After forty-nine years at the Internal Revenue Service (IRS), it’s the last tax season for Carolyn Tavenner. The long-term IRS employee, sometimes called the “Mother of the 1040-EZ,” has announced her plans to retire from the IRS, effective March 2, 2019. 

Currently, Carolyn is the Project Director for the Tax Reform Implementation Office. Prior to that, she served as the Director of the DCSE Affordable Care Act (ACA) Implementation Office. She has held a number of other positions including Senior Advisor to the Chief Taxpayer Service and Chief Operations Officer; Director of Media and Publications; Assistant Deputy Commissioner for Operations Support; Special Assistant to the Information Technology Associate Chief Information Officer (ACIO), Applications Development; Senior Advisor and Director for ACA Legislative Implementation for the Information Technology ACIO for ACA; and Special Assistant to the Deputy Commissioner for Services and Enforcement.  

IRS Commissioner Chuck Rettig noted, “Carolyn has had a remarkable career spanning nearly a half-century of exemplary service to the taxpayers of this country. She is one of the many unsung heroes at the IRS, taking steps to implement major tax law changes ranging from the 1986 tax overhaul to the current tax reform initiative. Carolyn also was a driving force in creating the Form 1040-EZ, a step that literally made taxes easier for many millions of taxpayers.”

In addition, Carolyn has been involved in every major tax law change since the Tax Reform Act of 1986, including the IRS Restructuring and Reform Act of 1998 and the Affordable Care Act. Most notably, she led a team that developed a new form 1040-EZ for the 1982 tax year. The form 1040-EZ stuck around for nearly four decades.

You can see what the form 1040-EZ looked like that year here (downloads as a PDF).

(Remember there’s no longer a form 1040-EZ through 2026 due to the Tax Cuts and Jobs Act.)

During her career, she was the recipient of five Commissioner Awards and two Presidential Rank Awards. Rettig says, “Her career of dedicated public service is a great reflection on her IRS colleagues and that of the entire federal workforce. You may not see her work in the headlines every day, but the dedication of Carolyn and many others at the IRS make a real difference to the nation and to taxpayers. Carolyn will be missed but never forgotten.”

I was lucky enough to meet Tavenner in 2017. I sat next to her at the National Press Club Luncheon. She and I spoke just before then IRS Commissioner John Koskinen offered a few words of appreciation for her, noting, “The average taxpayer has probably never heard of people like Carolyn, but she’s been involved in countless initiatives to improve tax administration over the years.”

Koskinen went on to emphasize that Tavenner’s career was illustrative of the nonpartisan aspect of the work that the IRS does, saying, “While presidential administrations come and go, our employees are still here, serving the American taxpayer and keeping our tax system running.” 

I’m thrilled to announce the return of Getting To Know You Tuesday.

Getting To Know You Tuesday began as a response to my own curiosity. When I started practicing, folks would tell me that I didn’t seem like someone who would like tax. I started thinking about who that might be exactly and it dawned on me: Nobody really knows.

Tax professionals come from all different walks of life. Some are tax preparers, while others are tax planners. Some may focus on offshore while others practice criminal tax defense. There are those who dig tax policy while others are content to flip through pages of tax statutes. Some are solos and some are in-house at large companies. Some teach, some blog, some audit. And some do a little bit of everything.

That’s one of the things that I love so much about the tax community. It’s also why I started the series, and it’s why I’m doing a reboot.

Here’s how it works. Each week or so, I’ll feature a tax pro. I’ll ask a set of questions, some silly and some serious. The questions remain the same from tax pro to tax pro with a few concessions for current events and tax policy changes.

(You can read the first ever Getting To Know You Tuesday here. You can find a longer list from the series here.)

I’m currently soliciting nominations for the series. If you’d like to recommend a tax pro to be featured send your suggestions to kelly (dot) erb (at) taxgirl (dot) com with the subject: Getting To Know You Tuesday. Self-nominations are totally okay, and are even encouraged!

If you’ve previously submitted a nomination, please feel free to send it again. I’ll consider all submissions, even those that were selected, so long as they were more than three years ago.

Taxgirl’s note: On September 8, 2014, Adam Steele joined Brittany Montrois and a “Class of More Than 700,000 Similarly Situated Individuals and Businesses” in filing a class action suit against the federal government seeking to recover allegedly unlawful license fees paid to the Internal Revenue Service (IRS). On June 5, 2017, the Court ruled in favor of the plaintiffs. As a result, tax preparers may be entitled to more than $175,000,000 to be refunded by the IRS. Steele’s first-person take on the industry, PTINs, and the case follows.
We accountants were getting nickel and dimed to death by regulatory fees and costs, and that affects the tax preparation fees that our clients have to pay. It got to the point where you say someone’s gotta do something, but, when one says that, it’s important to remember that each of us is someone.
It’s particularly hard on CPAs and EAs (Enrolled Agents), who have always had to pay licensing fees (in Minnesota, CPAs have to annually renew both an individual, and a firm, permit; each with a fee, even if the CPA is the only one at the firm), and for required Continuing Professional Education (CPE), and for travel to get the CPEs. And woe be unto a CPA who files a renewal form, or pays a fee, or reports CPEs, a little late, he gets walloped with a steep late fee as well. All of these fees and costs factor into what the client eventually has to pay the accountant to get his taxes done.

