SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
irs
What Todd Blanche Failed to Learn From Watergate
Will Todd Blanche see how his loyalty to Trump personally—rather than to the nation he has taken an oath to serve—is leading him to an unfortunate destination? Probably not.
Jul 16, 2026
In 1974, Watergate culminated in the first-ever resignation of a sitting US president. As Richard Nixon left office, his closest advisers were in prison—or heading there. Among them were attorneys who broke the law that they had sworn to uphold, including his former attorney general John Mitchell.
Acting AG Todd Blanche now seeks Mitchell’s job.
- Like Mitchell, Blanche was a successful lawyer at a prominent New York law firm before joining the president’s team.
- Like Mitchell, Blanche has served the president slavishly. He personally interviewed Jeffrey Epstein’s imprisoned co-conspirator Ghislane Maxwell who then got reassigned to a Club Fed; he guided the unlawfully incomplete release of the Department of Justice’s (DOJ) Epstein files; he spearheaded the effort to prosecute President Donald Trump’s perceived enemies; and he defended Immigration and Customs Enforcement agents publicly after they killed innocent Americans.
- And like Mitchell, Blanche’s ploys for Trump are sending him to a dark place.
The Latest Court Ruling
Blanche figures prominently in the recent opinion of Judge Kathleen Williams of the US District Court for the Southern District of Florida. She ruled that Trump’s purported settlement of his $10 billion case against the IRS was a collusive farce.
The government had strong defenses to Trump’s lawsuit claim, including the statute of limitations bar; it asserted none of them. That's not surprising: Trump controlled the executive branch (including the IRS), which put him on both sides of the supposed dispute. Such a clear conflict of interest meant that there was no real “adverseness” between the plaintiff and defendant and, therefore, no “justiciable case or controversy” for the court to decide.
The purported settlement agreement established a $1.776 billion “Anti-Weaponization Fund” to compensate, among others, January 6 insurrectionists whom Trump had pardoned. A separate, three-paragraph “release order” forever immunized Trump, his family members, and related parties from IRS investigations, claims, and audits that have haunted him for decades.
The court had harsh words—and sanctions—for the lawyers involved in perpetrating this abuse of the court process at taxpayers’ expense:
- Alejandro Brito represented Trump as plaintiff in the case. The judge referred him to the Florida Bar for consideration, review, and determination as to whether disciplinary action is appropriate.
- Daniel Z. Epstein’s name appeared on the complaint, and he signed the purported “settlement agreement” on behalf of plaintiff Trump. Epstein was a former White House senior associate counsel and special assistant to President Trump from 2017 until 2020. Because he is licensed to practice in Texas, not Florida, the judge barred his future applications to practice pro hac vice (special admission for a particular case) in the Southern District of Florida for a year or until her further order.
- Stanley Woodward Jr., associate attorney general under Blanche at the Department of Justice, signed the bogus “settlement agreement” on behalf of the DOJ. The court observed that Woodward had “represented several individuals charged in connection with the events of January 6, 2021, at the United States Capitol. He also represented Walt Nauta, who was President Trump’s personal aide and a co-defendant in the criminal matter involving the return of classified documents at Mar-a-Lago.” The judge directed the clerk to send a copy of her 56-page ruling to the District of Columbia bar, where disciplinary proceedings are ongoing against Woodward.
Blanche’s Plight
And the court turned repeatedly to Todd Blanche:
- His signature alone was on the IRS “release order.” Its attempt to waive tax audits contravened federal law prohibiting “executive branch influence over taxpayer audits and other investigations.”
- Judge Williams was “extremely troubled” by Blanche’s congressional testimony on May 19, 2026, as to why the settlement agreement was not submitted to the court for review. She found his answer “at best, misleading and, at worst, disingenuous.”
- The court noted, “In this case,… notwithstanding his prior representation of President Trump, Blanche did not recuse [himself]” from the IRS matter.
- Blanche’s congressional testimony that the “Anti-Weaponization Fund” aspect of the settlement would not go forward proved that the entire agreement was collusive: “Acting Attorney General Blanche’s apparent capacity to speak for both Plaintiffs and Defendants, sign a ‘settlement’ document on behalf of all Parties to this action, and then repudiate part of that agreement, demonstrates that there was only one party whose interests were being represented throughout this case.” That party was Donald Trump.
- Finally, she directed the clerk to send a copy of her ruling to the State Bar of New York, where Blanche is licensed. On June 22, 2026, more than 100 former state and federal judges had already filed a 73-page ethics complaint against him there.
A Freudian Slip and an Unhappy Ending
Early in Blanche’s confirmation hearing on July 15, Sen. John Kennedy (R-La.) asked him about his relationship with Trump.
“I’m his lawyer,” Blanche replied, before correcting himself to say that he “was” his lawyer.
Blanche’s initial impulse was closer to the mark. And he has already compromised his professional reputation and personal integrity.
In the service of Nixon personally, John Mitchell was convicted of conspiracy, obstruction of justice, and perjury in connection with his role in the Watergate break-in of the Democratic National Committee headquarters and subsequent cover-up. He spent 19 months in prison and lost his law license.
Will Todd Blanche see how his loyalty to Trump personally—rather than to the nation he has taken an oath to serve—is leading him to an unfortunate destination? Probably not.
Will he learn anything from Judge Williams’s stunning rebuke or the ethics complaints he already faces? Probably not.
Will enough Republican senators stand up and refuse to confirm Blanche, who is blatantly unqualified to be the next attorney general? Probably not.
All Americans will bear the consequences of his failures.
Keep ReadingShow Less
My Application for $30 Million From Trump’s $1.8 Billion Slush Fund
A formal letter to Acting Attorney General Todd Blanche, faithfully submitted.
May 30, 2026
Dear Acting Attorney General Todd Blanche,
I am writing to formally submit my application to your newly established federal “Anti-Weaponization Fund” for compensation in the form of a cash payment for damages incurred at the hands of the United States government.
As you stated while announcing President Trump’s new $1.776 billion fund, “The machinery of government should never be weaponized against any American, and it is this Department’s intention to make right the wrongs that were previously done while ensuring this never happens again.”
Todd, if I may, I saw your former client — President Trump, for whom you previously provided legal representation — backed you up, saying, “This is reimbursing people who were horribly treated.”
