s report that indicated targeting had gone on within the IRS concerning 501(c)(4) exemption. applications. In his usual instructive yet digressing style, he appeared to try and give the appearance  of acceptance that the the questions concerning the fairness of the IRS’ actions, were justified. Yet he did not apologize and claimed he wasn’t responsible for what happened regarding the targeting. Sounds rather like a terrified USC trying to appeal to the IRS that he/she wasn’t responsible for not filing a tax return, or an FBAR, since he/she had no knowledge of it, doesn’t it? Apparently the panel was not particularly sympathetic to Shulman (or Miller).

See the video of his comments at:

http://www.politico.com/story/2013/05/irs-scandal-doug-shulman-91665.html   (1:35)

Interestingly, Baucus took the unusual step of swearing each witness in. I wonder what level of risk that involves. I hear that famous phrase “under penalty of perjury” ringing deliciously in my ears!

“Shulman has come under fire for telling a House committee in March 2012 that the  IRS was “absolutely” not targeting conservative groups. He was briefed on the  program in May but never disclosed it to Congress before stepping down in  November at the end of a six-year term.”  If he could claim the IRS was not targeting in March 2012, it would appear that he knew it was going on. What difference does it make that he was briefed in May. What matters is that he knew, it was his responsibility to follow through and get to the bottom of it, given the seriousness of the matter. The fact he did not tell Congress is what should nail him. And what does that remind of us?  Willfulness. Willful blindness (NOT!). Hm, what’s the penalty for that?  Lying to Congress could land him 5 years in jail.

http://thehill.com/blogs/on-the-money/domestic-taxes/300969-former-irs-chief-i-didnt-know-full-story-before-i-left

Mr. Shulman’s testimony “frustrated Republicans already irritated by Miller’s contentious appearance before the  House Ways and Means Committee last Friday and shed little additional light on  when key figures in the White House and Treasury found out about the IRS  targeting.” I find it interesting that, although partisan-based, the Republicans seem to feel Obama is responsible so how could anyone not find Shulman responsible? It was his job to lead the IRS and knowing there was a problem, it is inexcusable that he did not investigate the full extent of it. Orrin Hatch said the fact Shulman and Miller found out in May 2012 and did not notify Congress amounted to “a lie of omission.”
http://thehill.com/blogs/blog-briefing-room/news/300573-dem-ex-irs-chief-lied-to-congress

A Democrat, Rep. Joseph Crowley, indicated he believed Shulman lied to Congress under oath when he told lawmakers last year that the agency  did not give special attention to certain groups.

http://www.cnn.com/2013/05/21/politics/irs-targeting/index.html?hpt=hp_inthenews

Baucus and Hatch sent a letter to the IRS on Monday seeking an exhaustive list of information about the case as part of a full investigation by their committee. There is a deadline (can’t find the original info) and there was no mention of any possibility of an extension. Hmmm, what kind of accuracy penalties, in addition to non-filing compliance, could we be looking at here?   LOL!

According to The Hill, the Justice Department has launced a criminal investigation into the matter. And Lois Lerner will plead the 5th tomorrow when appearing before the House Oversight Committee.

Tune in tomorrow to the House Oversight Committee hearing where Mr. Shulman will appear again.

 

 

 

133 thoughts on “How Does it Feel Mr. Shulman, How Does it Feel?”

  1. Requested by Daniel Werfel and scheduled meeting next Tuesday: J. Russell George, the Treasury Inspector General for Tax Administration —- wouldn’t it be good if Nina Olson also be there to give the new Acting IRS Commissioner Daniel Werfel all he needs to know about what needs to be done as he heads the IRS?

  2. House Oversight Chairman Darrell Issa: This meeting is in recess, not adjourned — Lois Lerner may be recalled to answer if by making her opening statement she waived her rights of the 5th Amendment for which she was excused from the rest of today’s hearing.

    May 23, 2013: http://www.accountingtoday.com/news/IRS-Hearings-Express-Lawmakers-Outrage-66838-1.html?ET=webcpa:e7131:241779a:&st=email

    One IRS employee who could have provided more detail—Lois Lerner, who oversees tax-exempt organizations—refused to testify to the House Oversight and Government Reform Committee.
    …
    Committee Chairman Darrell Issa, a California Republican, said he may recall Lerner to testify and suggested that by giving a statement, she may have waived her constitutional rights. Some criminal-procedure experts questioned whether Lerner said enough to give up her right against self-incrimination.

