The IRS is Not a Bully, No.4

The IRS is Not a Bully
You can poke a bully in the nose.
By Alan L. Olsen, CPA, MBA (tax)

Palo Alto, CA. July 4, 2014 – This is the Fourth installment of “The IRS is Not a Bully” series, identifying taxpayer concerns and the difficult position in which Congress puts the IRS. Namely, applying ever increasing pressure to operate in ways its founders never intended; until it’s commonly misunderstood and misused, much like the schoolyard bully that seems more like a victim upon closer examination.

Recent events, including a scandal involving the missing emails of a former IRS official under investigation, Lois Lerner, have focused renewed attention on IRS policies, methods and integrity. Without question, the vast majority of IRS employees are reasonable, smart, good, hardworking, honest and competent professionals, just doing what Congress dictates. However, the institution, its employees, and more important its leaders, would do well to conduct themselves appropriately and avoid even the appearance of impropriety. Trust, integrity and fairness are not mere catch phrases, they are the bedrock foundation that the institution must be built upon to be successful. If integrity of the IRS is in doubt, good luck expecting the average tax payer to believe what the IRS claims is their fair share of taxes!

In her June, 2014 article, “IRS Faces Volley of New Scrutiny”, CNN Reporter Lisa Desjardins raised some excellent points while uncovering some real concerns. Senators from both parties summoned the agency’s chief to Capitol Hill, one House committee set up a new investigative hearing and another issued a subpoena for the head of the agency to appear. You may remember that before she retired, Lois Lerner ran the IRS division in charge of tax exempt status. An inspector general’s report concluded her staff had inappropriately targeted Tea Party and other groups for extra scrutiny.

If one political party targets members of another for harassment, or worse, what should be done? I think most reasonable Americans would first want the allegation thoroughly investigated to determine the authenticity, scope, severity, and how far up the chain of command was involved. Well, that’s when Ms. Lerner got into more hot water. It seems that she was instructed to plead the fifth, not to admit to, or tell investigators anything more than a prepared statement. Further, a year after being asked to turn over her emails for the time frame in question, she informed investigators that her hard drive had crashed two-years earlier and destroyed the emails requested. One prominent senator on the committee investigating the allegations, Orin Hatch of Utah, released the following statement; ”Today’s admission by the IRS that they cannot produce Lois Lerner’s emails is an outrageous impediment to our investigation”. This accusation was mild compared to the outright disbelief expressed by others.

So, the next time the IRS requests that you produce emails or receipts, don’t worry; simply invoke the precedent established by Lois Lerner. Namely, read a prepared statement detailing the unfortunate hard drive crash that destroyed the evidence, including (unbelievable as it may seem) any and all backups, and conclude by pleading the fifth. If it’s good enough for the IRS, why not you?

Good luck with that; of course, any legitimate tax strategy should first be reviewed by your tax professional. Because our CPA firm specializes in very complicated and international tax work, we have lots of experience helping clients pay only the taxes they owe, and helping them through IRS audits. If you’d like additional information, I can be contacted at or (510) 797-8661, ask for Alan Olsen. Just remember, the IRS is not a Bully; you can poke a bully in the nose.