Additionally, Todd, I read an Associated Press report noting that during congressional testimony you stated that you “wouldn’t rule out the possibility that rioters who assaulted police on Jan. 6 would be eligible for fund payouts.” After hearing your remarkably broad interpretation of governmental victimization, I felt compelled to share with you what the government has done to me and my family by writing the letter below — which reveals several forms of government abuse my family and I have endured which, while you may not find as severe as the temporary loss of access to the U.S. Capitol experienced by individuals convicted of felonies related to January 6, nonetheless caused considerable hardship for us.
I was initially reassured that my request was reasonable after learning that Adam Johnson — best known for carrying Speaker Nancy Pelosi’s lectern through the Capitol during the January 6 attack — is reportedly considering a claim of up to $5 million himself.
However, after learning that Brandon Fellows — another January 6 defendant pardoned by President Trump — reportedly plans to seek $30 million from the fund, including $21.5 million for what he described as “wrongful imprisonment,” I realized that the harms experienced by my family and me may in fact fall closer to Mr. Fellows’s compensation range.
So, after reviewing your department’s stated principles, apparent standards, and anticipated applicant pool, I believe I am highly qualified for compensation and would like to make a modest request of $30 million.
In fact, Todd, I believe I possess two major qualifications that should place me among the strongest candidates for compensation, which I will detail below.
Claim One: Descendant of Enslaved People
First, since this appears to function as a reparations program for people harmed by state injustice, I should begin by saying that I come from a family with a long legacy of being brutalized by the United States. And if you think the January 6 defendants have a compelling claim for compensation due to governmental mistreatment, wait until you hear about this historical episode called slavery.
My great-great-grandparents, Laura and Thomas Lenoir, were enslaved in Marion County, Mississippi, and spent their lives laboring without compensation in a nation loudly proclaiming “liberty” while designating Black people as property. After decades spent tracing our family history, my father recently discovered the very plantation where they were enslaved— a breakthrough that finally allowed our family to identify the precise location where generations of uncompensated labor helped build this country’s wealth.
My ancestors worked this land they did not own, built wealth they could not keep, and endured violence they could not legally resist. No compensation was ever provided for the stolen labor, stolen children, stolen wages, stolen land, stolen futures, or the generations of poverty and discrimination that followed emancipation. Stories of Laura’s beatings and brutal treatment have been passed down through my family for generations.
In explaining why she believed January 6 defendants deserved compensation, Rachel Powell — who prosecutors identified as one of the first rioters to breach Capitol grounds and who was filmed using a battering ram to smash a Capitol window — recently stated: “We endured a lot. Our lives are still not the same. I don’t know what kind of price you can put on that.”
Todd, I must admit I found Ms. Powell’s reflections unexpectedly relatable. Indeed, many descendants of slavery have similarly struggled to determine what monetary figure might adequately compensate for generations of forced labor and legally sanctioned terror.
For many years, I was informed that reparations for descendants of slavery were unrealistic, unaffordable, divisive, or simply impossible. Republican and Democratic leaders alike repeatedly explained that while slavery was unfortunate, there was no practical mechanism for compensating descendants in the present day. However, your department’s new fund has helped me understand that no sum of money is too large for the government to produce once it decides that a great injustice has been perpetrated.
And then there is the symbolism of the fund’s exact amount — $1.776 billion — which is especially moving. President Trump, with his trademark subtlety and keen sense of gravitas, must have chosen this specific figure for providing reparations to people claiming mistreatment by the government as a fitting tribute to a nation founded by those who declared liberty for all in 1776 while simultaneously enslaving and brutalizing Black people.
Claim Two: My Arrest at a Capitol Building During Political Protest
My second major qualification is that, like many of the fund’s anticipated beneficiaries who stormed the capitol building on January 6, I was also arrested at a capitol building during a political protest.
In 2012, Washington state announced a special legislative session to determine how to slash education and healthcare budgets by some $2 Billion during the aftermath of the Great Recession. At the time, I was helping organize with the Social Equity Educators (SEE), a group of educators fighting against austerity and for educational justice.
We joined a much larger mass protest at the Washington State Capitol in Olympia to oppose billions of dollars in cuts to public services. Just before lawmakers gaveled in the special budget cutting session inside the House Ways and Means Committee meeting room, several of us managed to enter the chamber before they locked the door to the many protestors surrounding the building. The moment the session began, we mic-checked the room and read aloud the Washington State Constitution language that explicitly specifies funding education is the “paramount duty” of the state, and we declared therefore the state not only had a moral obligation but also a legal obligation to fully fund public education.
After finishing the statement, I produced a pair of plastic handcuffs I got at the dollar store and invited the legislators into my custody for what I announced was citizen’s arrest.
As I approached the legislators’ benches carrying self-made citizen’s arrest warrants to issue to each member, a police officer apparently arrived at a somewhat different interpretation of the law than I had. In an astonishing twist, he arrested me instead of the legislators.
He grabbed my arm, forced it behind my back, and cinched the handcuffs tightly around my wrists. Officers then moved me into a back room while they attempted to figure out how to remove me from the building as hundreds of protesters outside chanted, “Let the teacher go!”
Eventually, police whisked me out and pushed me into the back of a squad car and repeatedly questioned me about my actions even after I informed them that I wished to speak only in the presence of legal counsel. I was transported to a nearby jail, had my mugshot taken, ordered to exchange my clothes for a jail-issued orange jumpsuit, and placed in a jail cell with several other people for the evening.
While I was in jail, unbeknownst to me, my students at Garfield High School created a Facebook page titled “Free Mr. Hagopian.” When I returned to school the next day, students had changed the page into “Seattle Student Walkout for Education.”
Within twenty-four hours of my arrest, more than 500 Garfield students organized a mass walkout protesting the education cuts, carrying signs reading “Fund Our Future” and chanting, “We’re the future of our nation, no more cuts to education!” Students later formed a coalition called Students of Washington for Change to pressure the legislature through protests and letter-writing campaigns.
Importantly, Todd, not long afterward the Washington State Supreme Court ruled that the legislature actually was violating the constitution in what became known as the McCleary decision, so I trust that my legal vindication strengthens my application considerably. And if generations of slavery fall short in qualifying me for compensation, I trust my arrest at a capitol while protesting government lawbreaking will place me in strong standing under your department’s standards.
