Supreme Court takes Biden’s IRS down a couple of pegs, agrees to hear appeal against confiscatory fines

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WASHINGTON, DC- This week, the United States Supreme Court agreed to hear the case of a Romanian-American businessman who was fined $50,000 by the Internal Revenue Service for allegedly failing to file tax forms on time.

To make matters much worse, an appeals court increased the fine to $2.72 million, claiming the fine should have been levied based on the number of bank accounts he held as opposed to the number of forms he had failed to file in a timely manner, the Epoch Times reports.

The Biden administration, in an apparent attempt to squeeze as much money out of people as possible, spoke out in favor of the confiscatory fine and asked the high court to refuse to take the case. The case, Bittner v. United States of America is an appeals case from the Fifth Circuit U.S. Court of Appeals.

The justices didn’t explain in the order, which was not signed, why they had agreed to hear the case, as is typical procedure when deciding writs of certiorari for SCOTUS review.

The case involves Alexandru Bittner, who was born in communist Romania and who moved to the United States in his youth. He initially worked as a dishwasher, and later on as a plumber. He eventually became a naturalized citizen in the U.S. and maintains dual U.S. and Romanian citizenship.

After the Soviet Union collapsed in 1990, Bittner returned to his homeland, living there for about 20 years until late 2011. Bittner became a successful business owner, and had a number of non-U.S. personal bank accounts and owned stock in a number of Romanian corporations where he also maintained foreign bank accounts.

 

During his time abroad, Bittner maintained limited contact within the United States.

“Like many dual citizens, he was unaware that he was required to file U.S. income tax returns reporting his foreign income,” according to the petition Bittner filed with the Supreme Court.

Being a foreigner, Bittner was unaware that he was required to file certain financial disclosure forms, including the Report of Foreign Bank and Financial Accounts (FBAR) on the Financial Crimes Enforcement Network Form 114 (FinCEN), nor that he had a duty to file such forms.

Shortly after returning to the United States in 2011, Bittner became aware he should have filed U.S. tax returns while living abroad for the purposes of reporting his worldwide income.

Bittner eventually retained a professional money manager who told him he needed to file FBARs. However soon thereafter, the IRS discovered he had failed to file the forms in a timely manner for five years, between the years 2007 and 2011.

During that period of time, he maintained over 25 foreign accounts, and was not required to detail those accounts. The only requirement was to state the total number of foreign accounts in which he held a financial interest. Despite that, he submitted corrected forms which contained the full information.

Despite the fact that Bittner attempted to correct the issues as soon as he became aware of them, The IRS decided to drop the hammer and impose the maximum penalties under the Bank Secrecy Act. The IRS took the position that Bitter, despite only failing to file five annual forms, he had violated the act 272 times—one time for each account that was not reported in each of those five years.

The IRS decided to slam Bittner with fines totaling $2.72 million, which represented a $10,000 fine for each account he had disclosed on the untimely FBARs. The IRS sued him in federal district court in Texas, which ruled the IRS had made a mistake. The district court ruled the fine should have been capped at $50,000 or $10,000 for each annual FBAR Bittner had inadvertently neglected to file.

However the district court’s ruling was reversed by the 5th Circuit US Court of Appeals, which ruled the fines should apply “on a per-account, not a per-form basis,” and restoring the $2.72 million penalty.

In his petition, Bittner claims that court’s ruling conflicts with a prior case out of the 9th Circuit U.S. Court of Appeals, therefore, needs to be resolved by the Supreme Court.

“[T]here is no reason to think the conflict will disappear on its own: the IRS is applying one rule in the Ninth Circuit and a different rule everywhere else, leaving the conflict entrenched—and ensuring that tax penalties vary greatly based entirely on the happenstance of where a taxpayer is located.”

“That disparate treatment of identically situated parties undermines the proper administration of the tax system and interferes with sound tax policy,” he stated in the petition.

The filing continued: “This critical issue arises all the time, and the act’s penalties for identically situated parties will now turn on whether the taxpayer is from California or Texas.”

According to a brief filed on May 17, U.S. Solicitor General Elizabeth Prelogar had urged the high court to refuse Bittner’s appeal. She alleged that when Bittner had filed the FBARs in an untimely manner, the forms were “inaccurate and incomplete.” The IRS, she alleged, said Bittner had concealed cash and was uncooperative.

They further admitted that when Bittner filed U.S. tax returns for six of the years in which he resided in Romania, he had provided accurate answers to the question “regarding whether he had foreign financial accounts and whether he had a requirement to file an FBAR.”

Bittner’s attorney was happy the Supreme Court agreed to hear the case.

