The Jaw-Dropping Hunter Biden–Investigation Revelations

The compelling congressional testimony of two IRS whistleblower agents has established three things.

First, the investigation into Biden corruption — millions of dollars pouring into the family coffers from apparatchiks of corrupt and anti-American regimes seeking to buy Joe Biden’s political influence — is real and has been thwarted by the Biden Justice Department. Second, the president’s son Hunter Biden received preferential treatment, and, next week, a federal judge should reject the sweetheart plea deal he was given by the Justice Department. Third, Attorney General Merrick Garland owes the country an explanation for why the Biden investigation has been sabotaged from within, even as he maintains publicly that it was conducted with independence and integrity.

The two whistleblowers — supervisory agent Gary Shapley and the Biden investigation’s main case agent, Joseph Ziegler — began cooperating with the House Ways and Means Committee several weeks back. While Shapley went public in June, Ziegler was not publicly identified until Wednesday’s hearing. Their revelations have been jaw-dropping.

The agents recounted being blocked at every turn by Justice Department prosecutors as they tried to go about the routine steps investigators would take in any case — or, at least, any case not involving politically connected suspects. The investigation was slow-walked by prosecutors from the office of Delaware U.S. attorney David Weiss, to whom the case was assigned in 2018.

Garland and congressional Democrats never tire of branding Weiss a Trump-appointee — it’s Garland’s rationalization for not appointing a special counsel. Conveniently omitted from this story is the fact that Weiss could not have been confirmed absent the support of Delaware’s two Democratic senators, Biden allies Tom Carper and Chris Coons. More to the point, Weiss reports to Garland and, because the Hunter Biden matter is a tax case, DOJ rules dictate that any tax charges must be approved by the Tax Division at Main Justice — run by Biden appointees. Most obviously, Weiss’s appointment by Trump does nothing to eradicate the conflict of interest inherent in the Biden Justice Department’s investigation of the president’s son over conduct in which the president himself is implicated.

Weiss and his underlings used the pendency of the 2020 presidential campaign as an excuse to instruct the IRS and FBI agents on the case not to take measures that might call attention to the investigation and thus influence the election. Note that, simultaneously, according to tech executives and Republican senators Chuck Grassley and Ron Johnson, FBI agents were signaling that the pre-election emergence of derogatory information about the Bidens — e.g., the Hunter laptop and the influx of money from foreign sources — was likely the result of a Russian intelligence operation.

After Biden was elected, Shapley and Ziegler recalled being undermined in attempting to uncover evidence. The day before they planned to conduct interviews of Hunter Biden and other investigative subjects, the FBI alerted the Secret Service, which tipped off the Biden transition team. As a result, lawyers for Hunter and most other subjects refused to speak to the IRS. In connection with interviews that were later planned, the lead prosecutor from Weiss’s office, Lesley Wolf, forbade them from pursuing investigative leads that could potentially connect the president himself to the Biden family business — instructing them not to ask questions about Hunter’s “dad,” or about “the big guy” (as we now know several investigative subjects referred to the now-president).

In 2019, the FBI obtained Hunter’s laptop, teeming with data about the Bidens’ lucrative foreign transactions and Joe Biden’s potential connections to them; yet Weiss’s office denied the IRS agents access to this evidence. In early September 2020, Wolf agreed with the agents that there was more than enough probable cause to support a warrant to search a guest house at the Bidens’ Wilmington residence where Hunter was living; still, she is said to have declined to seek the warrant because “the optics” would be bad. After the election, the agents learned that Hunter had moved documents from his business office in Washington, D.C., to a commercial storage unit in northern Virginia. They convinced Weiss, over Wolf’s objection, to allow them to seek a search warrant if Hunter did not access the unit for 30 days. But, while the agents were preparing the warrant, Wolf precluded them by alerting Hunter’s defense lawyers about the existence of the storage unit, again putting the evidence out of the investigators’ reach.