A Possible Weakness in My Application
Now Todd, in the interest of full transparency, I should acknowledge one possible weakness in my case. The Department of Justice fact sheet explaining your fund notes that “Claims are awarded on a case-by-case basis, and the Commissioners must consider a claimant’s personal conduct and character when making a determination.”
I must admit, Todd, this language gave me some pause.
While I was arrested at a capitol building during a large political protest — something I understand may weigh heavily in my favor given your department’s apparent sympathy for January 6 defendants — I did not use a battering ram to breach the Capitol building, assault police officers, carry Confederate flags through the halls of government, or attempt to overturn the results of a presidential election.
In retrospect, I recognize this may complicate my claim.
Still, I would respectfully submit that my application remains highly competitive. Unlike many January 6 defendants, when I protested at a capitol, the court later ruled that the government I was protesting had actually broken the law.
Instructions for Disbursement of Funds
Todd, thank you for taking the time to read and consider my formal application for compensation from the Anti-Weaponization Fund.
Once my claim has been approved, you may issue a direct payment in the form of a contribution to Where I Got My Name: Down in Mississippi — a documentary film project about my father discovering the plantation where our family had been enslaved and our journey to Mississippi to recover our family’s history — or to Rethinking Schools and the Zinn Education Project, organizations that have spent decades supporting honest education about the history of this country and the people who were truly “horribly treated” by their government (as President Trump put it).
Todd, I appreciate your department’s newfound commitment to reparative justice, and I look forward to receiving confirmation of my $30 million award soon.
Sincerely,
Jesse Hagopian
Keep ReadingShow Less
Trump Escalates 'Illegal' and 'Immoral' Push for IRS Data to Fuel Mass Deportations
"You'd be a fool to think Trump won't go after others he dislikes," warned Sen. Ron Wyden, "including American citizens."
Apr 06, 2025
Democratic Sen. Ron Wyden of Oregon slammed the Trump administration over the weekend in response to fresh reporting that the Department of Homeland Security has intensified its push for access to confidential data held by the Internal Revenue Service—part of a sweeping effort to target immigrant workers who pay into the U.S. tax system yet get little or nothing in return.
Wyden denounced the effort, which had the fingerprints of the Elon Musk-led Department of Government Efficiency, or DOGE, all over it.
"What Trump and Musk's henchmen are doing by weaponizing taxpayer data is illegal, this abuse of the immigrant community is a moral atrocity, and you'd be a fool to think Trump won't go after others he dislikes, including American citizens," said Wyden, ranking member of the U.S. Senate Finance Committee, on Saturday.
Last week, the White House admitted one of the men it has sent to a prison in El Salvador was detained and deported in schackles in "error." Despite the admitted mistake, and facing a lawsuit for his immediate return, the Trump administration says a federal court has no authority over the president to make such an order.
"Even though the Trump administration claims it's focused on undocumented immigrants, it's obvious that they do not care when they make mistakes and ruin the lives of legal residents and American citizens in the process," Wyden continued. "A repressive scheme on the scale of what they're talking about at the IRS would lead to hundreds if not thousands of those horrific mistakes, and the people who are disappeared as a result may never be returned to their families."
According to the Washington Post reporting on Saturday:
Federal immigration officials are seeking to locate up to 7 million people suspected of being in the United States unlawfully by accessing confidential tax data at the Internal Revenue Service, according to six people familiar with the request, a dramatic escalation in how the Trump administration aims to use the tax system to detain and deport immigrants.
Officials from the Department of Homeland Security had previously sought the IRS’s help in finding 700,000 people who are subject to final removal orders, and they had asked the IRS to use closely guarded taxpayer data systems to provide names and addresses.
As the Post notes, it would be highly unusual, and quite possibly unlawful, for the IRS to share such confidential data. "Normally," the newspaper reports, "personal tax information—even an individual's name and address—is considered confidential and closely guarded within the IRS."
Wyden warned that those who violate the law by disclosing personal tax data face the risk of civil sanction or even prosecution.
"While Trump's sycophants and the DOGE boys may be a lost cause," Wyden said, "IRS personnel need to think long and hard about whether they want to be a part of an effort to round up innocent people and send them to be locked away in foreign torture prisons."
"I'm sure Trump has promised pardons to the people who will commit crimes in the process of abusing legally-protected taxpayer data, but violations of taxpayer privacy laws carry hefty civil penalties too, and Trump cannot pardon anybody out from under those," he said. "I'm going to demand answers from the acting IRS commissioner immediately about this outrageous abuse of the agency.”
Keep ReadingShow Less
Trump Letting 'Wealthy Tax Cheats Off the Hook' With Mass IRS Firings
"Trump and Musk care far more about hamstringing the agency in charge of making sure their billionaire buddies pay their tax bills than they do about making tax season bearable for millions of taxpayers."
Feb 20, 2025
At the height of tax season, the chronically understaffed Internal Revenue Service is expected to begin firing more than 6,000 employees on Thursday as part of the Trump administration's large-scale and destructive assault on the federal civil service.
Government Executive reported that the terminations "are expected to affect probationary employees ranging from recent graduates to veterans to specialized auditors across all 50 states."
An unnamed IRS employee told the outlet that Thursday's firings are likely just the start.
"They want to keep cutting," the worker said.
The firings come days after one of billionaire Elon Musk's lieutenants reportedly gained access to a critical IRS system containing sensitive taxpayer data, raising widespread alarm. Musk has also taken aim at the agency's popular Direct File program.
On Wednesday, Trump's newly confirmed commerce secretary said the president's ultimate goal is to "abolish the Internal Revenue Service."
Elizabeth Pancotti, managing director of policy and advocacy at the Groundwork Collaborative, said in a statement that Trump and Musk are "gutting the IRS in the middle of tax filing season for one reason, and one reason alone: to let wealthy tax cheats off the hook."
"Trump and Musk care far more about hamstringing the agency in charge of making sure their billionaire buddies pay their tax bills than they do about making tax season bearable for millions of taxpayers," said Pancotti.
Groundwork noted that attacks on the IRS will likely have consequences that run directly counter to the stated objectives of the so-called Department of Government Efficiency, or DOGE.
"Recent research found that for every $1 spent on tax enforcement for the wealthy, taxpayers get an average return of $26," Groundwork observed.
Biden-era investments in the IRS, which Republicansstarved of funding for years, yielded significant revenue from wealthy individuals, as the agency had the resources necessary to ramp up audit rates for the rich.