    Lerner’s opening statement was “puffing,” said Washington criminal defense attorney Stanley Brand, who was House general counsel from 1976 to 1983. “She’s not answering questions, and she’s not giving an account of what happened. She’s saying, ‘I’m innocent.’”

    As a practical matter, congressional Republicans can test Lerner’s assertion only by holding her in contempt and referring her case to the Justice Department for prosecution—a process that could take two years, Brand said.

    Lawmakers could call Lerner to testify again and require her to answer questions that aren’t incriminating, said Gabriel Chin, who teaches criminal procedure at the University of California Davis School of Law. Still, he said, “If it gets anywhere near the issue, she’s allowed not to say.”

  5. Thanks for the link Just Me. After finishing my final FUBAR and some other small tasks, I am prepared to enjoy! (Sick, eh?) 😉

  6. @Nobledreamer

    There are few greater accomplishments in life than competing the FUBAR. Thing is that if you file the FUBAR, you will NOT be guilty of “Form Crime”. Your lack of guilt means you can’t be fined. This means potential lost revenue to the US Treasury. Therefore, from the point of view of the US government there are two kinds of people who should be punished:

    First, those who do NOT file the FUBAR; and

    Second, those who DO file the FUBAR.

    What’s a self respecting. law abiding person to do?

    What would Doug Shulman say?

  7. Here’s a revealing quote from Progressive Farmer:

    Tea Party Isn’t Only IRS Victim

    In an unguarded moment, a young IRS examiner blurted out recently to one of our tax partners that “we’ve been told to raise more revenue.”

    Shulman changed the mission of the IRS from administering the law fairly to raising more money.

  9. @Johnson, that IRS examiner probably meant to follow that comment about the revenue raising imperative with “by any means necessary”.

    Raising revenue by any means necessary is probably the subject line of an IRS directive re those living outside the US.

    Those ‘abroad’ often cannot actually be assessed with US taxes owing (and have already paid up in full to the revenue agency of the country where they live), but are only somewhat protected from the jeopardy of US double taxation. And due to the draconian and confiscatory design of the Bank Secrecy Act FBAR, and all the rest of the labyrinthine financial reporting (ex. 3520/A) demanded of those living ordinary legal lives outside the US – the result is the penalty fundraisers foisted on those who do not live in the US, receive no benefit or US services, and have no representation.

    The IRS idea was to design mutilple penalty jeopardies for the unwary, in place of the US tax that frequently can’t be assessed.

    So, you can owe the US nothing, have paid up in full where you actually live and earn, but still fall into the FBAR and FATCA financial reporting pit of doom.

    If the IRS and Treasury didn’t intend that, they could have made changes. If Congress didn’t intend that, they could have said so. Neither have done anything to ameliorate the situation. Thus we must conclude that they ‘willfully’ intended to suck the life out of those living abroad in other countries, even in the total absence of any US economic relationship.

  10. @badger
    FBAR is the smoking gun that the IRS is targeting USP’s abroad. Unfortunately, public opinion is such that it’s still ok to shoot us with the real bad guys.

  11. Our erstwhile friend Mr. Mopsick seems to agree:

    The IRS Tea Party Scandal

    The IRS mission statement says its job is to “provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.” Really? It sure doesn’t look that way.

  12. @bubblebustin, there has to be some documentation about the creation of the non-willful FBAR penalty.

    I had forgotten that I’d read this on Phil Hodgen’s blog:
    http://hodgen.com/a-real-life-voluntary-disclosure-program-participants-story/
    Read the whole thread, but particularly the entry by John Nolan at Oct 11, 2010 11:50 am
    http://hodgen.com/a-real-life-voluntary-disclosure-program-participants-story/#comment-234
    Nolan writes;
    “…..In addition, in her management response to TIGTA Ms. Nolan points out that “The BSA requires persons to report certain financial transactions to the government; however, its purpose is not to generate revenue for the United States.””….

    He cites TIGTA Report 2005-30-101
    MEMORANDUM FOR DEPUTY COMMISSIONER FOR SERVICES AND ENFORCEMENT
    DATE: July 26, 2005
    FROM: Pamela J. Gardiner
    Deputy Inspector General for Audit
    SUBJECT: Final Audit Report – Compliance Opportunities Exist for the IRS to Use Foreign Source Income Data (Audit #200430002).

