IRS TO REWRITE 501(c)(4) RULES. Our Rachael Bade reports, “The IRS will rewrite, without holding a public hearing, a proposed rule on the political activities of nonprofit groups, regulations that stemmed from the tea party controversy that rocked the agency last summer. The IRS said it will start writing a revised regulation amid criticism from both the left and especially the right on the proposal to tighten rules governing the tax-exempt status of so-called social welfare organizations.”
“Given the diversity of views expressed and the volume of substantive input, we have concluded that it would be more efficient and useful to hold a public hearing after we publish the revised proposed regulation,” said an IRS statement.
“The agency says the rule will keep many of the same elements as the original proposal but will take the record number of comments into consideration for a new version.” Read on:http://politico.pro/1qYQ6yu
TAX EXTENDERS: STILL NOTHING. The Senate left for its Memorial Day recess without breaking what’s now a week-long impasse over the tax extenders. Whether Republicans may offer an amendment targeting Obamacare’s medical device tax remains the biggest sticking point. Sen. Orrin Hatch said he was willing to settle for a two-year delay, one he said Republicans would be willing to pay for. He estimated that would cost $4 billion. Asked where he’d find the money, Hatch said: “We could find $4 billion,” adding, “I’ll find it personally.”
Democrats say they are willing to consider Republican amendments, but they’re ruling out ones on the Affordable Care Act. “Of course, we can’t open up the whole tax code for debate or go and debate the merits of the ACA on this bill — this is not the type of bill to do that,” said Sen. Charles Schumer (D-N.Y.).
HAPPY FRIDAY! Your Morning Tax-er will be sticking around D.C. for the three-day weekend and enjoying the start of pool season. Let me know what you’re up to this weekend! If you want to talk taxes, or your favorite D.C. staycation spots, you can find me at mweinger@politico.com or on Twitter at @mweinger. As always, please follow @POLITICOPro and @Morning_Tax.
NO MORNING TAX MONDAY. Morning Tax, along with all your other favorite POLITICO newsletters, will be taking Memorial Day off. Hope you don’t miss us too much — we’ll be back bright and early Tuesday morning.
HOUSE: Gone.
SENATE: Convenes for a pro forma session at 10 a.m.
LAWMAKERS & STAFFERS OWE MILLIONS IN BACK TAXES. Rachael has the story: “Remember the alleged tax-dodging IRS workers? House and Senate employees — including lawmakers — make them look like model citizens. It turns out that IRS employees have a much better record paying their taxes than lawmakers and their staff in both the House and Senate — almost five- and three-times better, to be exact, according to data released by the IRS on Thursday.”
“About 4.9 percent of all House employees, including lawmakers, have an unpaid tax liability. Those 486 employees owe Uncle Sam about $5.8 million. Across the Rotunda, Senate staff and legislators have a 3.2 percent delinquency rate, with 228 employees owning $2.7 million in taxes. The IRS, which has a 0.9 percent tax delinquency rate, has come under fire in recent weeks when an agency watchdog found that it had paid $1 million worth of performance awards to about 1,100 IRS employees with tax-compliance problems.” http://politico.pro/Tzqp9q
IRS RELEASES THOUSANDS OF DOCS TO THE RNC. The IRS has released several thousands of pages in response to the Republican National Committee’s FOIA request, according to a D.C. court filing. The RNC requested documents in May 2013 after the IRS tea party targeting scandal exploded, and RNC spokesperson Kirsten Kukowski tells Morning Tax the committee is set to receive some of the docs from the IRS today.
Why now? Well — and pardon the brief bit of legalese — these documents served as grounds for the agency’s request for a two-week extension to respond to the RNC’s motion for a preliminary injunction prohibiting the agency from withholding the FOIAed records. The filing notes the RNC consented to the new deadline, June 6. And it stems from the RNC filing a lawsuit last month, on Tax Day, against the IRS for not producing any records at all since the FOIA request. In the complaint, the committee cited several instances of the IRS asking for additional time to fulfill the request to disclose documents about 501(c)(4)s.
