IRS Also Secretly Got Intelligence Info And Was Told To Launder It

from the this-isn't-going-to-end-well dept

Reuters continues to reveal incredible details of how the intelligence community (NSA, FBI, CIA, etc.) has been sharing information with other government agencies -- mainly via the DEA's Special Operations Division (SOD) and then telling those who use that info to do law enforcement work to "launder" their own investigation to hide where they got the information from. The example given was that, perhaps, the FBI or the NSA might provide the SOD with information about a truck likely to have drugs. SOD then tells other DEA agents to look for "this kind of truck in this truck stop," and then the DEA has local police stop the truck on a traffic violation, leading to a "random" search and voila, drug trafficker arrested.

The latest is that apparently, the DEA's SOD isn't just giving this info to DEA agents... but also to other agencies, including the IRS, who is again instructed to "launder" where the evidence came from in order to hide that it was the result of intelligence gathering.

A 350-word entry in the Internal Revenue Manual instructed agents of the U.S. tax agency to omit any reference to tips supplied by the DEA's Special Operations Division, especially from affidavits, court proceedings or investigative files. The entry was published and posted online in 2005 and 2006, and was removed in early 2007. The IRS is among two dozen arms of the government working with the Special Operations Division, including the Federal Bureau of Investigation, the National Security Agency and the Central Intelligence Agency.

An IRS spokesman had no comment on the entry or on why it was removed from the manual. Reuters recovered the previous editions from the archives of the Westlaw legal database, which is owned by Thomson Reuters Corp, the parent of this news agency.

This is almost certainly unconstitutional, as a due process violation, by hiding the evidence used to arrest someone. Furthermore, even if you think that it's reasonable that if the FBI or NSA comes across some details of, say, a tax cheat or a drug deal, that they should pass that info along to a relevant agency, at best you could make an argument that this made sense when those investigations were narrow and targeted at wrongdoing. Yet, as we've seen, surveillance capabilities for both the NSA and FBI have been expanding rapidly, such that nowadays they're collecting information on absolutely everyone. When you have information on everyone, it's not hard to construct "patterns" that can be passed along to various agencies for the purpose of directly targeting individuals. The risk of abuse of this kind of information gathering and information sharing is tremendous.

Filed Under: constitution, dea, due process, evidence, irs, sod, surveillance

Woman Who Bragged That She Was 'The Queen Of Tax Fraud' On Facebook Gets 21 Years In Jail

from the seriously,-stop-breeding dept

The stupid never seems to stop when it comes to dumb criminals. Whether it's accidentally dialing 911 during their murder-plotting or jumping on YouTube to make sure grandma knows what a great little bank-robber you are, there's just something about these criminals that make them go internet stupid. How else could you explain when these guys bilk money out of companies and governments, then jump on Twitter to taunt the authorities? Criminals, by and large, are stupid.

"Go in after them? No, no, we just wait outside until they come stumbling out looking for a bathroom."
Image source: CC BY 2.0

Well, let's put another one up on our wall of jack-ass-ery, shall we? Meet Rashia Wilson of Tampa, Florida. Rashia is the self-proclaimed "queen of IRS tax fraud." And she self-proclaimed this everywhere, including on her very personal Facebook page which had her very verifiable name splashed all over it. And, I have to admit, Rashia was very good at IRS tax fraud.

Prosecutors have said Wilson was among the most brazen thieves to commit identity theft tax refund fraud in Tampa. In 2011, she boasted to be Tampa's "queen of IRS tax fraud" in a Facebook post while stealing as much as $20 million, according to court documents.

A prosecutor said Wilson used the money stolen from taxpayers for "personal greed and glorification." Wilson bought a $90,000 car and a $30,000 birthday party for her 1-year-old daughter with the money, according to court documents.

See? Really good. What she was less good at was keeping that hidden. After brazenly posting about how awesome at crime she was on Facebook, the authorities came more quickly than...no, you know what? I'm not going to make that joke. They just got her, okay?

In any case, faced with 22 years in the clink, Rashia pleaded guilty and then wrote the court an apology letter and begged for leniency. The judge obliged, knocking a whole year off and saddling her with a measly 21 years in the federal pen. Nicely done, Rashia Wilson! Enjoy your stay!