    Nolan notes that it is heavily redacted. It would be interesting to see if that redaction could be challenged.
    He also says; …”There is also evidence out there – if it ever gets that far – that the real reason for seeking enhanced FBAR penalties under the Jobs Act of 2004 and the preceding shift of FBAR enforcement from law enforcement to the IRS was totally unrelated to any of the BSA’s lawful purposes but was instead motivated by two things:

    1. A desire to discourage and otherwise slow foreign investment by US residents by
    2. turning the FBAR into a compliance weapon and “revenue enhancer”.

    In short: keep American capital at home by quasi criminalizing their foreign investment.

    The evidence for this proposition: TIGTA Report 2005-30-101…”

    So, if it is true that it was meant to raise revenue, then the imposition on those abroad without any efforts to ‘educate’ (which the IRS had promised to do when the civil non-willful penalty for the FBAR was invented) is a means of double taxation bypassing reciprocal tax treaties and a means of extorting penalty revenue where US tax could not be assessed.

    If they continued to impose it on those living abroad but actually intended to target US homeland residents, then they were willful in subverting the original premise – which was to discourage US homeland residents from investing outside the US.

    So, did TIGTA ever do an update or reconsider report 2005-30-101 and see how the FBAR fundraiser was going?

    Would be interesting to know.

    Also have a look at the rest of Nolan’s entry – re constitutional and other problems with the FBAR.

    It is a different creature, but I have some questions about how foreign estates can be penalized by 3520/A failures to report on ‘foreign trusts’, and treated punitively as a result, with fines that could be considered confiscatory and extortionate as well. If the estate value falls far below the threshold for US tax to kick in, then the 3520/A penalties for failure to report is imposed on money that is legal, has been reported and taxed where it occurred, and which is non-taxable by the US. Another major abuse of those abroad. See: “….here is special relief from U.S. estate taxation for small Canadian estates with a total value under $1.2 million (in 2012)….” from http://www.serbinski.com/taxation-in-usa/estate-taxes.shtml

    So all these draconian penalties imposed for mere non-reporting (when we didn’t even know about it) on assets that were either already post-tax, or nontaxable is just a fundraiser for the US.

  14. @Johnson…

    I have been having an offline conversation with Steven, and read his blog. This quote was telling to me…and he is no T-party sympathizer. 🙂

    The Cincinnati check lists and fact probes were not dreamed up by the local staff. They would have to have been approved, if not drafted, by IRS Counsel in Washington. The aging reports of the caseloads of the Cincinnati determination group were duly reported on up the line. If it is true that the Commissioner knew about this disaster a year ago, what took so long do the right thing?

    Finally, the “tea pot” scandal is a punch below the belt to all the tax practitioners who have been doing the IRS’s bidding by telling their clients to trust the IRS and not be fearful of honestly disclosing their tax matters. People today are going to find it easy to simply ask, “Why should I?”

    Trust,which has been long gone for Americans abroad effected as they are by the offshore jihad and handling of FBAR penalties, is now really seeping into the homeland mindset even more. Ultimately that is not good for the institution, and it happened on Shulman’s and Obama’s watch…!!!!

  15. It’s a timeworn story. New administrator takes over public sector organization and declares a numerical target. The target is optimized without a care for the negative side effects to the primary mission of the organization. Administrator loudly proclaims success based on targets and moves onto fresh pastures.

    Shulman is just the latest miscreant in a long line including General Westmoreland and his body count in Vietnam and back further into history.

  16. @US Citizen
    Refuse to fill out the form a la 5th amendment? Think we’ve been through that argument but it is still interesting.

    Ah Mr. Shulman……….How about

    You’re not personally responsible for it even though filing occurred under your watch. You didn’t know anything about it until after the IRS had stopped the practice of bleeding expats dry. You had no obligation to tell the IRS of your need to feed Form Nation. There is no need to apologize. 😛

  17. @Johnson

    Yes but let us hope that the Committee’s frustration with Shulman’s “responses” will result in a deeper investigation. (Where we can continue to muscle in our cause).