When I started my practice, in 1981, as an uncredentialed tax practitioner, with no fees to pay and no red tape, my firm prepared long forms for as little as $19.95.

In 2010, the IRS threw a new fly into the ointment. Under the premise of more oversight for the tax industry, they instituted their own PTIN (Practitioner’s Tax Identification Number) system, under which each practitioner was issued a PTIN number, and had to pay the IRS an additional fee, each year, for this service. That was the straw that broke the otter’s back: it was one more form to submit, and one more fee to pay each year.

The fees for original issuance of the PTIN number were $64.25 for the 2011 season, then $63 annual renewal thereafter, until late 2015, when IRS reduced the annual renewal fee to $50 for the 2016 tax season, and thereafter.

On June 1st, 2017, the United States District Court (USDC) at Washington D.C. granted summary judgement in the case of Adam Steele, et al. v. United States of America (case no. 1:14-cv-01523-RCL) holding, simply put, that IRS could assign the numbers if they wanted to, but they couldn’t charge for them. In the case, a class action including (per estimates) at least 700,000 tax practitioners, IRS was ordered to refund those fees and enjoined from charging them in the future, absent Congressional approval. IRS has given notice (on September 6, 2017) that they will appeal the decision, but, as of late October 2017, they had not filed an appeal brief, and it is not known whether they will file one within the allotted time.

Unless the ruling is changed on appeal, the refund, for most practitioners who have paid the PTIN fee each year for practice in all of the 2011 through the 2017 filing seasons, is expected to be about $416 each; although actual payment amounts may be subject to adjustment for certain legal costs as determined by the Court; and the precise amount that any particular practitioner will receive cannot be determined until the final judgement, which is pending.

We CPAs, and EAs were already paying through the nose for regulatory oversight and ethics enforcement. And smaller, community-based, tax firms and practitioners may be disproportionately affected.

CPAs pay it in the fees we pay our state Boards of Accountancy. In Minnesota, our state Board is tougher than the PTIN program would ever be. If a CPA, here, picks up a complaint, even if it’s groundless, he’s probably going to have to do some talking with the people at St. Paul. And in the case of EAs, they are already regulated by, yes, the IRS itself!

Although this annoyed me as a CPA, my attorney, Allen Buckley (also a CPA) of Atlanta, Georgia, discovered, in the going, that Congress never authorized IRS to charge anyone the PTIN fees. That expanded the class, now, to include not just CPAs and EAs, but also attorneys, Registered Tax Return Preparers (RTRPs) and all other people, including uncredentialed practitioners, who prepare taxes for compensation, and so, had to pay for a PTIN. The class now numbers an estimated 700,000 to 1.2 million individuals who will share in the class action refunds.

Also named as lead Plaintiffs in the suit were Brittany L. Montrois, CPA, Atlanta; and attorney Joseph Henchman, who is the V. P. of Legal & State Projects at the Tax Foundation organization at Washington, D.C.

Our fees that we have to charge clients are outrageous anyway. For years, I headed my print advertising with VERY EXPENSIVE TAX SERVICE. Really, anything that you have to pay, to file a form that the government requires you to file, is too much.

Anyone who gets professional tax preparation is probably paying a lot every year. But we are a necessary evil. If a taxpayer tries to do the return himself, well, that may cost him a lot too, in the extra tax he’ll pay and never know about. We are like an auto mechanic: No matter how good the mechanic’s expertise, and the quality of his work, you don’t want to be there. Sometimes we can save the client more than the work costs (like the mechanic who changes your oil pump while you still have an engine). The tax law, today, is so complex that a person with just a small business probably won’t do their own return correctly showing the lowest legal tax.

Even a person with nothing but a W-2 can make expensive mistakes, and not be aware of available tax savings. And the home tax prep software makes it, now, very easy to make those expensive mistakes. A person can make them, now, in much less time than it took them to goof up their return, in the old days.

It’s always been my philosophy that if the government is going to make the tax law so complex as to, generally, necessitate professional service, in order to properly file a form that’s required by the government; then the government should pay those tax prep fees, like, maybe as a credit on the tax return itself. In the past, I’ve suggested certain provisions that have since become part of our federal tax law; but when I suggested that one, it was D.O.A. (Dead On Arrival).

This suit was just another step to try to keep our exorbitant client fees down, as much as can be. Will winning this, over $175 million, suit would change the way I do things? Probably not. We Northern Minnesotans don’t change much, it’s kind of a big deal, just when we change our socks. I don’t know, right now, what I’m going to do with my $190.25 share of the proceeds; but I don’t expect it to result in any major changes, except maybe, the oil in the truck.

Addressing Washington’s present need for more revenue (which, presumably, prompted the PTIN fees), and proposed budget cutbacks, we all know that there are people on disability, or worker’s comp, that shouldn’t be. But, administratively, it’s very hard to weed them out. More fertile fields lie in the expanded Earned Income Credit (EIC) and Child Tax Credit (CTC); both of which are, really, just welfare wrapped in a tax form, and are often wrongly paid. According to a report by the Treasury Inspector General for Tax Administration, for the fiscal year 2015, IRS paid out about $65 billion in Earned Income Credit claims; and, per the IRS’ own estimate, about 23.8% of these payments were issued improperly (e.g., on fraudulent, or otherwise erroneous claims).

