WASHINGTON, DC - MAY 22: Internal Revenue Service Director of Exempt Organizations Lois Lerner is sworn in before testifying to the House Oversight and Government Reform Committee May 22, 2013 in Washington, DC. (Image credit: Getty Images via @daylife)

It’s no surprise that Rep. Darrell Issa (R-CA), Chair of the House Oversight and Government Reform Committee, would recall Lois Lerner, Director of the Exempt Organizations Division at the Internal Revenue Service. He advised as much on yesterday when Lerner possibly (keep reading!) pleaded the Fifth rather than testify at a Congressional hearing into allegations that the IRS improperly targeted certain applications for tax-exempt status based on keywords and politically charged language.

What is surprising is how very quickly it happened.

Less than twenty-four hours after Lerner refused to testify at the hearing, Chairman Issa announced that he will bring Lerner back for questioning. She is expected to be summoned back sometime after Memorial Day, likely in early June. Since Issa didn’t officially adjourn the hearing – he simply called for a recess – he won’t have to issue a new subpoena to Lerner.

Issa’s reasoning for the quick call back? He believes that her statement was the equivalent of a waiver of her Fifth Amendment right against self-incrimination (you can read more about it on yesterday’s post). I’m not convinced that interpretation – that she waived the right – is correct. But then, I don’t claim to be an expert in constitutional law. So I did what you should always do when you don’t know the answer: I asked someone who does.

I reached out to some folks – attorneys and law professors – who make their living discussing the law and found that the only thing they could agree on is that the answer isn’t clear. What was clear was that it matters what Lerner said and when she said it. So, here’s the text of what she said:

Good morning, Mr. Chairman and members of the committee. My name is Lois Lerner, and I’m the director of exempt organizations at the Internal Revenue Service. I have been a government employee for over 34 years.

I initially practiced law at the Department of Justice and later at the Federal Election Commission. In 2001 I became — I moved to the IRS to work in the exempt organizations office, and in 2006 I was promoted to be the director of that office.

Exempt organizations oversees about 1.6 million tax-exempt organizations and processes over 60,000 applications for tax exemption every year. As director, I’m responsible for about 900 employees nationwide and administer a budget of almost $100 million.

My professional career has been devoted to fulfilling responsibilities of the agencies for which I have worked, and I am very proud of the work that I have done in government.

On May 14th the Treasury inspector general released a report finding that the exempt organizations field office in Cincinnati, Ohio, used inappropriate criteria to identify for further review applications from organizations that planned to engage in political activity, which may mean that they did not qualify for tax exemption.

On that same day, the Department of Justice launched an investigation into the matters described in the inspector general’s report. In addition, members of this committee have accused me of providing false information when I responded to questions about the IRS processing of applications for tax exemption.

I have not done anything wrong. I have not broken any laws, I have not violated any IRS rules or regulations, and I have not provided false information to this or any other congressional committee.

And while I would very much like to answer the committee’s questions today, I’ve been advised by my counsel to assert my constitutional right not to testify or answer questions related to the subject matter of this hearing. After very careful consideration, I’ve decided to follow my counsel’s advice and not testify or answer any of the questions today.

Because I’m asserting my right not to testify, I know that some people will assume that I’ve done something wrong. I have not. One of the basic functions of the Fifth Amendment is to protect innocent individuals, and that is the protection I’m invoking today.

Thank you.

Chairman Issa replied by saying, “Thank you for your testimony.”

And zing! Was it a statement or was it testimony? Whether she has waived her Fifth Amendment right may hinge on that very question.

I spoke with Hayes Hunt, an attorney in the Philadelphia office of Cozen O’Connor, and author of the highly regarded blog, From The Sidebar; he recently authored a piece on Fifth Amendment Fundamentals (worth the read, I promise). Hunt confirmed that the Fifth Amendment isn’t generally waived simply by making an opening statement even if it is under oath (as it is here). A statement isn’t usually considered testimony because it’s not in response to a direct question.

But that’s what’s even more curious here. Lerner might not have even asserted the right in the first place. The right is typically invoked in response to specific questions. As Hunt wrote in his blog, “a witness cannot simply claim a blanket Fifth Amendment privilege to all questions that might be asked of him or her. A witness must instead assert the privilege to each question asked.”

