Weekly Report from Washington, D.C.

A House Appropriations subcommittee approved a bill funding the IRS at $1.3 billion less than President Obama requested in his fiscal year (FY) 2017 budget. A series of hearings were held to address the possible impeachment of IRS Commissioner John Koskinen, the alleged IRS abuse of authority in undertaking its practice of civil asset seizure and forfeiture and corporate integration. The Treasury Inspector General for Tax Administration (TIGTA) issued a report finding that the IRS needed processes to ensure that required information to claim the Rehabilitation Credit was provided accurately on all tax forms. In addition, the IRS has announced the inflation adjustment factors and reference prices to be used in computing the renewable electricity production credit for calendar year 2016.

Congress

House. The House Appropriations Financial Services and General Government Subcommittee approved a $10.9-billion budget for the IRS for FY 2017 (TAXDAY, 2016/05/26, C.3 ). The bill is $1.3 billion below the president’s budget request.

The House Judiciary Committee examined allegations of misconduct against Koskinen at a May 24 hearing (TAXDAY, 2016/05/25, C.1 ). Koskinen, who did not appear at the hearing, offered a written statement defending himself against allegations, which was not introduced into the record because of objections by Reps. Darrell Issa, R-Ohio, and Ted Poe, R-Tex. A second hearing will be held in June.

The House Ways and Means Oversight Subcommittee held a hearing on May 25 to examine alleged IRS abuse of authority under its practice of civil asset seizure and forfeiture (TAXDAY, 2016/05/26, C.1 ). Lawmakers were in bipartisan agreement that taxpayers whose legally sourced assets were seized under structuring violations, when involved in no illegal activity, should be reimbursed.

National Taxpayer Advocate Nina E. Olson appeared at a House Small Business Committee hearing on May 26 that focused on tax challenges for workers and small businesses in a “sharing economy” (TAXDAY, 2016/05/31, C.1 )

The House Ways and Means Tax Policy Subcommittee held a hearing on May 25 with a panel of outside experts to discuss various avenues toward tax reform (TAXDAY, 2016/05/26, C.2 ). Economic growth was highlighted by the panel collectively as the most significant component in evaluating tax reform.

House Ways and Means Social Security Subcommittee Chairman Sam Johnson, R-Tex., and subcommittee member Jim Renacci, R-Ohio, on May 25 introduced legislation to protect taxpayers from identity theft (TAXDAY, 2016/05/26, C.5 ). The Social Security Must Avert Identity Loss (Social Security MAIL) Bill of 2016 (HR 5320) would require the Social Security Administration (SSA) to remove Social Security numbers (SSNs) from mailed documents when they are deemed unnecessary and to justify when it is necessary to include SSNs on mailed documents.

Senate. The Senate Finance Committee (SFC) held a hearing on May 24, the second in recent weeks, to examine corporate integration (TAXDAY, 2016/05/25, C.2 ). The hearing focused in particular on the impact of debt versus equity corporate financing.

SFC ranking member Ron Wyden, D.-Ore., on May 25 introduced the Presidential Tax Transparency Bill, which would direct presidential nominees to release their federal income tax returns for the three most recent tax years within 15 days of being nominated at a major party’s convention (TAXDAY, 2016/05/26, C.4 ). If the returns are not released by the candidate, the bill would instruct the Treasury secretary to release the returns directly to the Federal Election Commission (FEC), with appropriate redactions as determined by the FEC in consultation with the Treasury secretary.

Treasury

TIGTA Report. A new TIGTA report found that the IRS has not established processes to use National Park Service (NPS) data to ensure that taxpayers claiming the Rehabilitation Credit meet eligibility requirements at the time returns are filed (Ref. No.: 2016-40-024 ; TAXDAY, 2016/05/25, T.2 ). TIGTA also found that the IRS did not have a process to identify invalid NPS project numbers or pass-through entity employer identification numbers during processing of tax returns

Phone Scam Arrests. A senior TIGTA official announced that five individuals involved in an IRS impersonation scam have been arrested (TAXDAY, 2016/05/25, T.1 ). According to TIGTA, the individuals were responsible for defrauding 1,500 victims of almost $2 million.

IRS

Renewable Energy Production Credit. The IRS has published the inflation adjustment factors and reference prices to be used in computing the renewable electricity production credit for calendar year 2016 (Notice 2016-34 ; TAXDAY, 2016/05/23, I.1 ). The inflation adjustment factors and references prices apply to sales in calendar year 2016 of kilowatt hours of electricity from qualified energy resources and refined coal and Indian coal produced in the U.S. or its possessions.

IRS Nationwide Tax Forums. Tax professionals can now register for the 2016 IRS Nationwide Tax Forums for an opportunity to earn up to 19 continuing professional education (CPE) credits at any of the five forums held throughout the country beginning in July (IR-2016-78 ; TAXDAY, 2016/05/23, I.3 ). The forums are three-day events that provide tax professionals with the current information on federal and state tax issues, as presented by experts from the IRS and partner organizations, through a variety of training seminars and workshops.

By Jalisa Mathis and Jessica Watkins, Wolters Kluwer News Staff

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