I was an Enrolled Agent (EA) before becoming a CPA and believe that a streamlined, voluntary program, for otherwise uncredentialed tax preparers, to assure their clients of, at least, a basic threshold of competence, wouldn’t necessarily be a bad thing if it had Congressional approval. I think a lot of tax practitioners would avail themselves of that because it would give them a credential. Not a real strong one, mind you, but at least a public assurance of basic competence in tax, and agreement to ethics compliance.

We can test for competence, but there is no test for diligence, thoroughness, and integrity. So, to a degree, it’s always going to be caveat emptor – buyer beware. For instance, a competent practitioner knows how to take the correct IRA deduction on his self-employed client’s return; a thorough accountant, however, would go the extra mile – he’d also consider the client’s overall circumstance as reflected by the return, to determine if the client might better meet his goals with a SEP, or a SIMPLE, instead; so to be able to advise the client accordingly. That’s the kind of thing that, I think, a lot of people look for in professional tax help, and you can’t test for it.

The PTIN fees more strongly affected smaller, local, practitioners. But as a consumer, I’d be more likely to trust that type of accountant. The smaller accounting firm has more at risk on the integrity of its good name and word-of-mouth advertising; it can’t just rest on its laurels and national name recognition, like some of the larger firms can. Excessive fees and similar impediments are more discouraging to the smaller, and possibly, better producers. That’s neither good for the industry, nor the consumers.

There are some blatantly incompetent, and/or recklessly careless, practitioners out there – the butchers as I call them (no offense intended to the diligent and conscientious members of the meat cutting and packing industry who don’t prepare tax returns for compensation) – and IRS’ goal of reducing their numbers is a laudable one. It’s something that would be good for the tax industry, for the clients, for the IRS, and for America. The free market can be an effective tool in weeding them out; but only if the public knows what it’s buying.

To be successful, any IRS-sponsored practitioner designation program must have a strong public awareness component, making it a selling point for the participating practitioner. For instance, few people realize that an EA has passed an IRS-administered exam, that is far tougher on tax than the taxation part of the CPA exam. Personally, although my practice has always been limited almost exclusively to tax, I became a CPA because almost no one knows what an EA is. They’re highly regarded amongst other accountants – like, at tax forums and the like, but no one else knows who they are, what they do, and their demonstrated level of expertise at it. So a lot of people want a CPA to prepare their return; they know what that is.

Likewise, few people ever knew what the IRS’s former RTRP designation meant, which probably contributed to its failure to gain prominence in its time. (It was altogether abandoned by IRS when it came to light that the RTRP program, like the PTIN program, lacked Congressional authorization.)

So, were IRS to seek and obtain Congressional approval for a revised program, a public awareness campaign, explaining the difference between the letters (if any) after an accountant’s or tax practitioner’s name, and what assurances of quality the client has, and what services the client can expect to receive, from each; would be a necessary component for any new program’s optimal success. Besides the IRS, organizations like the AICPA, other accountants’ and tax organizations, some consumer organizations, and the various states’ tax departments might be willing to join in on such an effort, as it would be of obvious benefit to their professional memberships and agencies, as well as the general public.

Even with this, of course, and regardless of competence testing, ethics education requirements, and credentials; there will always be a few ‘butchers’ out there who defraud their clients, or who are willing to knowingly collude with their clients to cheat the IRS and all other taxpayers. These people can give the whole tax industry a black eye (as in, for instance, the Enron scandal, when the Big 6 accounting firms became the Big 5; later merging into the present Big 4) and these errant practitioners need to be out of it. IRS already has the power to seek to enjoin them from further tax practice; they should use it.

The Internal Revenue Service (IRS) has officially introduced the new Chief of the Criminal Investigation division. John D. (Don) Fort was appointed in June 2017 after former Chief Richard Weber announced his departure. This week, however, marked Fort’s first formal introduction to the media.

(You can read more about the former Chief of CI, Richard Weber, here.)

Fort is tasked with leading the IRS Division responsible for investigating criminal violations of the tax code and related financial crimes. It’s a new position but not unfamiliar territory: Fort has been with IRS-CI for 26 years. In 1991, Fort began work as a Special Agent with the Criminal Investigation Division in the Baltimore District. He moved on to positions as Supervisory Special Agent (Orlando, Florida); Senior Analyst and Acting Director, Office of Special Investigative Techniques, (CI Headquarters, Washington, DC); Assistant Special Agent in Charge (Baltimore and Washington DC Field Offices); Special Agent in Charge (Philadelphia Field Office); and Deputy Director of Strategy (CI Headquarters). Most recently, he was the Deputy Chief of CI where he supported the Chief in managing the day-to-day activities of the organization. He also advised the IRS Deputy Commissioner and IRS Commissioner on Criminal Investigation matters.

Fort now oversees a worldwide staff of nearly 3,300 employees, including approximately 2,200 special agents, who investigate crimes involving tax, money laundering, public corruption, cyber, ID theft, narcotics, and terrorist-financing.

As a department, Criminal Investigation promotes tax compliance, addresses emerging areas of fraud, and meets the needs of the law enforcement community by supporting national crime initiatives. CI is the only federal agency authorized to investigate and recommend prosecution of federal income tax cases. The work that the agency does is intended to have a maximum deterrent effect, enhance voluntary compliance, and promote public confidence in the tax system. That will not change. Fort says, as the new Chief, “CI Investigative Priorities remain the same.”