That didn’t happen here, even though I expected it to. Chairman Issa didn’t actually ask Lerner any specific questions meant to elicit testimony.

Or maybe he did.

You see, Chairman Issa used the word testimony a few moments after Lerner’s statement when he asked Lerner to authenticate the answers she had provided to the U.S. Treasury Inspector General for Tax Administration (TIGTA) in response to their investigation. When she was handed the written response and asked if these were the answers she had provided, Lerner answered, “This appears to be my response.” Chairman Issa replied, “So it’s your testimony that — as far as your recollection, that is your response?” Lerner confirmed with “That’s correct.”

Chairman Issa then stated the purpose of the hearing and advised Lerner that she has “given not once but twice testimony before this committee, under oath, this morning” with her “opening statement” and by authenticating “earlier answers to the IG.” With that, he indicated that he believed that Lerner did not assert her rights “but in fact have effectively waived” those rights. She was then dismissed.

So did she or didn’t she waive her Fifth Amendment rights? Chairman Issa may think so. Rep. Harold Watson Gowdy III (R-SC) definitely thinks so. And Rep. Elijah Cummings (D-MD) isn’t so sure. And neither are a bunch of lawyers, legal experts and people who want to be thought of as legal experts.

Reportedly, Rep. Issa is conferring with attorneys to determine whether the privilege was waived. It matters because if it was (and that’s a huge, big “if”), Lerner could be held in contempt of court for refusing to answer further questions. That would make more than a few in Congress pretty pleased. But it could also result in backlash. I think everyone wants answers about the IRS scandal at this point but nobody wants to see legal rights trampled in the process.

In the interim, while all of this shakes out, Lerner has been placed on administrative leave. Reportedly, she was asked to resign and she refused to do so. Expect to hear more next week.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.

This is my picture of a closed sign. I am using it on my profile. (Photo credit: Wikipedia)

Don’t get too excited. It’s not closed forever. The Internal Revenue Service had previously announced five planned daylong furloughs beginning on May 24, 2013. The other scheduled furlough days are June 14, July 5, July 22 and August 30, 2013. The closures are related to gaps in the budget, including those due to sequestration.

What this means is that IRS will effectively shut down on those days. All IRS offices, including taxpayer assistance centers, will be closed. No employees will report to work (they are furloughed without pay) so that means no answers to your phone calls or correspondences. No tax returns will be processed and no electronically filed returns will be accepted or acknowledged. No refund checks will be issued. You will also not be able to access the “Where’s My Refund?” tool and the Online Payment Agreement system.

On the plus side? No audits or exams will be conducted and no bills will go out.

That said, this doesn’t mean that due dates are extended: tax-filing and tax payment deadlines will remain in place. Taxpayers should continue to file tax returns and pay taxes due. Since the Treasury Department’s Electronic Federal Tax Payment System (EFTPS) will operate, payroll and excise tax deposits for businesses can go on as usual.

If you’re counting days for court deadlines (for example, for U.S. Tax Court), furlough days count as normal days: you don’t get any extra time to file. However, IRS has announced that it will allow taxpayers extra time for certain document requests, including administrative summonses, requests for records in connection with a return examination, review or compliance check, or document requests related to a collection matter if the last day for the request falls on a furlough day. If that happens, you have until the next business day. So, if your deadline is tomorrow, May 24, you have until Tuesday, May 28, to comply (remember that Monday is Memorial Day).

Enjoy the long break from IRS. On Tuesday, it’s back to normal (whatever that passes for these days).

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.

–

see photos

Click for full photo gallery: The 15 Most Expensive Tax Breaks

Internal Revenue Service Director of Exempt Organizations Lois Lerner(C) is sworn in before testifying to the House Oversight and Government Reform Committee May 22, 2013 in Washington, DC. (Image credit: AFP/Getty Images via @daylife)

As Congress continues its investigation into allegations that the Internal Revenue Service improperly targeted certain applications for tax-exempt status based on keywords and politically charged language, a number of IRS and Treasury officials made their way to the Hill today to testify in front of the House Committee on Oversight and Government Reform. The Committee, chaired by Rep. Darrell Issa (R-CA), is sometimes referred to as the Oversight Committee and has legislative jurisdiction over the District of Columbia, the government procurement process, federal personnel systems, the Postal Service and other matters. Chairman Issa describes the primary function of the committee as “oversight of virtually everything government does.” Pretty broad duties, right? And that is, of course, how the IRS matter ended up here.