“This case presents exceptionally important questions for taxpayers nationwide,” Daniel Geyser of Haynes and Boone in Dallas told The Epoch Times via email.

“The IRS is profoundly misreading the act to impose breathtaking penalties for non-willful conduct. We’re grateful for the grant [of certiorari] and we look forward to litigating the case on the merits.”

The DOJ refused to a request for comment from The Epoch Times.

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For more on the IRS’s incompetence, we invite you to:

DIG DEEPER

WASHINGTON, DC – Auditors recently found that the Internal Revenue Service destroyed 30 million documents submitted by taxpayers and proceeded to scold everybody’s least-favorite government entity for the operation.

The IRS responded: “Whatever.”

Not really, but that’s close enough for government work. What the IRS actually said in response was that taxpayers weren’t harmed by the document destruction, according to Fox Business.

The Treasury Inspector General for Tax Administration decided to review IRS operations due to its concerns over a backlog of unprocessed records. The report, released May 4 and signed by Michael E. McKenney, the deputy inspector general for audit, said:

“This audit was initiated because the IRS’s continued inability to process backlogs of paper-filed tax returns contributed to management’s decision to destroy an estimated 30 million paper-filed information return documents in March 2021.”

The audit noted that the documents — 1099 forms that show outside income and W-2 forms that document earnings — could have helped to catch tax evaders. The TIGTA report stated:

“The IRS uses these documents to conduct post-processing compliance matches to identify taxpayers who do not accurately report their income.”

The IRS was unconcerned with the concern, saying in a statement:

“There were no negative taxpayer consequences as a result of this action. Taxpayers or payers have not been and will not be subject to penalties resulting from this action.”

 

 

In a statement to Fox Business, the IRS said the document loss was nothing to worry about and directed attention to what it did not throw away. The IRS, using a term for documents submitted by third parties, stated:

“We processed 3.2 billion information returns in 2020.” 

The IRS added:

“Ninety-nine percent of the information returns we used were matched to corresponding tax returns and processed. The remaining 1 percent of those documents were destroyed due to a software limitation and to make room for new documents relevant to the pending 2021 filing season.”

Interestingly, the TIGTA audit noted that the IRS doesn’t seem to know which forms can be filed online and which must be filed using paper. The report said:

“Of particular concern is the fact that the IRS does not have an accurate and comprehensive list of individual and business tax forms that are not able to be e-filed.”

It continued:

“For example, on Sept. 16, 2020, the IRS provided us with a list identifying 365 tax forms that are not able to be e-filed. Our review identified inaccuracies with this list. There were tax forms included on the list that could be e-filed and tax forms absent from the list that could not be e-filed. When we discussed the inaccuracies of this list with IRS management, they stated they have not updated the list since calendar year 2018 due to other agency priorities and limited funding.”

It said the IRS was behind the curve on e-filing, which wastes Americans’ money. The inspector general’s report said:

“The IRS has yet to establish processes and procedures to identify and address corporate, employer and Heavy Highway Vehicle Use Tax filers that do not comply with e-file mandates.”

The audit report continued:

“Our analysis of tax return filings identified 15,108 filers that paper-filed 22,569 tax year 2018 returns that were required to be e-filed. TIGTA estimates that the processing of these returns cost the IRS $30,196 in comparison to the $3,405 to process the required e-filed tax returns.” 

The report recommended that the IRS “develop a Service-wide strategy to prioritize and incorporate all forms for e-filing.”

The IRS agreed to the recommendation but disagreed that it should “develop processes and procedures to identify and address potentially noncompliant corporate filers.”

The report says:

“The IRS disagreed with this recommendation. IRS management stated that, for corporate filers to be subject to penalties for failure to e-file returns when required, they must have filed 250 or more returns and have assets of $10 million or more. Not all these criteria are known or available at the time of filing.”

TIGTA suggested the IRS:

“Develop processes and procedures to ensure that penalties are consistently assessed against business filers that are noncompliant with e-filing requirements.”

The report said the IRS disagreed with this advisement as well. The report said:

“IRS management stated it has systemic processes in place for e-filed partnership returns and found them to be working as intended.” 

The inspector general’s report said that since 2014, e-filing among businesses has climbed from 41% to 63%.

In case you are wondering who the auditor is, the Treasury Inspector General for Tax Administration’s website states that:

“The TIGTA was established under the IRS Restructuring and Reform Act of 1998 to provide independent oversight of IRS activities. TIGTA promotes the economy, efficiency, and effectiveness in the administration of the internal revenue laws.

“It is also committed to the prevention and detection of fraud, waste, and abuse within the IRS and related entities.” 

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Biden administration’s latest brainstorm: Use $30 million of taxpayer money to pay for crack pipes

February 8, 2022

The following contains content which is editorial in nature and reflects the opinion of the writer.