Fort says that CI will focus on three primary areas:

1. Traditional Tax Inventory. This is, says Fort, CI’s primary mission. Traditional tax cases are those that are referred to the DOJ, and include Employment Tax, Abusive Tax Schemes, International Tax Enforcement, Return Preparer Fraud, fraud referrals, and other general tax crimes. Work on these cases have declined of late, largely because of declining special agent resources (Fort’s politically correct way of stressing that Congressional cuts to the IRS budget have affected how many cases IRS-CI can pursue). To make up for the shortfall, IRS-CI plans to cut resources dedicated to IDT, or identity theft since there are fewer cases to work following prior investigative efforts and many of the remaining cases can be worked by other agencies. Other traditional tax cases deserve CI’s attention, according to Fort, because “these are complex investigations that require our financial expertise.”

2. Nationally Coordinated Investigations Unit (NCIU). CI plays a critical role in many national law enforcement priorities since many involve money and tracing financial transactions (the dark web for example). And that’s what CI does: it follows the money. Calling it “the future of IRS-CI,” NCIU relies on a wide range of data to identify and develop areas of non-compliance. This will, Fort explains, help better select criminal investigations. Examples of the kinds of projects from this group include U.S. Securities and Exchange Commission (SEC) Microcap Fraud, international tax enforcement, and employment tax.

3. International Tax Enforcement Group. Fort also introduced the creation of a new group that will be dedicated to working and developing significant international tax investigations. This group will consist of experts in international tax crimes, including agents that have successfully worked these cases (think FATCA, FIFA, Panama Papers) in the past. By consolidating these efforts, Fort says that CI can better control the cases and move between them more efficiently.

And while the emphasis in all of these cases focuses on crime, don’t forget the qualifier: these are tax crimes. Fort does have a tax background. In addition to his work in CI, he’s also a licensed CPA in the State of Virginia.