    In that spirit, here is a petition that may be helpful:

    murphypete 12 hours ago
    Urge President Obama to appoint a special prosecutor in the IRS scandal. Please sign this petition and share it with your friends.

    https://petitions.whitehouse.gov/petition/appoint-special-prosecutor-investigate-targeting-conservative-organizations-irs/QnDMNRL1

  18. @Just Me

    I am close to the end of the first session. One of the things that absolutely floors me, is the implication of just how many people (other than the “rogue” couple of low-level employees in Cincy) must have been involved in devising the questionnaires exhibited by Rep Lankford (sp?) from OK and Rep Meehan from PA. Detail good enough to rival an 8938. Just as I logged on, I realized that must be what Mopsick is referring to.
    Very powerful – the moment Tammy Duckworth (who is, if I remember correctly, the vet who lost her legs and was subsequently elected in Illinois) way laid into Shulman for never taking responsibility. She said any 25-yr old buck sergeant understands “you can delegate authority but not RESPONSIBILITY.” I don’t know how Shulman could not have wanted for the floor to give way and allow him to disappear.

    J Russell George, the IG, is a very impressive fellow.

  19. @badger

    We can only hope that there will be the impetus for the truth to be revealed. I can say is that the chances of that seem a lot greater than they were just a couple of weeks ago 🙂

  20. @nobledreamer

    I thought her condemnation spoken in measured tones was very VERY powerful, and even more so when you know her back story…

    Surely Shulman knew, and the floor should have opened and swallowed him!

    An Iraq War veteran, Duckworth served as a U.S. Army helicopter pilot and suffered severe combat wounds, losing both of her legs and damaging her right arm. She was the first female double amputee from the war.[1] She continues to serve as a Lieutenant Colonel in the Illinois Army National Guard along with her husband, Major Bryan W. Bowlsbey, a signal officer and fellow Iraq War veteran.[2]

    Here she is walking…

    Yes, I agree about J Russell George, and the level of professionalism he displayed.

    He is the type of character I am sure Steven Mopsick is referring to when he speaks glowingly of those inside the IRS and Treasury.

  21. Lois Lerner Placed on Administrative Leave

    Congressional and administration sources confirm that IRS director of Exempt Organizations Lois Lerner has been placed on administrative leave after she reportedly refused to resign.

    Lerner came under fire this week when she chose to invoke her Fifth Amendment right not to incriminate herself rather than testify before the House Oversight and Government Reform committee.

    Sen. Charles Grassley of Iowa, a senior Republican member of the Finance Committee investigating the IRS, said tonight that Lerner “refused to resign.”

    “My understanding is the new acting IRS commissioner asked for Ms. Lerner’s resignation, and she refused to resign. She was then put on administrative leave instead,” Grassley stated. ”The IRS owes it to taxpayers to resolve her situation quickly. The agency needs to move on to fix the conditions that led to the targeting debacle. She shouldn’t be in limbo indefinitely on the taxpayers’ dime.”

    Earlier today, Rep. Darrell Issa, the chairman of the committee, announced that he believes Lerner waived her right to refuse to testify when she read a statement and authenticated a document for the record during the hearing.

    National Review Online first reported that the IRS had placed Lerner on leave.

    According to NRO, Lerner emailed colleagues shortly before the news broke, announcing, “Due to the events of recent days, I am on administrative leave starting today. An announcement will be made shortly informing you who will be acting while I am on administrative leave. I know all of you will continue to support EO’s mission during these difficult times. I thank you for all your hard work and dedication. The work you do is important.”

    IRS acting commissioner Daniel Werfel announced that Ken Corbin, currently the Deputy Director, Submission Processing, Wage and Investment (W&I) Division, has been selected to be the acting Director, Exempt Organizations, Tax Exempt/Government Entities Division.

    “Ken is a proven leader during challenging times. He has strong management experience inside the IRS handling a wide range of processing issues and compliance topics as well as taxpayer service areas,” Werfel stated. “Combined with his track record of leading large work groups, these skills make him an ideal choice to help lead the Exempt Organizations area through this difficult period.”

  22. Start of Class Action Suits?

    Sue The IRS dot Com

    Huffingon Live Interview with Tea Party Patriots founder Mark Meckler, IRS Terrorizing the American People

    (As an aside, the interview mentions the author of the Mother Jones article we were discussing, Erika Eichelberger. That led me back to that article Rand Paul Wants to Loosen Laws on Offshore Tax Evasion and a comment right on top for me Never mind. Thank goodness, it was an old one from ‘TruthLiesInLogic’ — he didn’t have any other good retired US accountant advice for me. There were some interesting comments I hadn’t seen though.)

  25. Thanks, bubblebustin. That was fun.

    Perhaps the blowback to the US in FATCA reciprocity and collateral damage to expats in citizenship-based taxation will one day make the list, hopefully toward the top of the continuum. (This must have been taken straight from the kids’ history books, right?)

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