In a letter to top Trump administration officials earlier this week, Sen. Ron Wyden (D-Ore.) and other senators warned that the mass IRS terminations and hiring freeze could cause a "tax refund trainwreck."
"It is nearly inevitable that this hiring freeze, compounded by layoffs and further reductions in staff mandated as a result of Elon Musk's unprecedented power grab will delay refunds and degrade taxpayer service," the senators wrote. "Millions of Americans plan their budgets around timely refunds every filing season. These reckless decisions on the part of Elon Musk and the Trump administration will likely cause serious financial hardship for people across the country."
Keep ReadingShow Less
Emergency Suit Seeks to Block DOGE From Riffling Through Sensitive Taxpayer Data
"Allowing DOGE unfettered access to the sensitive data held by the IRS is a violation of both the rights of all taxpayers and their trust," said the head of the Center for Taxpayer Rights, one of the plaintiffs in the lawsuit.
Feb 18, 2025
Another day, another lawsuit targeting the so-called Department of Government Efficiency's infiltration of the federal government. On Monday, four groups filed a complaint in federal court aimed at preventing DOGE from accessing sensitive taxpayer data at the Internal Revenue Service.
Over the weekend, The Washington Post reported that DOGE—advisory body created by U.S. President Donald Trump, who tapped billionaire Elon Musk to help lead—sought access to an IRS payment system that includes detailed financial data about every taxpayer, business, and nonprofit. Multiple outlets reported Monday that the IRS is preparing to grant that access for one DOGE lieutenant, software engineer Gavin Kliger, who arrived at the agency last week.
"On information and belief, as of February 17, IRS has decided to grant DOGE such access to return information," according to the complaint.
The suit was filed by the Center for Taxpayer Rights, an advocacy group; Main Street Alliance, a network of small business; the National Federation of Federal Employees (NFFE), a labor union representing government workers; and Communications Workers of America (CWA), a labor union.
The complaint alleges that DOGE lacks statutory authority to have access to the sensitive information, and that "DOGE will also have access to tax records of Mr. Musk's business competitors, which are held by the IRS. No other business owner on the planet has access to this kind of information on his competitors, and for good reason."
The plaintiffs highlight that the Trump administration has expressed an interest in scrutinizing programs such as the child tax credit and also worry that DOGE's access to sensitive data will erode trust in a federal agency that the vast majority of working adult Americans interact with each year.
"The efficiency and effectiveness of our system is dependent upon taxpayers' trust that the information they voluntarily provide the IRS will be held confidential," said Nina Olson, executive director of the Center for Taxpayer Rights, in a Monday statement. "Allowing DOGE unfettered access to the sensitive data held by the IRS is a violation of both the rights of all taxpayers and their trust. We all need to ensure that protection and rights are not violated."
According to the complaint, the move violates the Administrative Procedure Act, the Tax Reform Act, and the Privacy Act. The latter two laws were passed in the 1970s following Watergate, in response to former President Richard Nixon's attempts to collect tax information on political enemies, according to the Center for American Progress.
The complaint raises the specter of this chapter in American history: "This nation already once experienced a president who sought to collect tax information on his political allies and enemies in the White House for use for favor and punishment and, following the Watergate era, Congress clearly and unequivocally acted to protect the American people from these intrusions."
A former Trump aid from his first administration told The New York Times in 2022 that Trump had wanted to use the IRS to investigate his enemies, and six "Trump critics," including three officials in his first administration, told Reuters in December that they fear a malicious IRS audit.
The plaintiffs, who are requesting "a temporary restraining order to maintain the status quo until the court has an opportunity to more fully consider the illegality of the defendants' actions," are being co-represented in court by Democracy Forward, a litigation and advocacy nonprofit that has served as legal counsel in multiple lawsuits brought against the Trump administration.
Keep ReadingShow Less
Senate Democrats Say DOGE Has 'No Right to Hoover up Taxpayer Data' at IRS
Operatives of Elon Musk, warned Sen. Elizabeth Warren, "are attempting to access confidential tax information—tax returns, bank data, Social Security numbers—for millions of Americans."
Feb 17, 2025
As Americans prepare to file their taxes ahead of the April 15 deadline, two Democratic senators warned Monday that billionaire tech mogul Elon Musk's arrival at the Internal Revenue Service raises serious privacy concerns and could significantly impact the tens of millions of people who count on their tax refunds each year to pay bills, pad their emergency savings, and afford other essentials.
The Department of Government Efficiency (DOGE), the advisory body created by President Donald Trump and headed by Musk, has set its sights on the IRS as it works to gut agencies across the federal government—with the data of millions of ordinary taxpayers now among the troves of personal information DOGE is trying to seize.
As The Washington Post reported, the IRS is considering a memorandum of understanding (MOU) to give DOGE employees access to agency systems and datasets including the Integrated Data Retrieval System (IDRS).
The system allows a limited number of IRS employees to access IRS accounts of every individual taxpayer, business, and nonprofit in the country, including people's personal identification numbers and bank information, and enables them to change transaction data.
DOGE's "meddling with IRS systems in the middle of tax filing season could, inadvertently or otherwise, cause breakdowns that may delay the issuance of tax refunds indefinitely," said Sens. Elizabeth Warren (D-Mass.) and Ron Wyden (D-Ore.).
The MOU states that Gavin Kliger, a software engineer working with DOGE, should have access to the IDRS, enabling DOGE to "eliminate waste, fraud, and abuse, and improve government performance to better serve the people."
According to the memo reviewed by the Post, Kliger—who sources said had not officially been granted the access mentioned in the MOU as of Sunday night—will be tasked with consulting on modernizing the IRS' systems.
Even though outside contractors are used for technical upgrades or fixes to a system widely recognized as "antiquated," the Post noted that it is "highly unusual" for a political appointee of partisan body like DOGE to obtain access to the IDRS.
"The information that the IRS has is incredibly personal," Nina Olson, who served as the agency's national taxpayer advocate for nearly two decades, told the newspaper. "Someone with access to it could use it and make it public in a way, or do something with it, or share it with someone else who shares it with someone else, and your rights get violated."
In their letter to acting IRS Commissioner Douglas O'Donnell, Warren and Wyden (D-Ore.) noted that the tax code has long prohibited "executive branch influence over taxpayer audits and other investigations."