Curious things have happened to lawyers involved in a massive tax fraud investigation involving government officials in Russia. Sergei L. Magnitsky, the lawyer who initially uncovered the alleged fraud died in prison. This week, Nikolai Gorokhov, the lawyer representing Magnitsky’s family, is recovering from serious injuries after falling out of a window in his Moscow apartment building. Gorokhov fell just one day before he was scheduled to appear in a Moscow court.
Gorokhov was retained in 2011 to represent Hermitage Capital Management founder William Browder, as well as Magnitsky’s family. Browder, who founded Hermitage in 1996, was, at one point, considered the largest private foreign investor in Russia.
In 2007, Hermitage’s Moscow office was raided on allegations of tax evasion despite a belief by the company that it had actually paid more than required. Magnitsky, who was a lawyer as well as an auditor, was hired to find out what happened. Magnitsky came to believe that the tax fraud wasn’t happening inside Hermitage but inside Russia’s own government. He accused a wide network of police, judges, corporate owners, and the Russian mafia of contributing to, and in some instances, directing the fraud.
Magnitsky’s accusations were not well-received, and eventually, he was accused of working with Browder to evade 522 million rubles ($16.3 million U.S.) in taxes. Magnitsky was thrown into a Moscow prison and died before his trial. He was just 37.
Magnitsky’s cause of death was said to be acute heart failure and toxic shock, caused by untreated pancreatitis. Magnitsky’s family says that he had been denied medical treatment while in prison, allegations that were confirmed by Russia’s Presidential Human Rights Council, which also found that he had been tortured.
After his death, Magnitsky was tried and convicted for tax evasion. Yes, after his death. I spoke to Browder who advised that a posthumous conviction like that had never happened in Russia before Magnitsky. Browder, too, was convicted of tax fraud but in absentia – he had left Russia before his conviction after being labeled a “threat to national security.”
(You can read my previous story about Magnitsky here).
In 2012, in response to circumstances leading up to Magnitsky’s death, the U.S. passed the Sergei Magnitsky Rule of Law Accountability Act which imposes financial and travel sanctions on those alleged to have committed human rights violations. Not everyone in Washington is a fan. In 2016, Rep. Dana Rohrabacher (R-CA), who had briefly been bandied as a potential candidate for Secretary of State under President Trump, proposed removing Magnitsky’s name from the law. That didn’t happen, and today, in addition to the U.S. law, there are a series of global Magnitsky laws.
There’s another U.S. twist. Gorokhov is a key witness for the United States government in a related money laundering suit against Prevezon Holdings. In that suit, filed in 2013 by former Department of Justice attorney Preet Bharara, the feds allege that a Russian criminal organization “including corrupt Russian officials” defrauded Russian taxpayers out of approximately 5.4 billion rubles ($230 million U.S.) through a tax refund fraud scheme. To hide the fraud, the feds allege that money was funneled through an elaborate series of transfers.
What’s the U.S. connection? The money laundering allegedly included the purchase of Manhattan real estate with funds from the fraud. As a result, the suit seeks forfeiture of a number of assets and real estate holdings. Prevezon Holdings is incorporated in the Republic of Cyprus but is registered in New York State as a foreign business corporation. According to court filings, the sole shareholder of Prevezon Holdings since 2008 has been Denis Katsyv; if that name rings a bell, it’s because Katsyv is the son of Petr Katsyv, vice president of Russia’s state-run rail monopoly, and reportedly a business associate of Vladimir Yakunin, a confidant of Vladimir Putin. The case against Prevezon is ongoing. Browder believes that the case is “dependent on his [Gorokhov’s] showing up for trial.”
Just before his fall, Gorokhov was also expected to present new evidence into the Magnitsky case in Moscow. That evidence will reportedly show that Russian police were complicit in allowing those responsible for Magnitsky’s murder to escape prosecution. According to Browder, the evidence includes WhatsApp messages leaked from the criminals which prove a connection.
It may be that someone didn’t want that information made public. Russian news organizations have reported that Gorokhov fell while helping movers carry a hot tub into his apartment. Browder, however, tweeted that Gorokhov was “thrown from 4th floor apartment in Moscow.” Browder stands by his comments that it was “not an innocent act.”
Fortunately, Gorokhov is expected to make a full recovery. Browder says that Gorokhov is now out of the intensive care unit (ICU) and has no neurological damage and no paralysis. When Gorokhov will be released from the hospital – and whether he’ll be able to testify – isn’t yet known.
Browder had previously remarked to The New York Times, that “[b]asically, there is a trail of dead and seriously injured people leading from the Magnitsky case.” I asked him whether he worried about his own safety, especially in light of recent events. He still receives a number of direct and indirect death threats, he says. They are, he said, “from the Russian government.” I asked him to clarify whether he meant the Russian mob. “You’re making a mistake that a lot of Americans make,” he explained, saying there is “not a difference between government and organized crime in Russia.” I guess maybe it’s too many Goodfellas movies but the American perception is that the mob is a bunch of guys walking around in leather jackets killing people. The difference is, Browder says, that in Russia today, “it’s people walking around in Armani suits – and they work for the Ministry of the Interior.”
It’s easy to think about this series of events as if it was something out of Hollywood. It seems so out of touch with our reality. But these aren’t characters in a movie. Magnitsky was a real person. He had a wife and children. “Sergei was a lawyer,” Browder said, “like you.” I admitted that was one of the reasons the case had resonated with me for so long.
The fact that we’re still talking about a lawyer’s death all of these years later is, he says, “remarkable.” Magnitsky’s work, he says, lives on because he had exposed the Kremlin’s main money-stealing operation. Browder explained that the subsequent work – the series of Magnitsky laws around the world and tracing stolen money – has made things “extremely unpleasant” for Putin. Magnitsky’s legacy may just be the exposure of the entire Kremlin money-laundering pipeline in the West. Gorokhov was helping to continue that work.
After all of this time, with all of the threats, the prosecutions, there has to be something that would bring Browder some closure. “What,” I asked him, “would you consider justice?” He didn’t hesitate. “When Putin is no longer in power,” he said. “And when the people who killed Magnitsky are prosecuted.”
President-elect Donald Trump is expected to name Steven Mnuchin as Secretary of the Treasury.
Mnuchin, 53, is a graduate of Yale University. His father was a banker and partner at Goldman Sachs. Mnuchin followed suit, earning tens of millions of dollars at Goldman Sachs over almost two decades. Following Goldman Sachs, Mnuchin worked with Soros Fund Management (yes, that Soros) and eventually founded his own hedge fund company, Dune Capital Management LP.
It turns out, Hollywood was also calling: Mnuchin began producing movies. In 2013, RatPac Entertainment merged with Mnuchin’s successful Dune Entertainment, which had backed blockbusters like The Devil Wears Prada and Avatar, to become RatPac-Dune Entertainment. The company has since produced a number of popular films including Gravity (2013), The Lego Movie (2014), and Magic Mike XXL (2015).
In 2009, a newly created bank called OneWest Bank, funded in part by Mnuchin’s hedge fund company, bought the failed bank IndyMac (a spinoff from troubled Countrywide Home Loans) from the government. The new chair of OneWest was Mnuchin. Five years later, OneWest was acquired by CIT for $3.4 billion, and Mnuchin remained at the helm as chair. The sale was said to be “a hugely profitable deal for the hedge-fund and private-equity investors that have owned the bank for five years.”
Mnuchin wasn’t done being a chair: in early 2016, Mnuchin was named finance chair of Trump’s 2016 presidential campaign. At the time, it was revealed that Trump had known Mnuchin for years.
Assuming that Mnuchin is appointed and approved to Trump’s Cabinet, what will he do exactly? Here’s what the job entails.
The Secretary of the Treasury is a member of the President’s Cabinet. The office dates back to the first Congress of the United States which created the Department of the Treasury to manage the finances for the new country. The Treasury Act (clever name, right?) was also known as HR-9 and began:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That there shall be a Department of Treasury, in which shall be the following officers, namely: a Secretary of the Treasury, to be deemed head of the department; a Comptroller, an Auditor, a Treasurer, a Register, and an Assistant to the Secretary of the Treasury, which assistant shall be appointed by the said Secretary.