Filed Under: bragging, criminals, irs, rashia wilson, social media, tax fraud

IRS Targeted Open Source Groups Seeking Non-Profit Status

from the don't-they-have-better-things-to-do-with-their-time dept

The latest revelations into the IRS improperly targeting certain types of groups seeking non-profit status revealed a bit of a surprise: open source software operations were apparently a trigger for extra scrutiny. The "be on the lookout" list the IRS used in 2010 included the following entry:

Open Source Software

These organizations are requesting either 501(c)(3) or 501(c)(6) exemption in order to collaboratively develop new software. The members of these organizations are usually the for-profit business or for-profit support technicians of the software.

There is no specific guidance at this point. If you see a case, elevate it to your manager.

Kevin Drum wondered why that would happen, and a reader of his sent in an explanation, suggesting that the IRS suspected that many open source projects were really commercial projects in disguise, and the attempt to get non-profit status was to hide a commercial endeavor:

In short, the IRS is concerned that some of these organizations exist simply to market companies' software, and perhaps the associated services sold alongside them. The IRS suspects that such organizations would be a better fit for 501(c)6 classification, if anything.

I worked in the field for several years, and while it'd be pretty easy to convince me that some of these organizations deserve closer scrutiny, the IRS' "screening" has been wildly disproportionate. Groups that are unquestionably above board have been in limbo for years, unable to start fundraising in earnest, because the IRS refuses to finally approve or reject their application for 501(c)3 status.

Honestly, this raises questions about the whole concept of what qualifies as a "non-profit" in the first place, but targeting open source software operations, considering how important open source software has been to the growth of technology and innovation over the past two decades, is fairly crazy when you think about it.

Filed Under: irs, non-profit, open source, software

IRS Audited Over Inappropriate Spending, Claims It Can't Find Its Receipts

from the off-with-their-heads dept

Just a guess, but it probably sucks to be the IRS right now. Between reports about them snooping on people's emails and their targeting of conservative groups, it's quite easy to paint them as a big, evil bureaucracy. Actually, it was pretty easy to do so before all that. You can generally rely on the hatred of the people for a group that requires meticulous spending records and then collects taxes. Big, bad, evil. What could be worse?

Well, how about hypocritical? That sure seems like an apt word in light of reports on how flighty the IRS was with tax-payer money for their own comforts.

The conference spending included $4 million for an August 2010 gathering in Anaheim, Calif., for which the agency did not negotiate lower room rates, even though that is standard government practice, according to a statement by the House Oversight and Government Reform Committee.
Instead, some of the 2,600 attendees received benefits, including baseball tickets and stays in presidential suites that normally cost $1,500 to $3,500 per night. In addition, 15 outside speakers were paid a total of $135,000 in fees, with one paid $17,000 to talk about "leadership through art," the House committee said.

Infuriating, right? The bald-faced audacity of the organization that collects our taxes using some of that tax money to go to baseball games has the air of outright thievery. Fortunately, thanks to the investigation by the Treasury Department, we now have a full and accurate account of the awful IRS spending, right?

No, we damn well don't, because the IRS -- and I stress this, the IRS -- is claiming it can't find its own receipts, so the spending may well have been even worse.

Hypocrisy, thy name is now an acronym, and that acronym is IRS. This is the type of thing that keeps pitchfork and torch manufacturers in business. In fact, were it not for the undeniably smooth face and impossibly perfect coiffure of Anderson Cooper getting me through this, I might just be leading the mob.

Filed Under: hypocrisy, irs, receipts, spending

More Details Show IRS Targeted Groups Critical Of How The Government Was Run

from the ouch dept

Late on Friday (the time when people try to break bad news to avoid a big news cycle) the IRS admitted that the office that scrutinizes non-profit/tax exempt status of organizations had acted politically in targeting groups that had "tea party" or "patriot" in their names. Over the weekend, more details have been revealed showing that they further targeted groups that criticized how the government is being run including so-called "social welfare" groups. In other words: if you want to improve our government, the IRS might target you for a burdensome audit. As someone who regularly criticizes our government because I want it to act better, this is absolutely horrifying. I know that this issue has already descended for some into a "left" vs. "right" political battle, but this is an issue that everyone should be aghast about. While the full report hasn't been released yet (and, in fact, there are already accusations that the IRS has leaked parts to try to contain the fallout), some of the details are astounding:

The documents, obtained by The Washington Post from a congressional aide with knowledge of the findings, show that the IRS field office in charge of evaluating applications for tax-exempt status decided to focus on groups making statements that “criticize how the country is being run” and those that were involved in educating Americans “on the Constitution and Bill of Rights.”