The fact that IRS and Treasury officials are back in Congress to testify isn’t surprising or at this point, necessarily all that interesting. But what was gasp-inducing was the decision of Lois Lerner, Director of the Exempt Organizations Division at IRS, to invoke the Fifth Amendment and not answer questions in front of the committee. A spokesperson for the Oversight Committee had this to say earlier today:

The committee has been contacted by Ms. Lerner’s lawyer, William W. Taylor III, who stated that his client intended to invoke her Fifth Amendment right and refuse to answer questions.

Lerner still had to make an appearance at the hearing. She was ordered to the committee by subpoena, so not showing up wasn’t an option. She doesn’t, however, have to answer questions. She has the right to invoke the Fifth Amendment and it was clear that she planned to do so. Over and over. Lerner, however, insisted through her lawyer that she “has not committed any crime or made any misrepresentation.” So why not testify? Well, for one, she doesn’t have to. She does have an out through the Fifth Amendment and she’s taking it.

Here’s what the Fifth Amendment says:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

The Fifth Amendment actually covers a lot of ground. The one that we’re most familiar with is the right to choose not to testify against yourself (self-incrimination). But the clause actually touches on a number of constitutional limits meant to protect against potential abuses, among them, the right to a grand jury for capital crimes; the guarantee of no double jeopardy; the right to a fair and speedy trial; and a ban on government seizures without appropriate compensation.

It is, however, the right that we generally think of – self incrimination – which has been invoked by Lerner.

In this country, a basic tenet of our legal system is that you are innocent until proved guilty. That is, it’s the government’s burden to prove that you’re guilty and you can’t be compelled to shift that burden by testifying against yourself. That right – the right to “plead the Fifth” – allows you to refuse to answer a question because the answer might lead to an assumption, even if it’s not true, that you have done something wrong. The same rationale is the basis for our Miranda Rights, the notion that you have the right to remain silent rather than answer questions that might indicate or imply guilt. It’s a pretty powerful tool.

The Fifth Amendment, while initially thought to apply to questioning, extends to testifying in legal proceedings. It doesn’t have to be a criminal matter and does not only apply to defendants. The Supreme Court has ruled that the right includes both civil and criminal proceedings and includes defendants and witnesses. The right also applies to grand jury and congressional hearings. And that’s where we find ourselves today.

Lerner, for her part, did read a statement at the hearing, again affirming that she didn’t do anything wrong. That ticked off some of the members of the committee who felt that the statement was the equivalent of offering testimony and therefore, a waiver of her right to the Fifth Amendment. The law doesn’t quite work that way, so Lerner was able to stay quiet. The committee could have made her stay and plead the Fifth over and over (as was her plan) but decided against it. While it would have likely made many in Congress happy to watch her squirm, they wisely decided against what would have clearly been a waste of time.

Lerner, however, managed to make a lot of enemies in the short span of time, and was warned by Chairman Issa that he may wish to see her back again. Translation: you will be back again. And my guess? When she comes back, it won’t be as the Director of the Exempt Organizations Division at IRS but rather as Lois Lerner, member of the private sector.

So what gives? It’s hard to say. Lerner clearly knew what was happening early on. She is also the IRS employee who made the scandal public – with a disastrous appearance at the American Bar Association conference (which may or may not have been planned, depending on who you believe). And worse, when she attempted to address the issue further, she offered up, as an excuse, “I’m not good at math.” I’m going out on a limb and suggesting that she isn’t very good under pressure which is why I’m guessing she didn’t want to speak in front of the committee. But she raised more questions by not talking than she answered. That’s bad for taxpayers. It’s bad for IRS. And it’s very, very bad for Lerner.