"These prohibitions have long prevented political appointees in previous administrations from accessing the private tax records of hundreds of millions of Americans, and allowing DOGE officials sweeping access these systems may be in violation of these statutes," said Warren and Wyden, who serve as ranking members of the Senate Banking, Housing, and Urban Affairs and Senate Finance Committees, respectively. "Violations of these taxpayer privacy laws, including unauthorized access to or disclosure of tax returns and return information, can result in criminal penalties, including incarceration."
Without naming Trump, the lawmakers referenced Charles Littlejohn, the IRS contractor who was sentenced last year to five years in federal prison for leaking the president's tax returns to The New York Times after Trump refused to publicly disclose them.
"Until we fought to the Supreme Court and won, the president shielded his tax returns from the people," said the Democrats on the House Ways and Means Committee in a social media post. "Now, he's given yours to the richest man in the world."
Warren and Wyden wrote that "software engineers working for Musk seeking to gain access to tax return information have no right to hoover up taxpayer data and send that data back to any other part of the federal government and may be breaking the law if they are doing so."
In addition to seeking access to the personal financial data of millions of Americans, DOGE is reportedly preparing to oversee the firing of 10,000 probationary employees at the IRS.
"Any delay in refunds could be financially devastating to millions of Americans who plan their budgets around timely refunds every spring," said Warren and Wyden. "We demand that the IRS immediately clarify the extent to which DOGE team members may have inspected or be seeking to inspect the private tax return information of millions of Americans and whether taxpayer privacy laws are being enforced to prevent unauthorized disclosure and intrusions."
Keep ReadingShow Less
To Help Taxpayers, Congress Should Fund the IRS and Save Direct File
The arguments against an improved IRS are motivated by private corporations worried about their profit margins and by anti-government activists seeking to undermine the public’s trust in the agency.
Dec 17, 2024
As Congress negotiates a bill for federal funding during the lame-duck session, lawmakers would be wise to remember that stripping funds from the Internal Revenue Service costs more than it saves. On the table in the appropriations bill is a $20 billion recission of funds to the nation’s tax administration. While this may look like a spending cut, it will increase deficits by $46 billion due to a drop in the agency’s capacity to enforce taxes on wealthy individuals owed under existing federal law.
At the same time, congressional Republicans are calling on the incoming Trump administration to end the popular program that allows taxpayers to file their returns for free directly through the IRS. This will ultimately lead to more costs for taxpayers as they pay private services such as Intuit or H&R Block to carry out paperwork that they are required by law to file each year.
Regular taxpayers benefit from a competent and well-funded IRS. Most people do their best to pay their taxes accurately and on time, and slashes to funding that leave the agency understaffed and underequipped only create headaches for compliant taxpayers. Until recently, the IRS was not given the funding and capacity to pursue the high-income taxpayers who have the most complex returns but who also account for a hugely disproportionate share of the tax avoidance, which unfairly shifted the agency’s scrutiny to everyone else.
The arguments against an improved IRS are motivated by private corporations worried about their profit margins and by anti-government activists seeking to undermine the public’s trust in the agency.
Upcoming Appropriations Bill Will Cut Billions from the Agency if Congress Does Not Act
Congress must appropriate funding to each federal agency every year, even when that funding has already been authorized through prior legislation. When Congress cannot come to an agreement on funding levels, they frequently pass “continuing resolutions,” which generally keep funding at its current level to prevent a government shutdown.
To help rebuild the agency after a decade of cuts in its annual appropriations, Congress provided an additional $80 billion in the Inflation Reduction Act to supplement its annual appropriations for 10 years. Most of this money is for tax enforcement targeting profitable corporations and the wealthy. That was unpopular among congressional Republicans, who sought to eliminate the additional funding during 2023’s debt ceiling negotiations.
Filing tax returns is required by federal law, and taxpayers should not need to pay money to a private company to hand over their private information to complete the service for them.
U.S. President Joe Biden signed the IRA into law but shortly after compromised with then-Speaker Kevin McCarthy (R-Calif.) and agreed to rescind $20 billion in funds over the upcoming two years as part of a deal to prevent the Republican-controlled House from driving the United States to default on its debts. The provision to cut those funds was included in the next year’s spending bill, negotiated between Republican and Democratic lawmakers. But rather than spreading the cuts over two years, all $20 billion was included in the first year—fiscal year 2024.
Now, Congress is likely to pass a continuing resolution that would extend funding levels from 2024. Without an agreement between lawmakers, this would include an additional $20 billion funding cut to the IRS that was not included in the initial Biden and McCarthy agreement.
This is bad for the federal deficit and bad for average taxpayers.
Congressional Republicans Also Want to Make it More Expensive to File Tax Returns
This year, for the first time ever, many taxpayers were able to file their taxes for free directly through the IRS as part of the Direct File pilot program. In past years, taxpayers were forced to either file by hand themselves or to use paid tax preparers like TurboTax, H&R Block, or Jackson Hewitt.
Taxpayers who used the Direct File program (which was only available in 12 states during its first year) were pleased with the results. The pilot program exceeded its goal for the number of users, and 90% of users rated their experience with the program as excellent or above average.
State governments were excited about the opportunity as well. Thirteen additional states are cooperating with the IRS to expand Direct File to include their state income taxes.
It makes sense. Filing tax returns is required by federal law, and taxpayers should not need to pay money to a private company to hand over their private information to complete the service for them.
But that is exactly what many congressional Republicans are now asking the incoming Trump administration to require of honest taxpayers. Twenty-nine Republican lawmakers signed a letter to the incoming administration asking them to end the popular program on “day one.”
Previously, the IRS attempted to persuade private companies to offer free filing services for taxpayers with relatively simple returns through a program called the Free File Alliance, and the companies participated for some time. But this arrangement did not always go as planned.
Some companies hid the free services from search engine results, and in TurboTax’s case, their parent company Intuit was eventually sued for deceptively leading taxpayers into paid services rather than the free services. Intuit eventually settled for $141 million.
Decade of Austerity Diminished the IRS’ Ability to Serve its Mission
Between 2010 and 2021, the agency’s budget was cut by a fifth and the number of revenue agents dropped by 35%. Meanwhile, the amount of tax returns filed grew by 13%, and the amount of tax returns filed by individuals making more than $500,000 grew by 70% from 2011 to 2019. As a result, the audit rate on these wealthy individuals dropped by more than 76%.
