In this Aug. 2, 2012 file photo, Internal Revenue Service (IRS) Commissioner Douglas Shulman testifies on Capitol Hill in Washington, before the House Oversight Committee. The Internal Revenue Service inappropriately flagged conservative political groups for additional reviews during the 2012 election to see if they were violating their tax-exempt status, a top IRS official said Friday. (Credit/J. Scott Applewhite)
UPDATED 16:35 PM EDT, May 10, 2013 | STEPHEN OHLEMACHER, Associated Press
WASHINGTON (AP) — The Internal Revenue Service inappropriately flagged conservative political groups for additional reviews during the 2012 election to see if they were violating their tax-exempt status, a top IRS official said Friday.
Organizations were singled out because they included the words "tea party" or "patriot" in their applications for tax-exempt status, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups.
In some cases, groups were asked for their list of donors, which violates IRS policy in most cases, she said.
While American companies expect to pay taxes to Uncle Sam and the states where they operate, they weren't exactly ready to face levies from states where they aren't physically located.
But thinning budgets and a weak economy have prompted about 30 states and many more local communities to begin imposing "cross-border" taxes and fees designed to raise revenues from firms that don't locate or regularly operate in their jurisdictions.
If an IRS agent shows up at your door claiming you owe money to Uncle Sam, he or she could be wrong.
A new audit finds the IRS still has problems keeping track of what is owed by Americans. The problem persists because the agency's database still has errors in it, the Government Accountability Office said.
The IRS, which expects Americans to neatly keep all their receipts and tax documentation, destroyed numerous documents about potential identity theft without ever investigating the allegations, part of a broader failure in its effort to enlist the public to help fight financial crimes.
The agency encourages Americans to report suspected cases of tax fraud, identity theft and other financial crimes and has created specific forms to get complaints and allegations quickly to investigators.
Wading into a volatile election-year debate over taxes, Secretary of State Hillary Rodham Clinton on Monday urged nations across the world to tax their wealthiest citizens more to encourage economic growth.
“It is a fact that around the world the elites of every country are making money,” Clinton told participants at a conference in New York sponsored by her husband's Clinton Global Initiative. “There are rich people everywhere, and yet they do not contribute to their growth of their own countries.”
A tax credit designed to help families adopt children is bogged down by delayed processing and erroneous claims by the IRS, a Treasury Department's watchdog reports.
The Inspector General for Tax Administration found that 43,295 claims for the adoption credit went through "a more lengthy and inefficient process" because they lacked the proper paperwork. And of those, the Internal Revenue Service eventually awarded $11 million in tax credits to families that didn't qualify.