Democrats put spotlight on IRS after audits

Democrats are pressuring the IRS to explain why two enemies of the Trump administration have been singled out for a rare and intense type of scrutiny after being fired from their government posts. The chief tax writing House Ways and Means Committee will question Trump-appointed IRS Commissioner Charles Rettig Thursday afternoon, three House sources said, about how these seemingly punitive reviews were conducted by an agency not intended to be used for political purposes.

Former FBI Director James Comey and Deputy Director Andrew McCabe were both scrutinized after their firing under the National Research Program (NRP), an IRS program that requires taxpayers to scrutinize their tax returns line-by-line and dig deep-and-fro with the IRS.

Speculation is mounting on Capitol Hill that these audits were conducted as punishment for disloyalty to former President Trump.

“The politics here is a lot trickier than you think,” a House source told The Hill. “Commissioner Rettig is warm and caring, very caring for Congress. We haven’t seen a big outcry about it from Democrats or Republicans, but it’s a big story.”

A Democratic House official told The Hill he expects “Commissioner Rettig to ask questions about last week’s news about the Comey/McCabe audits.”

Republicans have also supported an investigation into political attacks on the IRS, but have come to defend Rettig, who was appointed by a Republican administration.

“Commissioner Rettig has made it clear that he has had no communications with President Trump, and the research reviews are statistically generated,” Ways and Means rankings member Kevin Brady (R-Texas) said in a statement last week. “He has referred this matter to the Treasury Department’s Inspector General for Tax Administration, and I support the investigation of all allegations of political targeting — consistent with the precedent set by the House Ways and Committee in investigating President Obama’s disgraced former IRS director.” Lois Lerner, who created the committee, has confirmed his involvement in this abuse.”

The IRS describes NRP audits as helping the agency “identify where compliance issues are occurring,” while tax attorneys describe them as extraordinarily intrusive.

“NRP audits are very, very intrusive,” Steven Goldburd, a tax partner at law firm Goldburd McCone, who is currently working on two NRP audits, said in an interview. “For example, if you go to your accountant and say give me proof of your child, you can just give them a social security number. But on an NRP audit, the IRS will ask to see his most recent testimony.”

“Could that be purposeful? Secure. There are many ways the IRS determines who needs to be audited,” added Goldburd. “Someone lives a certain lifestyle that doesn’t match their tax return? That’s one way to get audited. Using integer estimates of your expenses — $30,000 for a house payment, $2,500 for a car payment — is a good way to get instant scrutiny because you should be using accurate numbers.”

“The DIF score used by the IRS computer? These are secret algorithms,” Goldburd said, referring to a computer program used by the IRS that assigns each tax return a probability of not declaring a certain income.

The IRS keeps secret the algorithms it uses to select taxpayers for audits to discourage tax dodgers and ensure people can’t trick the system.

While individuals can be targeted for audits based on their returns, a former senior IRS official has slandered the notion that the NRP could be used as a political weapon.

“There are triggers embedded in the system for regular targeted audits, but that’s not the case at all,” the former official said. “It’s like jury duty.”

“There are geographic borders, income limits, and the computer spits out candidates,” the former official continued. Referring to an entry-level IRS agent, they said, “Is it possible that a GS-7 could have replaced a name? I would think that the IG [inspector general] could pull that. There are safeguards against such gimmicks. If you sit there and look at what Brad Pitt did in a given year, you get fired.”

Still, the former official said that “this crap happens occasionally. Do you remember the Paula Jones audit?”

Paula Jones was a former Arkansas state employee who sued former President Clinton for sexual harassment and was also the target of an IRS investigation. There was similar speculation at the time that the exam was political retaliation for causing trouble.

Former FBI officials Comey and McCabe drew Trump’s ire during the FBI’s investigation into possible ties between the Russian government and Trump’s 2016 campaign team. Comey pressed ahead with the investigation, and Trump said his dismissal was in light of “this Russia thing.”

McCabe took over from Comey as acting director of the FBI and was fired by Attorney General Jeff Sessions in 2018. He became a vocal critic of the Trump administration after being fired and stripped of his pension before later suing to win it back.

“Commissioner Rettig always welcomes the opportunity to meet with members on tax matters and routinely flags potential concerns for key heads of congressional oversight committees,” IRS spokeswoman Jodie Reynolds said in a statement. “Commissioner Rettig also contacted TIGTA personally [the Treasury Inspector General for Tax Administration] after receiving a press inquiry last week.”

The Comey and McCabe NRP audits were first reported by the New York Times.

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