Although the IRS budget cuts were part of a larger campaign of government austerity following the Great Recession, the cuts put the federal budget in a worse position. The gap between the taxes that people legally owed and what they actually paid grew as high as $600 billion annually by 2021, more than half of that due to unpaid taxes from the top 5% of income earners.
Every hour spent auditing the returns of the most well-off families found $13,000 in unpaid taxes.
It wasn’t just the country’s fiscal situation that suffered from the assault on the IRS. Regular taxpayers trying to file accurate and timely tax returns found themselves dealing with an agency unable to meet the needs of the public. In 2022, The Washington Post reported on outdated and understaffed IRS processing facilities. IRS employees were in many cases using 70s-era technology and business processes. The Austin, Texas facility was so strained that its cafeteria became an impromptu document storage room.
The result was that the agency was failing. It was simply unable to answer calls, respond to letters, and issue swift tax refunds.
Recent Improvements to the IRS are Delivering Immediate Results for Taxpayers
The Inflation Reduction Act passed in 2022 reversed the decades of funding cuts to the IRS. The bill allocated $80 billion (now reduced to $60 billion and potentially even further) in funding to the agency to return its workforce to adequate levels, modernize its business systems and technology, and increase tax enforcement on big businesses and people making more than $400,000 a year.
The results were immediate. In prior years, the IRS had satisfactorily answered just 15% of phone calls. In 2023—the first tax year with the new funding—they answered 85%. That’s still too low by most standards, but a remarkable improvement. The agency also opened or re-opened 54 in-person centers to assist taxpayers across the country.
Positive Results for the Federal Budget, Too
The improvements to the IRS have delivered progress toward closing the tax gap as well. In 2023, the agency released a comprehensive strategic operating plan. In addition to improving taxpayer services, the document laid out the agency’s strategy for increasing audit rates on high-income individuals and complex business structures. While it may only take one auditor a few hours to review the tax return of a family claiming the Child Tax Credit, dissecting the tax return of a large S-corporation could be a years-long project for an entire team of auditors. So, the first step was to hire highly-skilled staffers and provide them with the best training and technology available.
This year, the IRS announced that it had collected $1.3 billion in unpaid taxes from millionaire households. In many cases, these were individuals simply not even bothering to file their tax returns. The agency had also begun leveraging modern technology like artificial intelligence to identify the most suspicious returns from large, complex partnerships.
If these funding cuts are passed, there will be thousands of fewer audits of wealthy individuals and large corporations. The latest estimates from the Congressional Budget Office show that an additional $20 billion recission in IRS funds will result in $66 billion in lost revenue, creating a $46 billion rise in deficits. That estimate tracks with a recent Government Accountability Office report that found every hour spent auditing the returns of the most well-off families found $13,000 in unpaid taxes. Cutting this funding is costly, not just for the honest taxpayers who will spend more hours waiting on the phone, but with direct increases in the federal deficit.
Keep ReadingShow Less
Billionaires Buy Governments to Avoid Paying Their Fair Share in Taxes
In legislatures, the courts, and our executive offices, we have a system rigged in favor of the ultra-rich, rigged by everything from acts of Congress and judicial rulings to IRS budgets and audit policies.
Aug 03, 2024
By all appearances, former U.S. President Donald Trump has cut a sweet deal with a dozen or two of America’s richest billionaires: Finance his campaign and he’ll keep their federal taxes super low—or even lower them—once he’s sitting back in the White House.
How much do billionaires like this deal? This much: In April, hedge fund billionaire John Paulsen held a Palm Beach fundraiser for Trump that brought in $50.5 million. Immediately after Trump’s late May conviction on 34 felony counts in Manhattan, Timothy Mellon, the grandson of the classic plutocrat Andrew Mellon, ponied up $50 million. Miriam Adelson, the billionaire widow of Las Vegas kingpin Sheldon Adelson, appears eager to kick in as much as $100 million.
This past spring, meanwhile, billionaires Elon Musk and David Sacks reportedly held a secret dinner party for Trump, with attendees including the illustrious deep pockets Peter Thiel, Rupert Murdoch, and Michael Milken.
The rich themselves have actually become more brazen about avoiding taxes. Just try to stop us, they seem to be saying.
America’s billionaires clearly see politics as one route to ensuring they pay as little as possible at tax time. But they don’t just make their presence felt at election time. America’s rich have their thumbs firmly on the scale of all three branches of government. In legislatures, the courts, and our executive offices, we have a system rigged in favor of the ultra-rich, rigged by everything from acts of Congress and judicial rulings to IRS budgets and audit policies.
Some of this rigging we can all easily see. The dividends and long-term capital gains of the ultra-rich have for decades faced a maximum tax rate barely half the maximum rate applicable to other forms of income. And the investment income of the rich, unlike the paychecks of working people, faces no Social Security tax.
In 2017, the first year of the Trump presidency, intense lobbying efforts helped rich business owners to a special tax rate for their business income. In 2018 alone, according to ProPublica, that special rate translated into a $67 million gift to Mike Bloomberg, whose personal wealth now reportedly exceeds $100 billion.
But these glaring privileges the rich enjoy at tax time only tell part of the billionaire tax story. Other parts get precious little attention. In 2004, for instance, lawmakers in Congress enacted a penalty for the failure to disclose potentially abusive tax avoidance transactions on tax returns. The penalty on the surface looked substantial: 75% of the tax sought to be avoided. But Congress capped the penalty at $100,000, a move that turned the penalty into a minor nuisance for billionaires seeking to avoid millions of dollars in taxes.
In our current rich people-friendly tax climate, IRS staff who want to do the right thing face tough going. Recently, for example, one former IRS staffer, Michael Welu, went public with his concerns that the IRS itself has both official and unofficial policies that end up treating audited rich taxpayers much more gently than small business owners.
“I was putting butchers, bakers, and candlestick makers in jail,” Welu told the International Consortium of Investigative Journalists, “but the big stuff we really wanted to go after was being ignored.”
Welu found the upper management of the IRS division tasked with auditing the super rich—and the corporations they run—distinctly uninterested in investigating America’s richest and their “most egregious, ridiculous schemes” for avoiding taxes.