Fortunately for the committee, Lerner wasn’t the only witness in line to testify. Also scheduled to be on the hot seat were Douglas Shulman, the former IRS commissioner who voluntarily testified on yesterday; J. Russell George, the Treasury Inspector General for Tax Administration (TIGTA) who testified last week; and Deputy Treasury Secretary Neal S. Wolin. No surprises are expected from any of them.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.

MOORE, OK - MAY 20: In this handout provided by the U.S. Department of Defense, two firefighters break through concrete during the search for survivors in the remains of the Plaza Towers Elementary School after it was hit by a tornado on May 20, 2013 in Moore, Oklahoma. (Image credit: Getty Images via @daylife)

It was described as “a lawn-mower blade spanning two miles” – and it left a trail of devastation in its wake. The tornado that ripped through Moore and Oklahoma City on yesterday may have only stayed on the ground forty minutes but it will be remembered for years to come.

As those in Oklahoma began the long process of cleaning up after the storm, the Internal Revenue Service announced tax relief to individuals and businesses to those impacted by the tragedy. Affected taxpayers in Cleveland, Lincoln, McClain, Oklahoma and Pottawatomie counties will receive special tax relief. The IRS is continuing to monitor the area and made extend relief to other locations as the Federal Emergency Management Agency (FEMA) continues its work.

Specifically, the relief extends certain tax filing and payment deadlines occurring after May 18, 2013. The IRS is waiving failure-to-deposit penalties for federal payroll and excise tax deposits normally due on or after May 18 through June 3 so long as the deposits are made by June 3, 2013. For those tax filing and payment deadlines for all other affected taxpayers occurring after May 18, those deadlines have been extended to September 30, 2013. This includes estimated tax payment deadlines of June 17 and September 16, as well as the July 31 payroll and excise tax deadlines. Those taxpayers who are entitled to relief will automatically have any applicable interest, late-payment or late-filing penalty abated. This means that affected taxpayers will need not contact the IRS to get this relief.

If you live outside of the FEMA designated area but have books, records or tax pros inside those area, the IRS will work with you to get you relief. Relief is also available for those who live outside of the FEMA designated areas but who are assisting in disaster relief. If either of those situations apply to you, you will need to contact the IRS; the relief is not automatic for those living outside of the FEMA designated areas. If this applies to you, contact the IRS at 866-562-5227.

Taxpayers who suffered disaster related losses which are not covered by insurance can deduct those casualty losses on a federal income tax return. A casualty loss is the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a tornado. You can find out more here.

I’ll have more on available tax relief and how you can help victims of the storm as information is made available. In the interim, please know that my thoughts and prayers are with all of you affected by the storms.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.

When the announcement was made about the hearing, Committee Chair David “Dave” Camp (R-MI) said:

The American public expects the Internal Revenue Service to be apolitical in its enforcement of our tax laws. News that the agency admits it targeted American taxpayers based on politics is both astounding and appalling. The Committee on Ways and Means will get to the bottom of this practice and ensure it never takes place again.

Ranking Committee Member and former Chair Sander M. Levin (D-MI) added:

The American people must have the fullest confidence that organizations requesting tax exemption receive completely unbiased treatment from the Internal Revenue Service and are never singled out by name or political views. The nation deserves a complete understanding of this matter, and as Chairman Camp and I discussed this morning, it is essential that there be a thorough and bipartisan investigation and effective remedial action.”

The timing of the hearing was clearly political. The fact that Congress was beating down the doors for IRS to testify meant that it was going to be scheduled quickly: with about four days’ notice, there was not a lot of time for either side to prepare (though, really, why bother with facts?). It also meant that the process is likely to be finished quickly, not at all like the extended hearings for Bush’s “Lawyergate” or Clinton’s impeachment. That’s likely a relief for the Obama administration (as well as Acting Commissioner of the Internal Revenue Service Steve Miller, who is on his way out).

Steve Miller, and the Treasury Inspector General for Tax Administration (TIGTA), J. Russell George, were the only scheduled witnesses at the hearing. Just prior to the hearing, Miller offered these opening remarks:

Thank you for the opportunity to be here today. Unfortunately, given time considerations, the IRS was unable to prepare written testimony. I would note that I have a very brief statement before I take your questions.