The first person to hold the office of Secretary of Treasury was Alexander Hamilton. Hamilton, a champion of strong central government, was the principal economic advisor to President Washington (but you knew that already from the musical, right?) and a banker. Hamilton’s actions set a precedent for future Secretaries of the Treasury: today, the Secretary establishes economic and financial policy for the country – that includes tax policy.
The latter should be interesting since, in 2015, Trump proposed repealing the carried interest “for speculative partnerships that do not grow businesses or create jobs and are not risking their own capital, and reduces or eliminates other loopholes for the very rich and special interests.” He was, of course, talking about hedge fund managers – exactly what Mnuchin has done for years. Trump stuck to his guns on the issue during the second presidential debate, when he claimed that Hillary Clinton would not get rid of carried interest (she said she would). It will be interesting to see whether a Mnuchin appointment would change that position.
The Department of the Treasury also manages and produces the country’s money (meaning coins and currency), oversees revenue collection (meaning your taxes), and facilitates the borrowing of funds necessary to keep the country running. To do this, the Treasury has some special bureaus. They are:

  • Alcohol and Tobacco Tax and Trade Bureau (TTB)
  • Bureau of Engraving & Printing (BEP)
  • Bureau of the Fiscal Service
  • Community Development Financial Institution (CDFI) Fund
  • Financial Crimes Enforcement Network (FinCEN)
  • Inspector General
  • Treasury Inspector General for Tax Administration (TIGTA)
  • Internal Revenue Service (IRS)
  • Office of the Comptroller of the Currency (OCC)
  • U.S. Mint

(If you think I’m missing something, don’t panic: since 2003, the Bureaus of Alcohol, Tobacco and Firearms (ATF), Federal Law Enforcement Training Center (FLETC), U.S. Customs, and the United States Secret Service (USSS) are no longer Bureaus of the Department of the Treasury. For more on the Secret Service, check out this prior article.)
Having the IRS under his control in the current climate could be a challenge. Some members of Congress want to get rid of it altogether – but that could create a revenue problem since someone has to administer and collect those taxes. The reality is that the IRS is sticking around for a bit longer – like it or not – but that doesn’t mean that the head of the IRS will remain in place. Efforts to impeach IRS Commissioner John Koskinen are still in the works since a contentious September hearing didn’t result in a vote to bring charges – yet. If an impeachment vote moves forward in the next few weeks, it could make for a challenging tax season for the new Secretary.
If that sounds like a lot to be in charge of, it is. For the job, the Secretary of the Treasury gets paid $203,700 annually, more than those in Congress. And as a nod to how closely the Secretary of Treasury works with the President, he or she is fifth in line for the presidency (behind the Vice President, Speaker of the House of Representatives, President pro tempore of the Senate, and Secretary of State).
The President appoints the Secretary of the Treasury with the advice and consent of the Senate. There is no fixed term of service and Secretaries don’t always come and go together with the President who appointed him or her. The current Secretary of the Treasury under President Obama is Jacob Lew, who was officially confirmed on February 27, 2013.

John C. “Jack” Bogle, the Founder of The Vanguard Group, Inc., and President of Vanguard’s Bogle Financial Markets Research Center, has witnessed more than a few presidential elections in his lifetime. The most current election cycle, though, stands out as “at least the most chaotic within my memory.”
He’s not alone. In August, the usually reliable FiveThirtyEight website “emphatically predicted” that Donald Trump would not secure the Republican nomination, putting his chances of winning at less than 2%. Other media sites followed suit, claiming that Trump couldn’t possibly win over GOP voters. And yet, Trump is expected to accept the nomination as the Republican Presidential candidate when the convention convenes next month in Cleveland, Ohio.
Bogle claims that voters don’t exactly know what they’re getting with Trump. The presumptive Republican presidential nominee has, says Bogle, “big ideas but no specifics” – and that’s not terribly good news for investors. Bogle says, with respect to Trump, while there is “little chance he’ll get what he wants, if he does get what he wants, it will likely not be good for the stock market.”
You may be getting the sense that Bogle isn’t a fan of Trump. Since both are successful businessmen who built their wealth in the private sector, you’d think that Bogle would champion Trump. He does not, saying, “I don’t believe that Trump has the character and background to be President.” Bogle then added, “And I’m a Republican.”
That doesn’t necessarily mean that Bogle is willing to talk up Hillary Clinton. On the presumptive Democratic nominee, Bogle is pragmatic, saying that “we know what she plans to do if she gets elected.” Calling her plan for the economy “well-articulated,” Bogle contrasted the specifics of Clinton’s proposal with Trump’s declaring, “[w]e may not like it but we know what she plans to do.”
Bogle went on to clarify that even without specifics, “we still have a Congress.” No matter who goes on to win the election, he says, “Congress will decide what happens.” In fact, he stated, “whether there will be a Republican or a Democratic Congress is the more interesting question of the election.”
With that kind of – for lack of a better word, I’ll use Bogle’s – chaos, how can you election proof your portfolio?
You can’t. That’s Bogle’s simple answer. The real problem, he notes, is that there are so many unknowns to consider. There has been a lot of chatter in this election but, he says, we’re not focusing on the most important issues. For example, Bogle states that there has been “very little talk” about what he believes to be the single most important concern in the economy: the “soaring cost of health care.” Perhaps that’s because we’re managing it – but only for now. Bogle says if nothing is done to control costs now, the consequences will be “catastrophic” in the next 10-15 years. “Something,” he says, “has to be done about this.”
What does managing the cost of healthcare look like? Bogle isn’t sure. Perhaps, it could be, he said, found in greater efficiencies in the healthcare industry or more disciplines drug prices. Bogle reflected on his own heart transplant, performed at Hahnemann University Hospital in 1996, calling it a good example of how technology can be used for our benefit. There must be, he mused, “some way of taking advantage of the huge advances in medicine and technology” when it comes to managing health care costs.
Of course, without managing those costs, the obvious alternative would be to raise taxes. Bogle quickly dismissed the notion, though, as not possible. He stated the obvious, especially during an election year: voters don’t want to pay more in taxes. That’s because, he chuckled, taxpayers like for “taxes to go up on everyone else but themselves.”
Even though Bogle is talking about health care costs, our presidential candidates aren’t. With the real consequences at least an election cycle away, nominees seem content to continue to kick the health care cost can down the road.
But what about now? With all of the potential uncertainty and volatility lurking after November, it’s hard to know what to do when it comes to investing. Bogle offers four pieces of advice for taxpayers who are worried about the economy in an election year:

  1. Keep investing. Keep putting money away. Despite fluctuations in the market, Bogle says that investors should continue to save. And if the market dips? That’s okay, Bogle explains, since a lower market can be beneficial for funding longer-term goals such as retirement and education. Saving is always a good idea, and if you can add to savings when the market is low, you may be in a better position when the market goes back up.
  2. Pay attention to asset allocation. A good starting point for asset allocation, according to Bogle is a portfolio consisting of 65% stocks and 35% bonds. That’s it. “Stay out of the exotic stuff,” he says, however, noting that the allocations of assets may change depending on age and circumstances. If you’re younger, for example, you might skew towards investing more in stocks: you have time to take more risks. However, if you’re older, you might consider putting more in bonds, typically more conservative and consistent. But don’t tilt too far in either direction, he warns, noting that you should pay attention to the norms.
  3. Expect lower returns. For years, the market was flush and paying out significant returns. That’s not going to continue, according to Bogle. Bogle expects to see lower stock returns for the next 10-20 years, noting that 12% returns moving forward isn’t realistic. The same is true when it comes to bonds, he says, claiming that 6% returns are not in the cards. Managing those expectations is key.
  4. Don’t pay attention to fluctuating markets. Echoing his earlier advice, Bogle says to keep putting money away so long as you are able. Remember that the markets – and your own investment strategy – may change over time. That shouldn’t make you so nervous that you bail. “Stay the course,” advises Bogle

Despite his optimism about the economy, Bogle admits that he is frightened about the election. But not just about the election. He is, he says, “frightened about the two-party system and frightened about where we are in American politics.” The measure of our success as a nation, he says, has long been tied to the answer to one question: Have we lost our ability to govern ourselves? “We are not there yet,” he says thoughtfully, “but we’re getting close.”

There’s a perception that the tax world is static: that’s it’s a bunch of stodgy old accountants hunched over ledger books, crunching numbers. In reality, the tax world is constantly moving, driven not only by an ever-changing Tax Code but by technology. You may not notice it at tax time, but advances in technology are making the tax world faster, more secure and more accurate.

Jessica Mah’s aspires to be part of the next chapter meshing tax and technology. Her company, which offers unlimited, flat-fee accounting/tax/payroll services as software, aims to change the role/definition of the CPA and accounting professions. aspires to take business operations, including financial statements, invoicing, bill pay, expense reports – and yes, tax – out of the office so that business owners can focus less on tax and accounting and more on getting business done.

I recently chatted with Mah, CEO of the San Francisco-based company, about her company and what it means for the future of tax and accounting related businesses. Here’s what she had to say.

Erb: How would you describe what you do in terms of value-added to a prospective new customer?

Mah: inDinero’s biggest value add for startup and small business customers is two-fold; giving them the confidence that their accounting is strategic, not just compliant while at the same time they can focus on growing their business’ core product, sales, and marketing programs, they can focus on themselves. inDinero also grows with a growing company. inDinero can take a garage startup all the way to 100+ employees, so there’s never a need to break-up with inDinero to transition from a CPA to an accounting firm to hiring in-house staff; inDinero provides an army of accountants to do any and everything from day one.

Erb: What’s the #1 thing that sets InDinero apart from its competitors?

Mah: We’re the one-stop-shop hub for the entire back office. Historically a business owner needs to choose a software platform, find a bookkeeper, and a separate CPA for their taxes. inDinero eliminates this friction and allows entrepreneurs to easily manage their finances from a single hub.

Erb: You don’t exactly come from a heavy tax/accounting background. What gave you the idea for the company and how did you ensure that you got it right in the beginning?

Mah: My background is in computer science, and I’ve started several businesses before but always felt like this was a huge problem that needed to be solved and wasn’t being addressed. To make sure that our solution was right, we’ve always listened to our customers; what exactly do they need? Time and time again we were hearing from startup and small business CEOs that they just don’t want to have to deal with accounting at all, it’s a pain and very distracting, and so we solve the entire issue for them.

I actually first thought about this back when I was 14 – I ran a business that was short on cash, and we didn’t plan our cash flow very well. I wasn’t getting what I needed from a bookkeeper or from a tax advisor. I needed actual business strategy help, and I knew that all stemmed from the numbers and quality of our accounting. If only there existed a business and software solution that did what inDinero does back when I needed it!

The biggest thing I’ve learned as an entrepreneur is that I can’t rely on myself to do everything – I need to surround myself with others who know more and can do more. We’ve built an army of over 100 accountants and CPAs and tax experts who have thousands of years of combined experience. That’s how we’re getting this right from the beginning.