WASHINGTON, DC – As the drug problem in the United States spirals out of control, the Biden administration has apparently produced a solution—fund programs that give crack pipes to drug addicts, for example.

According to the Daily Wire, the Department of Health and Human Services under former California attorney general Xavier Becerra is seeking to implement a $30 million grant program which would do just that. According to the Washington Free Beacon,

Applicants for the grants are prioritized if they trat a majority of ‘underserved communities,’ including African Americans and ‘LGBTQ+ persons,’ as established under President Joe Biden’s executive order on ‘advancing racial equity.’”

The Beacon said:

“A spokesman for the agency told the Washington Free Beacon that these kits will provide pipes for users to smoke crack cocaine, crystal methamphetamine, and ‘any illicit substance.’”

Fox 5 in New York says the hope is that it will convince people to smoke instead of injecting drugs because (allegedly) injections are riskier. San Francisco and Seattle have implemented crack pipe kit distribution programs, which should probably tell you all you need to know about that idea.

As Law Enforcement Today has previously reported, New York City opened officially authorized “safe injection” sites last November. Fox 5 says the two facilities—referred to as “overdose prevention centers”—provide a place where drug users are monitored with staffers and supplies in place in order to reverse anticipated overdoses.

Advocates have said the program is a great way to reduce overdose deaths. OnPoint New York, which runs the sites says they have intervened in 125 overdoses among some 640 users, many of whom have made multiple visits.

After Sen. Marco Rubio (R-FL) raised the issue, Sarah Lovenheim, assistant secretary for public affairs for HHS denied the report, calling it “blatant misinformation.’

“The Harm Reduction grant is designed to help folks struggling with substance use stay healthy and safe, prevent overdose death. The grants must stick to federal, state, local laws or regs,” she said.

That apparently comes as a surprise to Patrick Hauf, who broke the story, who responded to Lowenheim’s statement.

“Again, I have yet to receive a response from HHS on how my story is misinformation. The HHS confirmed to me last week that the ‘smoking kits’ they fund are used to smoke crack, meth, and ‘any illicit substance.’ This ‘misinformation’ push today is complete nonsense,” he said.

It also appears to contradict the actual grant document, which on page 8 refers to “Safe smoking kits/supplies.”

Supreme Court takes Biden's IRS down a couple of pegs, agrees to hear appeal against confiscatory fines
Grant language that specifies provision of “safe smoking kits/supplies”

Some cities, according to the Free Beacon which implemented such programs in order to address drug addiction by distributing such “smoking kits,” later reversed that decision, including Louisville, Kentucky, and some cities in Maryland.

Meanwhile, Sgt. Clyde Boatwright, president of the Maryland Fraternal Order of Police told the Free Beacon:

“If we look at more of a preventive campaign as opposed to an enabling campaign, I think it will offer an opportunity to have safer communities with fewer people who are dependable on these substances.”

The so-called “harm reduction program” grant is provided through funds from the “American Rescue Plan,” according to the outlet, while adding, “Other equipment that qualifies for funding include syringes, vaccinations, disease screening, condoms and fentanyl strips.”

“During his long run in the U.S. Senate, Biden helped create the Anti-Drug Abuse Act of 1986, which provided sentences 100 times greater for people possessing crack when compared to the same amount of powder cocaine. The policy was widely criticized as having a disproportionate impact on minority communities, and the Biden administration now backs a bill undoing the disparities,” The Washington Examiner reported.

“News of the pipe program came the same day that the Justice Department signaled that it might be willing to allow safe injection sites for people to use heroin and other drugs,” Fox 5 reported.

Last April, two Maryland cities, Annapolis and Brooklyn drew fire after crackpipes were distributed by public health workers, the Daily Wire report stated.

“Absolutely dumbfounded,” said Carl Snowden, Chairman of the Caucus of African American Leaders of Anne Arundel County. “It was inexcusable, unacceptable. We were very, very clear that crack pipes is where we draw the line.”

The first-ever crack pipe vending machines were installed in Vancouver, Canada in 2014, whereby users could purchase crack pipes for 25 cents as opposed to between $1 and $10 on the street, Mark Townsend, director of the PHS Community Health Society stated at the time:

“It’s part of a basic public health intervention, very similar to needle and syringe programs. People who smoke crack often get blisters or burns on their mouth, and sharing a pipe and mouthpiece means greater risk of HIV or hepatitis C, and possibly other infections like pneumonia. This vending machine makes clean pipes available to those who need them…before we introduced the machines, a pipe cost anywhere between $1 and $10 on the street. This price was too high for many users, meaning people were more likely to share pipes or use unclean equipment.”

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