First and foremost, as Acting Commissioner, I want to apologize on behalf of the Internal Revenue Service for the mistakes that we made and the poor service we provided. The affected organizations and the American public deserve better.

Partisanship or even the perception of partisanship has no place at the IRS. It cannot even appear to be a consideration in determining the tax exemption of an organization.

I do not believe that partisanship motivated the people who engaged in the practices described in the Treasury Inspector General’s report. I have reviewed the Treasury Inspector General’s report, and I believe its conclusions are consistent with that. I think that what happened here was that foolish mistakes were made by people trying to be more efficient in their workload selection. The listing described in the report, while intolerable, was a mistake and not an act of partisanship.

The agency is moving forward. It has learned its lesson. We have previously worked to correct issues in the processing of the cases described in the report and have implemented changes to make sure that this type of thing never happens again. Now that TIGTA has completed its fact-finding and issued its report, management will take appropriate action with respect to those responsible.

I would be happy to answer your questions.

And he did. Miller and George answered questions for hours, taking occasional breaks from what was, at times, a contentious hearing. In the end, I don’t think we have a much clearer picture of what went on at IRS: the IRS (and TIGTA) maintained that what went on was “inappropriate” but not illegal.

Miller maintained, as he had previously, that an increase in the number of organizations applying for nonprofit status contributed to a change in the IRS tax exempt application review process. He also insisted that the review was not political and “included groups from across the political spectrum.” He shrugged off accusations that he had lied to Congress, saying that he had answered their questions truthfully, including those posed in July 2012 while Doug Shulman was still in charge at IRS.

That wasn’t enough for some on the Hill who clearly feel that Miller is getting off easy. Specifically Rep. Tom Reed (R-NY) chastised Miller, saying that “[n]othing bad is going to happen to you, you’re going to get your full benefits.” Miller, who resigned in the middle of the scandal, shot back: “Nothing bad is happening to me, Congressman?” He advised, when asked about his resignation, that “I resigned because as the acting commissioner, what happens in the IRS, whether I was personally involved or not, stopped at my desk.”

You can read Miller’s proffered testimony here. You can read George’s testimony proffered testimony here. And, if you have a few hours to kill, CSPAN has archived the hearings for you here.

But don’t expect the controversy to end here. Rep. Camp has already indicated that he expects to have more hearings about potential abuses at the IRS. Worries over what might have happened in terms of disclosures are already making rounds on the internet. Congress is calling for more investigations and at least one more hearing will come this week as former IRS Commissioner Doug Shulman will voluntarily testify before the House Oversight Committee on Wednesday.

Congress is clearly walking a line between wanting to learn more (good) and exploiting those holes for political gain (not so good). There is, however, always the very real possibility that politicians on both sides of the aisle could experience some backlash as a result with the public getting increasingly weary over coverage of the next big scandal. It is entirely possible to have too much of a good thing.

(Image Courtesy of C-SPAN).

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.

You can watch the hearings at C-SPAN over the web here: http://www.c-span.org/Events/C-SPAN-Event/10737439699/

I’ll have a round-up of the day’s events at the close.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.

WASHINGTON, DC - FEBRUARY 14: Office of Management and Budget Federal Controller Danny Werfel testifies before the Senate Appropriations Committee about the potential impacts of 'the sequester' during a hearing on Capitol Hill February 14, 2013 in Washington, DC. (Image credit: Getty Images via @daylife)

One day after President Obama accepted the resignation of Acting Internal Revenue Service Commissioner Steven T. Miller, a replacement is already being talked up. President Obama is expected to name 42 year old Daniel Werfel to the position.

Werfel was named as Controller of Office of Federal Financial Management of the Office of Management and Budget (OMB) by the President in July 2009. Prior to that appointment, he had served in several roles at the OMB: as Deputy Controller; Chief of the Financial Integrity and Analysis Branch; budget examiner in OMB’s Education Branch; and as a policy analyst in OMB’s Office of Information and Regulatory Affairs.