Educating people about the Constitution and the Bill of Rights gets extra scrutiny by the IRS? Isn't that the kind of thing that we should be encouraging?

Are there groups that abuse the non-profit status? Probably. But targeting them based on their viewpoints goes way beyond what's allowed or should be seen as even remotely reasonable. As some have pointed out, politicizing the IRS was part of the impeachment articles against Nixon.

Is it so much to ask for a government that actually respects the Constitution? Or does simply asking for that make you a target?

Filed Under: advocacy, constitution, irs, non-profit, patriots, political targeting, tax exempt, tea party

IRS Says It Will Change Its Policy On Looking At Emails Without A Warrant... At Some Point

from the good-idea,-though-a-bit-late dept

You may recall a couple weeks ago the discovery that the IRS believed that it did not need a warrant to view emails over 180 days old. That got a fair bit of attention, and recently, Senator Wyden asked the IRS about this. And, almost immediately, the IRS folded, kind of. In response to Wyden's question about dropping the policy, the IRS's acting commissioner, Steven Miller, said that he "intends" to drop the policy... though he wouldn't give a date on when he'd drop the policy. Senator Wyden asks him to commit to a 30 day deadline to drop the policy, and Miller says he'll try his best and suggests he should be able to drop the policy by then, but does not commit to it. Also, he seems to indicate that the IRS has not used this ability (to the "best of my knowledge") -- and he also says that the IRS has not and cannot seek private info from Twitter and Facebook, but that it will use public info from those services. Of course, it makes you wonder why they had this policy in the first place. And, further, it seems ridiculous that it took until the info became public and seemed embarrassing that they decided to drop it -- but, at least, in the end, they're moving away from the practice, at some point.

Filed Under: irs, ron wyden

IRS Investigators See No Need For A Warrant To Snoop On Emails

from the time-for-an-audit-of-aclu-folks dept

The ACLU filed a freedom of information act (FOIA) request last year, asking for details about whether not IRS investigators get warrants before reading people's private communications. After finally getting 247 pages of records (which don't fully answer the questions asked), the ACLU has noted that the documents suggest that the IRS likely read private emails regularly without obtaining a warrant. In their blog post, they note that in the US v. Warshak case, the 6th Circuit made it clear that the government must get a warrant to turn over emails, and it seems clear that the IRS had to change its policy because of that.

The documents the ACLU obtained make clear that, before Warshak, it was the policy of the IRS to read people’s email without getting a warrant. Not only that, but the IRS believed that the Fourth Amendment did not apply to email at all. A 2009 “Search Warrant Handbook” from the IRS Criminal Tax Division’s Office of Chief Counsel baldly asserts that “the Fourth Amendment does not protect communications held in electronic storage, such as email messages stored on a server, because internet users do not have a reasonable expectation of privacy in such communications.” Again in 2010, a presentation by the IRS Office of Chief Counsel asserts that the “4^th Amendment Does Not Protect Emails Stored on Server” and there is “No Privacy Expectation” in those emails.

Other older documents corroborate that the IRS did not get warrants across the board. For example, the 2009 edition of the Internal Revenue Manual (the official compilation of IRS policies and procedures) explains that “the government may obtain the contents of electronic communication that has been in storage for more than 180 days” without a warrant.

Of course, the IRS is not alone in this. That's the same way other government agencies have treated email thanks to the outdated nature of ECPA, the Electronic Communications Privacy Act, a law written nearly 30 years ago, which assumed that any content left on a server for over 180 days was "abandoned," because the idea of online messaging systems was foreign to folks in Congress at the time.

The bigger question, though, is whether or not the IRS paid attention to the ruling in Warshak and started getting warrants. As the ACLU notes, while not entirely clear, the answer is likely "no."