IRS officials like Michael Welu do occasionally speak out. But only tax wonks truly have any real sense of how much obscure tax code penalties and IRS audit policies favor the rich. And most of those tax wonks work for the rich.
The rich themselves have actually become more brazen about avoiding taxes. Just try to stop us, they seem to be saying.
Take the recently decided Supreme Court case, Moore v. United States. Working through an array of right-wing organizations, the conservative mover-and-shaker Leonard Leo attempted to use a challenge to an obscure one-time tax as a vehicle to preempt Congress from ever taxing the wealth or unrealized gains of the ultra-rich. Ultimately, the court decided the case without ruling on whether the rich can be taxed on their wealth or unrealized gains. But the opinions that four of the nine justices handed down made it clear that they stand prepared to do the billionaire bidding should a direct challenge to a tax on the wealth or unrealized gains of billionaires come before them.
Billionaires now have at least three Supreme Court justices firmly in their pockets. Reporting by ProPublica has revealed the massive gifts that have been flowing from Harlan Crow and other billionaires to Justice Clarence Thomas as well as the generous gifts that billionaire Paul Singer has been sending Justice Samuel Alito’s way. Justice Neil Gorsuch has had his entire career, including his appointment to the court, funded by the billionaire Philip Anschutz.
Those three justices, along with Justice Amy Coney-Barret, have now made it patently obvious they will not allow billionaires to be taxed on their unrealized gains or their wealth. Does anyone really think the billionaires won’t have the crucial, majority-making fifth vote from Justice Brett Kavanaugh when they need it?
Republican members of Congress are showing even less shame than our Supreme Court justices. Last year, these GOP lawmakers held the country hostage in negotiations to increase the country’s debt limit. Their price for agreeing to raise the debt limit, thereby avoiding a default on the country’s debt? They demanded—and won—a reduction in a scheduled IRS budget increase that would been used to increase enforcement moves against rich taxpayers.
The purported motive for this legislative hostage taking—“concern” over the federal deficit—made for an absurd justification. The proposed increase in the IRS budget would have been recovered, several times over, through increased tax collections. The IRS budget reductions the Republican lawmakers extracted will, in fact, only increase the federal deficit. But those reductions will serve a political purpose. They’ll protect the GOP’s richest patrons from tax enforcement.
The mainstream media, to no one’s surprise, did a miserable job of exposing this Republican dishonesty in the debt limit negotiations. But at one point in our recent past a courageous soul did emerge to expose the rot in our tax system. What happened? The ultra-rich and their henchmen in Congress make sure that this soul faced a punishment far more severe than any punishment ever meted out to those few rich Americans who actually get caught evading their taxes due.
That courageous soul, Charles Littlejohn, worked as an IRS contractor. He leaked tax return information related to Trump and America’s billionaires to The New York Times and ProPublica. ProPublica used that leaked information to write over 50 stories about billionaire tax avoidance, embarrassing and angering many of our richest in the process. Two of them even brought lawsuits, one against the IRS and the other against Littlejohn’s employer.
Ultimately, Littlejohn pled guilty to one count of unauthorized tax return information disclosure, a crime that carries a recommended sentence of four to 10 months. But 25 Republican members of Congress, undoubtedly at the behest of their billionaire patrons, wrote the judge in the case and urged the harshest possible sentence of five years. The judge obliged, stating in her sentencing remarks that Littlejohn posed a graver threat to democracy than the January 6 rioters. As tax law professor Reuven Avi-Yonah has noted, Littlejohn is now serving a sentence far harsher than any imposed on rich Americans convicted of tax evasion.
Littlejohn’s extreme sentence did not reflect the one single count of unauthorized tax return information disclosure he pled guilty to. That sentence reflects his “crime” of exposing the tax avoidance of the billionaire class.
Try this thought experiment: Imagine if Littlejohn had released the return information of 1,000 or so taxpayers with modest incomes to ProPublica. Imagine that ProPublica had then publicly detailed all the tip income that servers and bartenders among these taxpayers had failed to report and all the social meals that small business owners in the sample had claimed as business expenses. If Littlejohn had then pled to one count of unauthorized disclosure, would 25 members of Congress have intervened? Would the judge have imposed a sentence over six times the maximum recommended in federal sentencing guidelines?
Doesn’t it become dangerous to society when the punishment for a crime depends on who the victim happens to be?
We are now living that danger. Our billionaires sit firmly in control. And they will do whatever it takes to make sure they never pay tax at an appropriate level—even if that means locking a human being up for a preposterously long time just to send a message.
Keep ReadingShow Less
Tax Prep Companies’ Business Model Exploits Low-Income Payers
The average parent in low-income communities is being bombarded with advertising designed to trick them into wasting their hard-earned money that could otherwise be going to groceries, gas, and other necessities.
Apr 16, 2024
How far could an extra nine hours and $150 go for you and your family? That’s how much Intuit’s TurboTax and H&R Block are taking from their average customer in low-income neighborhoods. Many of these customers don’t know that they can access these services for free—and that’s intentional. The average parent in low-income communities is being bombarded with advertising designed to trick them into wasting their hard-earned money that could otherwise be going to groceries, gas, and other necessities.
With Tax Day just passed, corporate tax prep giants are trying to extract every last dollar they can from Black communities and working-class taxpayers. A new report in partnership with Better IRS, titled Preying Preparers: How Storefront Tax Preparation Companies Target Low-Income Black and Brown Communities sounds the alarm on how exploiting low-income taxpayers is core to the business model of tax prep companies.
As it stands, 70% of taxpayers are eligible to file their taxes for free, but less than 3% have actually used the failed, corporate-backed free file service. The overwhelming majority of qualifying taxpayers are being coerced by unscrupulous corporate practices like deceptive advertising, overcharging, or hiding the free options.
Now that the IRS has made Direct File a free option, we call on the agency to expand the program.
Tax prep companies rely on and take advantage of economically disadvantaged communities. In fact, areas with the most people claiming the Earned Income Tax Credit have 75% more tax preparers for each person filing taxes compared to areas with fewer people claiming the credit. Furthermore, these major companies primarily hire what are called “unenrolled” tax preparers who lack expertise, certification, or credentials in tax rules and policy. Tax prep companies bank on their proximity, non-stop advertisement, celebrity endorsements, sweepstakes, and giveaways to legitimize their illegitimacy.