MAKE IT TEN BILLION. Disclosures of taxpayer information to Congress last year, that is. Bloomberg’s Richard Rubin reports, “Congress spent a lot of time investigating the Internal Revenue Service last year. And now there’s statistical proof. Congressional committees received 10.6 billion disclosures of taxpayer information last year, up from 2.4 billion the year before, according to the Joint Committee on Taxation’s annual report. The IRS has said it spent $14 million complying with congressional inquiries stemming from the agency’s disclosure that it gave extra scrutiny to Tea Party groups applying for tax-exempt status.”http://bloom.bg/RdilZV
THE VIRGINIA-CREDIT SUISSE CONNECTION. The New York Times’ DealBook takes a look at the “long arm of prosecutors” in Alexandria, Va., particularly in the Credit Suisse case. “Hundreds of miles from Credit Suisse’s Madison Avenue office tower and an ocean away from its headquarters in Zurich, the bank found an unlikely opponent in Alexandria, Va. Federal prosecutors there helped lead an investigation into Credit Suisse, which this week pleaded guilty to helping thousands of American clients hide their wealth overseas,” Ben Protess reports. Read on: http://nyti.ms/1obQvvI
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ICYMI — POLITICO’s Morning eHealth newsletter launched this week — delivering the latest policy developments from the intersection of health care and technology. POLITICO Pro eHealth, our forthcoming coverage area launches June 3, covering everything from electronic health records to telemedicine to health apps to federal health IT. Start your day smart by signing up for the morning tipsheet here: http://bit.ly/Qyu4lQ
OVERSIGHT CALLS OUT DOJ FOR MEETING WITH LERNER IN 2010. That’s two and a half years earlier than previously known, the House Oversight and Government Reform Committee said in a release. In a letter to AG Eric Holder, Chairman Darrell Issa and Rep. Jim Jordan requested the Justice Department make DOJ public integrity section chief Jack Smith available for an interview in light of election crimes branch head Richard Pilger telling investigators that the Justice Dept. met with former IRS official Lois Lerner in Oct. 2010 “to discuss how the IRS could assist in the criminal enforcement of campaign-finance laws against politically active nonprofits.”
And Justice responds. Justice spokesperson Brian Fallon told Morning Tax in a statement: “We are reviewing the letter. The department was not at any point involved in the targeting of any category of nonprofit group, conservative or otherwise, for scrutiny or potential prosecution.”
And the DOJ also addressed the 2010 meeting with Lerner in a May 7 letter sent to Issa, writing that “Pilger’s contacts with the IRS were entirely appropriate and consistent with our efforts to work with other agencies to ensure that criminal conduct, wherever it occurs, is brought to the attention of the Department.”
‘Just part of normal enforcement.’ Philip Hackney, a law professor at Louisiana State University who spent five years at the Office of the Chief Counsel of the IRS, tells Morning Tax that “in terms of IRS talking to DOJ, that’s a commonplace thing — and they should be doing that.” And in general, the IRS meeting with Justice is “just part of normal enforcement,” he says, noting that the agency needs to work with the Justice Department because it’s DOJ that brings cases. “It was absolutely normal for the IRS to be meeting with the Dept. of Justice, discussing the law, as a matter of ordinary course,” he says. “You’ve got to know where everybody stands on these things, to make sure everybody’s comfortable in terms of what the law is and how you will enforce it.”
Issa and Jordan, meanwhile, wrote to Holder that it’s apparent from the meeting Pilger discussed that DOJ “was closely involved in engaging with the IRS in wake of Citizens United and political pressure from prominent Democrats to address perceived problems with the decision.” Read the Oversight letter here: http://1.usa.gov/1lGWxOw
QUICK LINKS:
—The Economist’s Lexington: “Taxes, no; migrants, maybe.” http://econ.st/1mb9tPC
—Bloomberg: “Madoff Fraud Victim’s Estate Can Seek Refund in Tax Court.”http://bloom.bg/1jZQZND
—“As the days tick down to the expiry of Pfizer’s offer for AstraZeneca on Monday, one of the most striking aspects of the takeover battle has been the success of the Anglo-Swedish target company in winning over British public opinion,” The Financial Times reports.http://on.ft.com/1lHpt8Z
—The New York Times’ The Upshot: “There’s No Such Thing as a Free Tax Cut.”http://nyti.ms/1jZFYvO
—RATE Coalition co-chairs James Pinkerton and Elaine Kamarck have an op-ed in The Washington Times: “Cut corporate-tax rate to keep business in America.” http://bit.ly/1pi3KIH
—Reuters: “France to go easy on firms that come clean on tax dodging.” http://reut.rs/1jIZqmg
—FT repots, “Credit Suisse has sold $5bn worth of bonds in its first significant senior debt sale in more than three years and only days after pleading guilty to charges that it helped US citizens evade tax.” http://on.ft.com/1mcgS19
DID YOU KNOW? Oscar Mayer was a real person.
Tips, comments, suggestions? Send them along via email to our team: Rachael Bade (rbade@politico.com), Kim Dixon (kdixon@politico.com), Brian Faler (bfaler@politico.com), Kelsey Snell (ksnell@politico.com) and Mackenzie Weinger (mweinger@politico.com).
** A message from CIT: Growmerica® Definition: Growth opportunities for America’s small and middle market businesses created by lending, leasing and advisory services from CIT. CIT provides credit access to businesses in your communities, contributing to a stronger economy for all Americans. Our financing expertise helps suppliers keep retailers’ shelves fully stocked. We’re a force in railcar and commercial aircraft leasing. In fact, we’re a steadfast partner to companies in more than 30 industries, in all 50 states, offering the financial solutions your constituents need to prosper. Visit cit.com. **
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