Posts tagged with "IRS"

Senate Democrats, including Joe Manchin, (finally) strike a deal

July 29, 2022

On Thursday, July 28, the word was out: Senate Democrats unveiled a surprise, pulled-from-the-ashes $670 billion spending plan that has the blessing of the mercurial centrist Senator Joe Manchin (D-West Virginia) It’s an outline to help lower drug prices, give Americans more subsidized health coverage under Obamacare, and mitigate climate change, The Hill reports.

It would be paid for with higher taxes on corporations and the wealthy, which sounds similar to proposals Manchin previously rejected.

Scheduled to become law before the Senate escapes for its August break, the proposed reconciliation package needs all 50 Democrats and a tie-breaking vote from Vice President Kamala Harris, as well as approval by the House. It would be a big win for President Joe Biden—and Republicans have said they are opposed.

“It’s like two brothers from different mothers, I guess. He gets pissed off, I get pissed off, and we’ll go back and forth. He basically put out statements, and the dogs came after me again,”  Manchin told Politico in an interview about talks with Senate Majority Leader Charles Schumer (D-New York). “We just worked through it.”

In a shocking development, Manchin struck a deal with Schumer after more than a year of hemming and hawing in talks over a number of proposals that had been unable to garner his backing.

Headlining the rejuvenated bill are $369 billion in funding for energy and climate programs over the next ten yearswith the goal of reducing emissions by roughly 40% by 2030 and an additional $300 billion to reduce the deficit.

According to a summary released by the two senators, the blueprint would raise $739 billion in new revenue through a variety of proposals:

  • $313 billion via a 15% corporate minimum tax;
  • $288 billion from empowering Medicare to negotiate lower drug prices;
  • $124 billion from strong IRS enforcement of tax law; and
  • $14 billion from closing the carried interest loophole for money managers.

The Hill reports that the newly announced proposals will be tacked on to a bill that includes items that were expected to dominate as part of an even-slimmer package—a multiyear extension of Affordable Care Act subsidies aimed at preventing premium increases that is extended through the end of Biden’s first term and provisions aimed at lowering prescription drugs.

According to the two Senate Democrats, the bill will be brought to the floor next week before the upper chamber recesses in August.

The breakthrough hands the party a massive and a seemingly improbable victory that very few, if any, had anticipated. Senator Maria Cantwell (D-Washington) told  The Wall Street Journal  that she only learned of the bill while on the way to the chamber to vote on Wednesday evening.

“Holy shit. Stunned, but in a good way,” Senator Tina Smith (D-Minnesota) said.

Research contact: @thehill

This breast cancer charity is the big new ‘scam’ in politics

October 18, 2021

This October, as Americans mark another Breast Cancer Awareness Month, many organizations and advocates are looking for ways to support the cause. But The Daily Beast reports, there’s one group that donors may wan to avoid: The American Breast Cancer Coalition.

Although it sounds like a noble charity, the ABCC actually is a political group—a political action committee (PAC)—and rather than trying to actually address breast cancer, the ABCC appears to be a scheme to extract millions of dollars in donations, mostly from small contributors.

In recent robocalls, a feminine voice claims the goal of the group’s fundraising is to “support legislators who will fight for the fast-track approval of life-saving breast cancer health bills and breast cancer treatment drugs to the FDA.”

But financial records on file with the Internal Revenue Service tell a different story—reviewed in a joint investigation between The Daily Beast and OpenSecrets—revealing payments to firms with ties to a multimillion-dollar “scam PAC” network.

In May 2019, Bill Davis created the nonprofit, and the group quickly started raising money.

In the space of two years, ABCC has brought in nearly $3.57 million, according to IRS filings. But the nonprofit has so far paid nearly every dollar it has raised to fundraising companies. According to The Daily Beast, some of those companies even have ties to a telemarketing kingpin who was fined $56 million last year for bilking donors out of tens of millions of dollars in fake charity contributions.

What’s more, it’s not alone.

The ABCC is just one of a number of political groups masquerading as charities, known broadly as “scam PACs.” These shady organizations purport to raise money for a number of heart-tugging issues—e.g., law enforcement, wounded veterans, firefighters, children with disabilities—but plow nearly every dollar back into raising more money, often in major payouts to the same network of shady telemarketing companies and other firms.

By registering as a political group instead of a charity organization, scam PACs can usually operate in a legal gray area beyond the reach of authorities that regulate campaign finance and nonprofit activity.

But the ABCC case is even more brazen. Even though the ABCC is a PAC, unlike typical scam PACs, it has not registered with the Federal Election Commission. Instead, it has registered with the IRS as a “527” political group—an apparently recent (and legal) tactical shift to make investigations more difficult for the public, the press, and regulators.

Political groups known as 527s—so named after a section of the tax code that governs their operations—are tax-exempt nonprofits that are supposed to operate primarily to influence the “selection, nomination, election, appointment, or defeat of candidates for federal, state, or local public office.”