Unsurprisingly, companies like H&R Block have dismissed our report by noting the prolific number of locations, the years of experience of their preparers, and their 100% accuracy guarantee. They believe that because there are 9,000 locations across 50 states and most Americans live within five miles of one of their stores, then surely they must be helping hardworking families.
What this actually confirms is that H&R Block preys on low-income communities and communities of color by saturating the neighborhoods of targeted EITC-eligible taxpayers. Additionally, admitting unqualified preparers have been filing taxes for an average of 10 years or more is cause for concern. The predatory locations and disproportionate filing of EITC-eligible tax returns can both explain why Black taxpayers are audited at higher rates than their counterparts and why many people fail to take the deduction even though they are eligible. In this instance, correlation is causation.
These companies claim they are operating within the rules of the game—of which there are none. In 2010, the IRS tried to regulate the practice citing “an abysmal failure rate among unenrolled preparers” and pointing out that 1 in 4 of the 84,000 unenrolled preparers who took the competency exam failed, and more than 320,000 others never took it. That’s why we’re asking for accountability and for regulation of these tax preparers.
The introduction of the IRS Direct File pilot program represents a significant opportunity to dismantle economic inequality in our tax system. Direct File provides a much-needed alternative to costly tax preparation services in 12 states. This service is simple, free, readily available online, and a step in the right direction that empowers working-class people with an option to keep money in their pockets.
In the fight against corporate greed, we stand firm in our resolve. It’s time to hold these giants accountable, to empower the working class, and to build a fairer, more just system for all. Recent enforcement actions by the Federal Trade Commission are an important step; the public should know if they were overcharged and by how much.
With overwhelming public support for IRS modernization, including competency exams to ensure accountability and professionalism, the time for change is now. Now that the IRS has made Direct File a free option, we call on the agency to expand the program. The pursuit of an economy that works for everyone is ongoing. It starts with holding corporations accountable for their exploitative practices, advocating for policy solutions that prioritize the needs of working-class individuals, and ensuring equal access to resources and opportunities for all tax-payers.
Keep ReadingShow Less
In Latest Crackdown on Rich Tax Cheats, IRS Pursues 125,000 Non-Filing Cases
"At this time of year when millions of hard-working people are doing the right thing paying their taxes, we cannot tolerate those with higher incomes failing to do a basic civic duty of filing a tax return," the IRS chief said.
Mar 01, 2024
The Internal Revenue Service announced on Thursday that it was going after high-income earners who had dodged taxes by failing to file tax returns since 2017.
The agency said it would begin mailing compliance letters this week in more than 125,000 cases in which people making over $400,000 a year had refused to file. The enforcement action was made possible by increased IRS funding in the Inflation Reduction Act (IRA).
"At this time of year when millions of hard-working people are doing the right thing paying their taxes, we cannot tolerate those with higher incomes failing to do a basic civic duty of filing a tax return," IRS Commissioner Danny Werfel said in the announcement. "The IRS is taking this step to address this most basic form of non-compliance, which includes many who are engaged in tax evasion."
"Funding the IRS to track down wealthy tax cheats pays off big time."
Non-filing by the wealthiest Americans has cost the federal government a significant amount of money in recent years. In 2023, a report found that more than 1.4 million high-earning U.S. taxpayers had not filed at all from 2017 to 2020, depriving the government of $65.7 billion.
The IRS does not know exactly how much it might recuperate through this current round of compliance letters. While the cases deal with financial activity of more than $100 billion, taxpayers may be able to claim credits or deductions. However, the agency said that "even with a conservative estimate, the IRS believes hundreds of millions of dollars of unpaid taxes are involved in these cases."
The IRS will send out between 20,000 and 40,000 compliance letters, or CP59 notices, each week, starting with the highest earners. That includes more than 25,000 who made more than $1 million between tax years 2017 and 2021 and more than 100,000 who made between $400,000 and $1 million. Individuals may be included in the total case count more than once if they refused to file on more than one year during the target period.
Those who fail to respond to the letters will face additional notices and enforcement actions, including audits, collections, and "potential criminal prosecution."
The IRS is making this effort now because it finally has the resources to do so, the agency explained.
"Without adequate resources, the IRS non-filer program has only run sporadically since 2016 due to severe budget and staff limitations that didn't allow these cases to be worked," the agency said.
However, the IRA earmarked $80 billion for the agency following years of chronic underfunding from Republican lawmakers and administrations, which has already allowed it to claim more than $500 million from wealthy tax evaders since 2022.
"With the Inflation Reduction Act resources, the agency finally has the funding to identify non-filers, ensure they meet this core civic responsibility, and ultimately help ensure fairness for everyone who plays by the rules," Werfel said on Thursday.
Thursday's announcement is only the latest in the IRS' renewed efforts to crack down on wealthy corporations or individuals who cheat on taxes. Last week, it announced plans to audit the use of private jets for non-business travel. The agency has also collected more than $480 million so far from a group of 1,600 millionaires who each owed at least $250,000, CNBC reported last week.
Overall, Werfel told CNBC there was a "tax gap" of over $150 billion each year that the wealthy owe but do not pay. However, spending on enforcement works: The IRS calculates that it earns back around $6 for every $1 spent.
"$13,011 per hour—that's the amount of unpaid taxes that the IRS has found by auditing the ultra-rich who made over $10 million in 2022," Sen. Elizabeth Warren (D-Mass.) posted on social media Thursday. "Funding the IRS to track down wealthy tax cheats pays off big time."
However, the IRS' new funding is already threatened by congressional Republicans. As part of the debt-ceiling deal, they successfully persuaded the Biden administration to slash $20 billion of the new IRA funding, and House Speaker Mike Johnson (R-La.) is pushing for more cuts. If the funding remains in place, the Treasury Department and IRS have calculated that the agency could boost government revenue by up to $561 billion over the next decade. The revenue would be around $100 billion less if the $20 billion in cuts go through.
"If millionaires and billionaires actually paid all the taxes they already owe, we'd have enough money to fund universal child care and STILL have more left over," Warren said further. "The IRS' crackdown on wealthy tax cheats is paying off—but Republicans are trying to stop it."
Keep ReadingShow Less
See More
Most Popular
To inform. To inspire. To ignite change for the common good.
News & Opinion
Trending
Common Dreams, Inc. Founded 1997. Registered 501(c3) Non-Profit
Privacy Policy