Erb: With data security as a huge concern these days, what is InDinero doing to make taxpayers feel like their financial information is safe?

Mah: We take security very seriously, everyone in the company gets trained on security, and we use 2-factor authentication, session idling along with innovative safety permissions that restrict access to sensitive information. We also use the highest level of SSL encryption, and we are proactive performing regular security audits on our product and company. We’ve created a culture of security at inDinero, and we even advise customers on best practices.

Erb: Do you find it challenging to keep up with a constantly changing Tax Code? What about on the local level with payroll changes?

Mah: Absolutely, the Tax Code is a living thing, but that’s our bread and butter, and we take great pride in staying on top of tax changes. We’re not satisfied however with just knowing the facts, we make sure we’re able to strategically counsel our clients on how best to work with a tax code change. How does it impact their short and long term, should they consider other business impacts because of the change? That’s the level of service customers choose us for, and we’re always trying to go above and beyond because we have an army of accountants on staff. As for payroll, there are a number of payroll experts that have already cracked that nut so well that we make sure customers work with those payroll partnership experts.

Erb: How do you see the company – and your role – evolving in the future?

Mah: I’ve always felt like the company’s growth has been based on my personal evolution as a leader and as a CEO. We’re both growing together. When I first started the business, I did everything. I wrote the code, I talked to the customers, and I did the errands. Today, I’m focused on hiring the best people and spend most of my time doing data gathering. I’m talking to clients to figure out where and how we can improve. I’m talking to team members to figure out what’s holding them back from making progress even faster.

I also think a lot more now about where inDinero can be in 10, 20, or even 30 years from now. I’m tired of the short-term Silicon Valley thinking of just getting liquidity in a few years. What happened to long-term vision? We want to provide the value of a CFO and COO to every small business in the world, and all of that starts with doing accounting and taxes. This is our Trojan horse for being able to offer other value-added services to businesses.

Culturally, I see us doubling down on the Entreocracy manifesto that I’ve talked about in the past. I want inDinero to be a role model for entrepreneurship, or in other words, entrepreneurship and leadership at even the bottom level of the organization. Coming up with new ideas for how to create a more interesting place to work is half the fun of being CEO!

The podcast is coming! The podcast is coming!

Fear not, the podcast is finally making its re-debut. In the meantime, you can listen to me chat with Jeena Cho about writing, tax and how Taxgirl came to be here (grab a cup of coffee and plan on staying awhile, it’s long!).

Just a few weeks remain until Pope Francis’ historic visit to Philadelphia. It’s not only Pope Francis’ first time in Philadelphia but his first official visit to the U.S. While the Pope will also be making stops in Washington, D.C. and New York City, the focus of his visit is the City of Brotherly Love where he will be offering Mass for the conclusion of the World Meeting of Families on Sunday, September 27. The Mass, which is open to the public, will be held outside the Philadelphia Art Museum and folks are expected to line up along the mile long avenue.
Estimates for the crowd hoping to take Mass on the Parkway have ranged from thousands to millions. If similar events are any indication, the latter is likely the case: in January, Vatican spokesman Father Federico Lombardi reported that between six and seven million people attended a Mass held by the Pope in Manila. Recent estimates have put the number of visitors to the City in anticipation of the Pope’s visit at 1.5 million.
To help visitors navigate what promises to be a packed series of events, the Secret Service has released a guide (downloads as a pdf), complete with a map showing the areas that will be off limits to those without special tickets. Those areas? Most of the city. Roads will be closed and public transit will not run in select locations. As a result, Mayor Nutter is asking businesses to rethink whether it’s necessary to have employees come into work. Courts have already made the decision for employees as well as lawyers and interested parties: courts will close at 5 p.m. on September 22 and will not reopen until 9 a.m. on September 29. That includes the First Judicial District, Municipal, Common Pleas, Orphans, Civil and Criminal court operations.
So what does that mean for the Internal Revenue Service (IRS)? Because of restricted access to the building, services at the Internal Revenue Service’s Taxpayer Assistance Center (TAC) at 600 Arch Street in Philadelphia will be unavailable September 25 and 28. Area taxpayers needing face-to-face help on federal tax matters can visit the IRS TACs listed below:
200 Lakeside Dr.
Horsham, PA 19044
Monday-Friday – 8:30 a.m.- 4:30 p.m.
(Closed for lunch 1:30 p.m. – 2:30 p.m.)
King of Prussia
601 South Henderson Rd.
King of Prussia, PA 19406
Monday-Friday – 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. – 1:30 p.m.)
1400 N. Providence Rd.
Media, PA 19063
Monday-Friday – 8:30 a.m.- 4:30 p.m.
(Closed for lunch 1:00 p.m.-2:00 p.m.)
Be sure to check out road closures and public transit restrictions before heading out. Portions of major highways, including I-76, I-676 and Rt. 1 will be shut down.
Additionally, the IRS reminds taxpayers who plan to visit an IRS office to first check the hours and services offered at that location. Services at IRS offices vary, may be limited or unavailable. Hours of operation and available services for all TACs are listed at
The IRS also reminds taxpayers that they can often get needed tax information or resolve a tax problem without having to call or visit an IRS office. The IRS website provides many of the same services available at a TAC, including the ability to request copies of tax transcripts, check the status of a tax refund or get answers to common tax law questions.