While 527s are allowed to make expenditures for reasons that do not relate to political campaign activities, such as lobbying, those groups may be subject to taxes on activities that do not further political purposes.

Any political group whose “major purpose” is the nomination or election of federal candidates is required to register with the FEC as a federal political committee. But these 527 groups are not subject to FEC oversight, and are often called “shadow groups.”

The IRS does require 527s to disclose and itemize all contributors that give more than $200 in a calendar year, as well as the expenditures that they make. But unlike federal political committees, whose contribution and expenditure data is readily searchable on the FEC website, information about these 527s is largely locked away in PDF files with the IRS and difficult to find and digest.

A number of 527 “shadow groups” share the same familiar raising and spending patterns. Among them are the Cancer Recovery Action Network, the National Cancer Alliance, the National Committee for Volunteer Firefighters, the American Police Officers Alliance, the National Coalition for Disabled Veterans and several similarly named organizations, which all pay a network of loosely affiliated companies.

Eric Friedman, head of Maryland’s Montgomery County Department of Consumer Protection, has spent the last two years unraveling these networks. In 2019, he busted a ring of scam PACs, and asked the FEC to investigate a group called the Breast Cancer Health Council.

Speaking to The Daily Beast, Friedman likened the task to an “almost impossible” game of whack-a-mole, and said his small research team had also noted that groups have shifted from FEC-registered PACs to 527s.

“Scammers are clever and constantly moving. So it looks like the trajectory started as phony charities, [which] then decided they were better off operating as phony FEC groups, and now the latest transition—just in time for Halloween, I guess—is to be a phony PAC registered with the IRS instead of with the FEC,” Friedman said.

Asked why these groups have made the new shift, Friedman said it was complicated, “but the short of it is that it’s easier to hide what they’re doing, so we’re now looking at that phase of the scam.”

Lloyd Mayer, a nonprofit law expert at the University of Notre Dame Law School, explained why the change poses a new hurdle.

“The obvious reason to move away from being a federal political committee to a 527 is the FEC actually has a full staff look at all reports that are filed. The IRS could do that in theory, but they don’t,” Mayer said, noting that the available IRS staff—already stretched thin—is “an order of magnitude” smaller for this work.

“No one is looking to see if the filings make sense, if the math is correct, if the numbers are semi-accurate,” he added. “You could shade them, lie, misrepresent, fudge, make it hard to see.”

Phil Hackney, a nationally recognized nonprofit law expert at the University of Pittsburgh School of Law, said he is most frequently concerned about the opposite scheme—political groups posing as nonprofits—and had never seen this approach.

“I don’t know of anybody looking at the question of someone using a 527 as a vehicle to carry out a scam. It’s actually hard to say something about it, because you don’t have a body of law addressing vehicles being used in this way, and I’m not sure if you could use tax law to crack down,” Hackney said.

But he noted that the Federal Trade Commission and state attorneys general may have jurisdiction “regarding consumer interest protections and possible wire fraud,” an observation shared by multiple campaign finance and nonprofit law experts.

Research contact @thedailybeast

After a ‘Times’ report on Trump’s taxes, the figure $750 could stick in voters’ minds

September 29, 2020

The late hotelier Leona Helmsley famously said “Only the little people pay taxes”—a quote that is being recalled by many Americans after learning from an exclusive report by The New York Times that President Donald Trump paid only $750 in federal taxes in 2016 and 2017—and absolutely nothing for ten of the preceding 15 years.

And while most Americans will be shocked, the $750 figure may well stick in the minds of blue-collar voters who earn far less than a president, and who pay far more in federal taxes.

Indeed, Representative Alexandria Ocasio-Cortez tweeted on Sunday, September 27, that she had paid thousands of dollars in federal taxes in 2016 and 2017— when she was still working as a New York bartender. “He contributed less to funding our communities than waitresses & undocumented immigrants,” she wrote.

The Biden campaign on Sunday night used the report to press its case that Trump is out of touch with the working Americans he says he is fighting for. The campaign quickly put out a video showing the typical income taxes paid by an elementary school teacher, a firefighter and a nurse. Each paid thousands of dollars in taxes per year.

At a Sunday evening news conference, Trump dismissed the reporting as “totally fake news” and claimed he was never contacted about the report, despite the fact that a lawyer for the Trump Organization was quoted in the article.

The Times did not disclose just how its reporters had gotten their hands on tax return data that covers more than two decades. The president has long refused to release this information, making him the first POTUS in decades to hide basic details about his finances. His refusal has made his tax returns among the most sought-after documents in recent memory.

Among the key findings of the Times’s investigation:

It is important to remember that the returns are not an unvarnished look at Trump’s business activity. They are instead his own portrayal of his companies, compiled for the I.R.S. But they do offer the most detailed picture yet available.