An attorney by trade, Werfel also served as a Trial Attorney in the Department of Justice’s Civil Rights Division. He holds a Masters Degree in Public Policy from Duke University, a law degree from the University of North Carolina at Chapel Hill, and a Bachelors Degree in Industrial and Labor Relations from Cornell University.

Werfel is generally considered well liked in Washington. Even though he was nominated by President Obama to his most recent position, he was a fixture in the OMB under former President Bush, gaining bipartisanship support. With that in mind, while it is mostly unheard of for an Acting IRS Commissioner to be named as IRS Commissioner, there are rumors that Werfel had been discussed as a possible replacement for former Commissioner Doug Shulman.

I’ll have more as the story unfolds.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.

A Walmart employee gathers pushcarts as police man the front entrance to a Walmart store in Paramount, California on November 23, 2012 as Walmart employees and their supporters protested nearby. (Image credit: AFP/Getty Images via @daylife)

Wal-Mart Stores, Inc., (Walmart) had mostly good news for Wall Street yesterday when it reported earnings of $3.78 billion, or $1.14 per share, in the first quarter. Those earnings were consistent with Walmart’s expectations of $1.11 to $1.16 per share and just short of analysts’ average forecast of $1.15 per share.

Those earnings were likely a welcome sign for the company who had worried internally this year about slow sales. Those fears were made public when emails were leaked referring to February as “a total disaster.” In the text of those emails, Walmart VP of Finance Jerry Murray reported that Walmart had the worst sales start in seven years.

I had suggested at the time that sluggish sales might be linked to tax season. It turns out that Walmart agrees.

If you don’t think timing and tax policy can be linked directly to the economy, think again. Delayed refund checks due to a late start to the tax season this year and snafus with returns claiming education credits no doubt contributed to slower sales because consumers had less cash in hand. By mid-February, the date that most refunds had been issued in 2012, the Internal Revenue Service was just getting started issuing returns in 2013. Bill Simon, Walmart U.S. president and chief executive officer, acknowledged this week that the delay contributed to slow sales, saying “February sales started slower than planned, due in large part, to the delay in income tax refunds. We began seeing increased tax refund check activity late last week in our stores, resulting in a more normalized weekly sales pattern for this time of the year.”

And there was something else: those disappearing payroll tax cuts. Simon mentioned the cuts not once but twice in his remarks, noting at first that sales have likely slowed because families had grown used to the cuts – and will now have to get used to not having them. He said, “[w]e are confident that our low prices will continue to resonate, as families adjust to a reduced paycheck and increased gas prices.” With respect to sales moving forward, he offered that “[w]e continue to monitor economic conditions that can impact our sales, such as rising fuel prices, changes in inflation and the payroll tax increase.” Despite those delayed tax refunds and payroll tax cuts, it appears that Wal-Mart managed to bounce back.

It wasn’t all bad news on the tax front: the company reported that benefited from a “lower than expected effective tax rate.” The effective tax rate for the retail giant for the year was 31.0%, down nearly two points from last year. Walmart saw its biggest drop in the effective tax rate in fourth quarter, a nearly three point drop to 27.7% as compared to 30.9% last year. The company touted “a number of discrete tax items, including positive impact from fiscal 2013 legislative changes, most notably the American Taxpayer Relief Act of 2012″ for the dip in tax rates.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.

On Wednesday, President Obama announced that acting IRS Commissioner Steven T. Miller had resigned. (Image credit: AFP/Getty Images via @daylife)

And he’s outta here!

Earlier today, Acting Internal Revenue Service Commissioner Steven T. Miller offered his resignation to President Obama. The resignation was issued amid a scandal that has plagued the IRS in recent days – and put the Obama administration in clear scramble mode. There have been calls for criminal charges (though for what is not yet clear) and demands for investigations into confirmed reports that the IRS improperly targeted certain applications for tax-exempt status based on keywords and politically charged language.

Miller announced plans to leave next month to IRS employees, saying:

Dear Colleagues:

It is with regret that I will be departing from the IRS as my acting assignment ends in early June. This has been an incredibly difficult time for the IRS given the events of the past few days, and there is a strong and immediate need to restore public trust in the nation’s tax agency. I believe the Service will benefit from having a new Acting Commissioner in place during this challenging period. As I wrap up my time at the IRS, I will be focused on an orderly transition.