Then came Warshak, decided on December 14, 2010. The key question our FOIA request seeks to answer is whether the IRS’s policy changed after Warshak, which should have put the agency on notice that the Fourth Amendment does in fact protect the contents of emails. The first indication of the IRS’s position, from an email exchange in mid-January 2011, does not bode well. In an email titled “US v. Warshak,” an employee of the IRS Criminal Investigation unit asks two lawyers in the IRS Criminal Tax Division whether Warshak will have any effect on the IRS’s work. A Special Counsel in the Criminal Tax Division replies: “I have not heard anything related to this opinion. We have always taken the position that a warrant is necessary when retrieving e-mails that are less than 180 days old.” But that’s just the ECPA standard. The real question is whether the IRS is obtaining warrants for emails more than 180 days old. Shortly after Warshak, apparently it still was not

The IRS had an opportunity to officially reconsider its position when it issued edits to the Internal Revenue Manual in March 2011. But its policy stayed the same: the Manual explained that under ECPA, “Investigators can obtain everything in an account except for unopened e-mail or voice mail stored with a provider for 180 days or less using a [relevant-and-material-standard] court order” instead of a warrant. Again, no suggestion that the Fourth Amendment might require more.

As the ACLU notes, the IRS owes the American public a clear explanation of its view on warrants... and it should put in place a clear warrant requirement before snooping through emails.

Filed Under: 4th amendment, ecpa, ecpa reform, email, irs, privacy, warrants

IRS Gives $104 Million To UBS Whistleblower... Who The DOJ Put In Jail

from the mixed-messages dept

Sometimes it seems that the federal government's left hand has no idea what it's right hand is doing. Bradley Birkenfeld, a former banker for Swiss banking giant UBS, blew the whistle on UBS practices of helping Americans hide their money offshore. For his troubles, the Justice Department charged him, leading to a plea deal in which he plead guilty to fraud conspiracy and was put in jail for a few years. He just got out a month ago... and now the IRS has handed him $104 million for the whistleblowing, which resulted in UBS paying $780 million to the government to avoid prosecution itself. The IRS claims they're doing this to encourage others to blow the whistle on tax fraud... though they might want to warn the DOJ not to put their whistleblowers in prison. That said... $104 million seems somewhat insane. I realize that it may have resulted in the US government getting a lot more money, but $104 million still seems like a giant sum of money to give a guy who, as the government's own efforts show, participated in fraud. If the idea is to "get the word out" to whistleblowers, you would think that smaller sums, still in the millions of dollars, would do the trick...

Filed Under: awards, bradley birkenfeld, conspiracy, doj, irs, jail, whistleblowers
Companies: ubs

DailyDirt: There's One For You, Nineteen For Me

from the urls-we-dig-up dept

This year, April 15th isn't the deadline for filing your taxes, you can wait until Tuesday, April 17th -- thanks to Emancipation Day. Enjoy those extra couple days and a few of these tax-related links.

• Death and taxes are unavoidable, but it's a strange coincidence that there's a statistically significant increase in car accident fatalities on Tax Day. Unfortunately, it seems that electronic filing hasn't had much of an impact on Tax Day car accidents. [url]
• Sherman Friend, 69, evaded income taxes on his lottery winning to the tune of $132,000 -- in a scheme involving getting his friends to cash in his winnings for him. The tax evasion plot has been reported clearly, but the winnings were collected on a large number of 50-cent tickets in Pennsylvania's daily Big 4 game. [url]
• The IRS needs some help for keeping track of organizations that provide free tax preparation services to low-income and elderly taxpayers. Over 88,000 volunteers prepared about 3.1 million Federal tax returns in 2011, and the IRS could improve on how it manages its Volunteer Income Tax Assistance program. [url]
• Not sure if you can deduct your haircuts as a business expense? Um, you can't. A list of other non-deductible expenses include: vet bills, pets as dependents, gym memberships, cosmetic surgeries... [url]
• To discover more interesting business-related content, check out what the deal is on StumbleUpon. [url]  

By the way, StumbleUpon can recommend some good Techdirt articles, too.

Filed Under: april 15th, deductions, federal returns, irs, tax day, tax evasion, volunteer income tax assistance

Actually, Now IRS Wants Congress To Repeal Tax On Work-Provided Mobile Phone

from the wow,-public-response-worked dept

Earlier this week, we wrote about how the IRS was exploring how to enforce an old law that required people whose mobile phones were paid by their employers to pay taxes on the phone service as a "fringe benefit." That got quite an uproar, and it appears the IRS is now saying that it agrees it's a really stupid idea and hopes that Congress will repeal that old law. Of course, it's not clear why it was even explored late last week as a possibility if the administration is so against the idea.

Filed Under: fringe benefits, irs, mobile phones, taxes