Posted On May 18, 2015

U.S. Senator challenges IRS hiring of private lawyers

Members of the U.S. Congress continue to closely scrutinize IRS practices and procedures. Recently, one powerful U.S. Senator has criticized the agency’s use of a private law firm to perform legal examinations of taxpayers. Of course, the IRS has a large staff of in-house lawyers located in Nevada and throughout the country who are trained in that very thing. The Chairman of the Senate Finance Committee, Orrin Hatch, sent a letter to the IRS Commissioner, demanding an explanation and justification for hiring a private contractor to examine taxpayers.

The letter from Senator Hatch suggests that the procedure appears to violate federal law and is against the express intent of Congress. He claims that the practice tends to lower taxpayer protections and it opens the IRS up to  deep criticism for squandering resources in a time when the agency’s budget has been greatly reduced. The Senator explained that the integrity of the tax administration process relies on certain restrictions that protect taxpayers from an overreaching government.

One of those restrictions is the limitation that only government officials may carry out certain examination functions, according to Hatch. The conflict centers around the agency’s hiring of a private law firm last year to conduct sworn interviews of employees of a corporate taxpayer for the sum of $2.2 million. The IRS, without notice to the public, issued a temporary regulation allowing the use of private contractors, according to Hatch.

The IRS referred to the temporary regulation it put forth as a “clarification.” The Internal Revenue Code reflects the intention of Congress to restrict the performance of certain functions, including the taking of sworn testimony, to the IRS Secretary and specified delegates. Hatch told the Commissioner in the letter that the agency should contact Congress for changes in the Code if it feels that it cannot perform certain duties adequately. The ongoing conflict between Congress and the agency is important in defining the long-term rights and protections of taxpayers nationwide, including those residing in Nevada.

Source: utahpolicy.com, “Hatch Questions IRS’s Outsourcing of Taxpayer Examination“, May 13, 2015