While I recognize that much work needs to be done to restore faith in the IRS, I don’t want anyone to lose sight of the fact that the IRS is comprised of incredibly dedicated and hard-working public servants. During my 25-year IRS career, I am profoundly proud to have worked alongside you and to be part of an institution that has worked hard to support the nation. I have strong confidence in the IRS leadership team to continue the important work of our agency.

I want to thank everyone for all of their support and friendship during my career in government service. And I especially want to thank each and every one of you for your continued commitment to the nation’s taxpayers.

Steve

While I’ll admit that the timing of the resignation threw me off, the move didn’t. Those in positions of power have been calling for his head – heck, anyone’s head – since the story was made public last week. Notwithstanding the fact that Miller happened to be in charge when the accusations flew, there was a more damning fact: it has been reported that, in May 2012, former Commissioner Doug Shulman was briefed about the then-percolating scandal. Miller was said to have learned about it at roughly the same time.

The controversy about who knew what and when led Sen. Marco Rubio (R-FL) to write a strongly worded letter to Secretary of the Treasury Jack Lew, calling for Miller’s resignation earlier this week. Or sort of. Sen. Rubio took a lot of flak for his statement that “it is clear the IRS cannot operate with even a shred of the American people’s confidence under the current leadership. Therefore, I strongly urge that you and President Obama demand the IRS Commissioner’s resignation, effectively [sic] immediately.” Here’s the rub: Miller isn’t exactly the Commissioner. He’s the Acting Commissioner. There hasn’t been an actual Commissioner since Bush appointee Doug Shulman resigned in November following a five year stint. I know, it’s semantics but it’s important semantics. Those in positions of power should make an effort to get the facts straight – or at least have a fact checker to do it for them.

As for Miller? He’ll be okay. I suspect he didn’t have aspirations of making Commissioner. Historically, the Acting Commissioner does not accede to be Commissioner, with most acting only a few months (believe it or not, a few have only held the position for a couple of days).

This is the first public hand slapping since the scandal was made public. You can bet that it won’t be the last.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.

Logo of the Internal Revenue Service (Photo credit: Wikipedia)

The headlines were filled this morning with accusations, defenses and more about the scandal involving the Internal Revenue Service’s increased, targeted scrutiny of the applications of specific tax exempt organizations.

Details about what actually happened – and who knew what and when – are still murky. An investigation into the timeline and the players in the scandal is ongoing. The U.S. Treasury Inspector General for Tax Administration (TIGTA) was instructed to dig deeper and the Attorney General’s office also ordered the FBI to investigate.

When the matter was made public last week, the IRS acknowledged that mistakes were made and issued an apology (whether or not it was enough is another story). Last night, the IRS released the following statement:

The IRS welcomes the public release of the Treasury Inspector General’s report. The IRS agrees that aspects of the original approach for handling the influx of tax-exempt applications were inappropriate, but it is important to clarify a few points.

The IRS is required by law to determine if organizations are engaging in a legally permissible level of political activity. Centralizing these cases was necessary to achieve consistent treatment. After seeing issues with particular cases, inappropriate shortcuts were used to determine which cases may be engaging in political activities. It is important to note that the vast majority of these cases would still have been centralized based on the general criteria used for other cases. All centralized cases –including the minority of those with the specified names — received similar treatment in which the facts and circumstances of each case determined the ultimate outcome. It is also important to understand that the group of centralized cases included organizations of all political views.

While flaws in our process were corrected last year based on our own review, we only recently discussed this publicly as there had been a concurrent ongoing TIGTA audit of the situation. There was no intent to hide this issue, but rather we waited until TIGTA completed their fact finding, made recommendations, and we reviewed their findings.

I will keep you posted as more information – real information, not just fake, teaser headlines – becomes available.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl), hang out with me on Facebook or check out my new YouTube channel. You can also buy my book in print at Amazon.com or as an ebook for the Kindle, the Nook from Barnes and Noble or through Hyperink.