Shapley and Ziegler are among the IRS’s most experienced and accomplished agents. Despite the strictures placed on them, they built a compelling tax case against Hunter Biden — even the limited evidence, according to Ziegler, showed that Hunter had evaded roughly $2.2 million in taxes on $8.3 million in foreign income between 2014 and 2019. The agents and the line lawyers in DOJ’s Tax Division and Weiss’s office all agreed that a felony prosecution was called for.

Nevertheless, Shapley recounted a meeting with the top investigators on the case at which Weiss conceded that he was not the final decision-maker on whether charges could be filed. Delaware was not the proper venue for tax charges — those could be indicted only in Washington, D.C. (for tax years 2014 and 2015), or California (for the subsequent years). Weiss explained to the flabbergasted agents that he had asked the Justice Department to give him special-counsel authority so that he could file charges in any federal district without interference, but had been rebuffed. He was thus being blocked from filing charges by Matthew Graves, the Biden-appointed U.S. attorney in Washington.

The 2014 and 2015 tax years included Hunter’s lavish, undeclared income from his sinecure at the allegedly corrupt Ukrainian energy company, Burisma. This period is crucial to the potential corruption scheme. According to information provided to the FBI by an informant with a reliable track record (and released yesterday by Senator Chuck Grassley), after speaking with then–Vice President Joe Biden and his son, Burisma founder Mykola Zlochevsky placed Hunter on the company’s board and paid him over $80,000 per month (a rate that, reportedly, was roughly halved once Joe Biden was no longer vice president). The informant added that Zlochevsky told him he’d paid then–Vice President Biden and his son a combined $10 million bribe to use Biden’s influence on Burisma’s behalf, and had made the payments through a byzantine array of companies and accounts that he bragged would take investigators a decade to trace to Joe Biden. This alleged scheme strongly resembles the pattern uncovered by House investigators showing foreign actors paying Biden family members (including grandchildren) millions of dollars through labyrinthine channels that included some 20 obscure business entities, most of which Hunter set up while Joe was vice president.

Yet, the Biden Justice Department’s infighting and foot-dragging caused the statute of limitations for the 2014 and 2015 tax years to lapse, vitiating some of the investigation’s key allegations. And it gets worse. Shapley and Ziegler testified Wednesday that, in the interests of negotiating a plea agreement, Hunter’s lawyers had agreed to extend the statute of limitations by stipulation; it was the Justice Department that allowed the charges to lapse. This is simply inexcusable: Prosecutors never have an incentive to forego the possibility of filing serious criminal charges.

As for the tax years from 2016 through 2019, Shapley learned that, when Biden’s newly appointed U.S. attorney for Los Angeles, E. Martin Estrada, was confirmed in September 2022, the felony tax charges for those years were rejected. It is thus through the tender loving care of Biden appointees that Hunter was given the sweetheart plea bargain which — if Delaware federal judge Maryellen Noreika approves it next week — would allow him to dispose of the case with pleas to two misdemeanor tax charges. Not only would there apparently be no incarceration term; it is anticipated that a gun charge — for which someone not named Biden would be staring at a prison sentence of up to ten years — would be dismissed.

Garland has insisted for years that Weiss had ultimate authority over whether and where to file charges. Weiss initially backed this story publicly, but he has subtly changed his tune since the whistleblower disclosures began. Realizing how credible and corroborated the agents are, Weiss has strained to avoid contradicting them while echoing Garland, a needle that can’t be threaded. After claiming the mantle of ultimate authority, he conceded that he could not indict outside Delaware, but made the caveat that he had been consulting with the Justice Department about that problem. Later, he weaseled about how he had never formally sought special-counsel authority — which doesn’t address whether he told a room full of agents that his request for it had been denied, and whether he didn’t seek it because he knew it would be denied.

Meantime, Garland’s story is a crock. He asserts that Weiss would have been given any necessary authority — he only needed to ask. But the U.S. attorneys for Washington and California work for Garland; they couldn’t have blocked Weiss without the attorney general’s support. And it’s not a district U.S. attorney’s job to ask the attorney general for special-counsel authority — which would be tantamount to asking to be fired since, by regulation, a special counsel must be a lawyer “from outside the United States Government.” Rather, it is the attorney general’s duty to appoint a special counsel if there is a conflict of interest that prevents the Justice Department from investigating in the normal course.