But it’s inevitably a story he will face questions about in the first presidential debate on Tuesday night. And with five weeks left in the race, every day that Trump is on defense is one when he isn’t able to shift the dynamics of a race that public polls show he is currently losing.

The Times also notes, “Revelations like the fact that Trump deducted $70,000 for hairstyling expenses during “The Apprentice” also risk contributing to a sense that the president views his supporters — those who serve in the military, or pay their tax bills, or attend his rallies in the middle of a pandemic — as fools.”

To wit: The tax revelations followed a report in The Atlantic this month that said the president had privately referred to American troops killed in combat as “losers” and “suckers.”

And a former official on the coronavirus task force, Olivia Troye, has gone on the record in recent weeks to recall that the president, during a meeting she attended, said there was an upside to the virus: He would no longer have to shake hands with “disgusting” people, referring to his own supporters.

Research contact: @nytimes

Dems demand Trump tax returns from IRS—forcing Mnuchin to choose between fealty and duty

April 8, 2019

Although President Donald Trump claims that nobody’s interested in his tax returns—and that they are under audit anyway, so they cannot be released—House Democrats are through taking “no” for an answer—and last week, they set the stage for a major face-off with both the White House and Treasury Secretary Steven Mnuchin.

House Ways and Means Committee Chairman Richard Neal (D-Massachusetts) formally requested President Trump’s personal and business tax returns on April 3, setting up what will likely become a protracted and high-profile legal battle between the administration and Congressional Democrats, The Hill reported.

Specifically, in a letter to the IRS, Neal requested Trump’s personal income taxes from 2013 to 2018, as well as the tax returns associated with eight of his business entities, and cited his oversight role to justify the request.

“Under the Internal Revenue Manual, individual income tax returns of a President are subject to mandatory examination, but this practice is IRS policy and not codified in the Federal tax laws,” Neal wrote in the letter, which was first obtained by CNN. “It is necessary for the committee to determine the scope of any such examination and whether it includes a review of underlying business activities required to be reported on the individual income tax return.”

Mnuchin—a loyal Trump insider—now “will have to balance his loyalty to Trump against a request that many experts say leaves him little wiggle room,” The Hill noted. As head of the department that comprises the IRS, Mnuchin will face pressure from Trump and congressional Republicans to push back on Democrats’ request.

“[The] request tests Mnuchin’s oath of office—whether Mnuchin will faithfully execute the laws of the United States, or whether Mnuchin will bend to the will of the president,” commented Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, who testified before Congress in February about the need to request Trump’s tax returns.

Trump — the first president in decades to not voluntarily disclose any of his returns—quickly indicated his disdain for the request. “Until such time as I’m not under audit I would not be inclined to do that,” he said  last Wednesday.

When asked on April 4 if he would direct the IRS to not disclose his returns, Trump said, “They’ll speak to my lawyers and they’ll speak to the attorney general.” 

As is to be expected, Republicans leaders are critical of the request. The top Republican on the Ways and Means Committee, Rep. Kevin Brady (R-Texas), argued in a letter to Mnuchin on April 3 that the request is “an abuse of the tax-writing committees’ statutory authority,” and he said it weakens Americans’ right to have their personal information kept private, The Hill reported.

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said the next day that courts have ruled that congressional requests for information need to have legitimate legislative purposes, and that he believes the Democrats have fallen short on that front.

“They don’t have a purpose,” he said, according to The Hill. “All they have are a lot of excuses.”

Mnuchin said at a Ways and Means Committee hearing last month that the Treasury Department would “follow the law and we will protect the president as we would protect any individual taxpayer under their rights.”

The Treasury Department has not commented on the tax returns request since it has been issued.

“Secretary Mnuchin should have no involvement in responding to Chairman Neal’s request for President Trump’s tax returns,” Senate Finance Committee Ranking Member Ron Wyden (D-Oregon) said in a statement on April 4, adding, “Tax returns are held at the IRS and it is Commissioner [Charles] Rettig’s job to fulfill the agency’s legal obligations. If Secretary Mnuchin inserts himself that would be blatant political interference.”

Both Mnuchin and Rettig are scheduled to testify at congressional hearings this coming week, and lawmakers are likely to press them about their response to Democrats’ tax-return request. Democrats and supporters of the request say there’s no good reason for the administration to not comply.

Democrats also took issue with Trump’s comments about not providing his returns while under audit, arguing that the statute under which they requested the tax returns doesn’t leave the matter up to him.

“With all due respect to the president, we did not ask him for the tax returns, we asked the commissioner of the IRS,” Rep. Dan Kildee (D-Mich.), a Ways and Means Committee member, told The Hill on Thursday.

Republican strategists predict that Mnuchin will get involved and that it will be an easy decision for him to reject Democrats’ request.

“You’ve never seen a Cabinet secretary at that level not fight for the administration,” GOP strategist Ford O’Connell told The Hill. He predicted that Mnuchin is likely to let the issue end up in the courts.

Research contact: @thehill