Tim Scott: IRS audits will be a burden for job growth
Sen. Tim Scott, R-S.C., expresses concerns with additional IRS agents auditing Americans and shares his thoughts on the Trump FBI raid.
If you believe the addition of 87,000 new IRS agents is to audit only the super-rich or to answer the public’s tax compliance questions, you’re delusional.
Twice in my life Democrats have seriously abused the tax powers, most recently for purely partisan reasons. Barack Obama silenced conservatives in 2012 and 2016 by blocking them from forming nonprofit corporations if they had conservative sounding names, and no one stopped him.
My own experience with the IRS dates to the 1990s and Bill Clinton. I was writing novels and having some success. My books were on the New York Times and other bestseller lists, and foolish me, I bought a new toy – a 32-foot trawler called "Tortuga." Turtle in Spanish.
More money for the IRS under the Inflation Reduction Act has many concerned about increased audits for taxpayes. (Chip Somodevilla/Getty Images | Photo by Alex Wong/Getty Images)
This slow boat was the red flag that brought me to the attention of the IRS. Why I don’t know. We never took deductions on her. We were always overly cautious about taxes. I wrote at home, but took no home office deduction, one of the IRS’ notorious red flags. I took no car deduction. My only expenses were printing paper, computer depreciation and business travel.
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My IRS auditor – I think she’d just graduated from high school – announced that no one had a right to buy such a lavish boat. She wanted pictures. I provided them. She wanted to know why I’d purchased it. For pleasure, I said. She acted as if I was hiding something. Her comments caused me to conclude that the audit was rapidly degenerating into an exercise in class warfare.
She demanded every scrap of paper regarding travel. We spent months in an endless paper chase, none of which was sufficient. She objected to much of my travel being in Mexico and the Caribbean.
I explained that all my business travel was to locations that I showed in my books. I always traveled there alone, always short term, and always within the limits of permissible tax deductions. I gave her copies of my published works that corresponded with photographs of alleys and vacant lots where I’d set murders or other events. I explained that if my readers ever traveled to these locations, I wanted them to see authenticity in my research.
None of it made a dent. My auditor disallowed all my business travel, then expanded the audit to embrace additional tax years. When I asked her for legal authority supporting her decision, she told me – and this is a direct quote – "I am all the authority you need."
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I asked my CPA if we should hire a tax attorney. He said: "Absolutely not! Hire a tax lawyer, and the IRS will refer the matter to the U.S. Attorney’s Office. They’ll most likely open a criminal investigation for tax fraud, even if there’s no evidence. Two years later they might drop the matter. By then you’ll owe several hundred thousand dollars in legal fees. It’s what the IRS and the government do."
So we took it on the chin.
Then it happened: manna from heaven. National news stories revealed serious abuses by the IRS. Countless audits had been conducted without proper cause. Auditors had displayed personal vendettas against taxpayers.
One Midwest supervisor, nicknamed "King James," actually exhorted his workers each morning by saying: "Now let’s go out and beat up some more taxpayers."
Bill Clinton balked. He told Treasury to get answers and stop the abuses – now!
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My CPA saw his opening. He demanded a conference call with my auditor’s supervisor. Under the political gun, she agreed. I listened. My CPA talked. He was interrupted several times by the anxious auditor who tried to defend her conduct to her boss, until he asked the dynamite question – "What about this boat?" My auditor hemmed and hawed. You could smell evasion over the speakerphone.
"My client’s corporation didn’t buy his boat," said my CPA. "It never owned the boat. The boat was a personal asset. It had never been chartered or rented. It produced no income – only endless expenses – none of which were ever claimed on taxes."
"Give us a minute," said the supervisor. The line went dead. My accountant smiled. When the speaker came alive again, the supervisor had an entirely different tone.
He announced the 14-month audit was closed. We owned no taxes, penalties, or interest. The word "sorry" is not in the IRS lexicon.
All that was left was a $100,000 bill to my CPA.
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In law school I had a constitutional law professor who described how he had immense confidence in American governance – with one exception.
The IRS.
That professor was Anthony Kennedy, recently retired from the U.S. Supreme Court.
We should all consider the havoc that Joe Biden and the Democrats are visiting on American society. The addition of 87,000 new agents to an already partisan IRS is the last thing America needs.