Click here to read the full story at the National Review

IRS Whistleblower In Hunter Biden Case Says He “Felt Handcuffed” During 5-year Investigation

The Internal Revenue Service case agent who handled “95%” of the tax evidence in the Hunter Biden investigation told CBS News that he “felt handcuffed” during the five-year probe and blocked from pursuing leads that he thought might implicate Hunter Biden’s father, President Joe Biden.

Second IRS whistleblower in Hunter Biden investigation — “Whistleblower X”

Special Agent Joseph Ziegler, a 13-year veteran of the IRS, is the second IRS employee to come forward to claim the federal tax investigation into the president’s son supported criminal charges more serious than the misdemeanor tax charges he is scheduled to plead guilty to next week as part of a plea bargain. 

“When you’re prevented from going down certain roads, I guess I don’t know what could have been found if we were not hamstrung or not handcuffed,” Ziegler told CBS News.

Ziegler, who has been known only as “Whistleblower X,” revealed his identity Wednesday at the insistence of lawmakers, who called him before a House committee to describe his role in the federal investigation into Hunter Biden. As the main IRS case agent, he worked with his supervisor Gary Shapley and says the evidence they uncovered “supported felony and misdemeanor tax charges.”

Ziegler’s investigation spanned both the Trump and Biden administrations.

“I’m a Democrat. In the last presidential election, I actually did not vote,” Ziegler said. “I thought it would be irresponsible of me to do so because I didn’t wanna show bias one way or the other.”

Democrats’ reaction

An attorney for Hunter Biden, Christopher Clark, has said previously that suggestions the investigation was not thorough are “preposterous and deeply irresponsible.”

At Wednesday’s hearing, Rep. Jamie Raskin, Democrat of Maryland, said he has not seen evidence that Hunter Biden “received any kind of official favoritism in this prosecution for being Joe Biden’s son.”

“The key point, Mr. Chairman that America needs to understand is that the only political interference at play here is coming from Donald Trump and my Republican colleagues,” Raskin said.

During an executive session in June, the Ways and Means committee voted to publicly release the transcripts from Shapley and Ziegler’s whistleblower testimony, keeping Ziegler’s identity hidden. The top minority member on the committee, Democratic Rep. Richard Neal of Massachusetts, said during that closed door meeting that Republican efforts to publicize the tax records of a private citizen was an example of “naked partisanship, and stoops below the stature of this Committee.” 

Democrats have also focused on Shapley’s and Ziegler’s choice of legal representation; their attorneys have had connections to Republican Party politics. Those attorneys counter that they have worked with both Republican and Democratic whistleblowers and organizations. Democrats also questioned whether the two agents lacked visibility into the factors prosecutors faced when making decisions about what charges to bring. And they noted that Hunter Biden has repaid the taxes he owed.

Questions about deductions

Ziegler alleges that evidence he collected showed how Hunter Biden improperly claimed business deductions for a range of personal expenses, such as college tuition for his children, bills for stays at a posh Hollywood hotel, payments to escorts, and no-show employees. In 2021, Ziegler says he drafted a memorandum recommending prosecutors charge Hunter Biden with multiple felonies and misdemeanors. 

“In August of 2022, we had a phone call with all of the assigned prosecutors and they had said that all four of them were recommending the approval of felony and misdemeanor tax charges,” Ziegler said. 

Hunter Biden’s legal team did not immediately respond to a request for comment. 

Ziegler said Trump-appointed U.S. Attorney for Delaware, David Weiss, told him he agreed with certain felony charges, but there was resistance from other officials inside the Department of Justice who thought a jury may be sympathetic to Hunter Biden’s drug addiction and the death of his brother, Beau Biden. 

“David said to us…’I’m getting some concern from the Department of Justice Tax Division, the evidence that might come in related to his substance abuse and the death of his brother, Beau Biden, those might affect the jury’s opinion’,” Ziegler said.

Court filings unsealed last month showed that the U.S. attorney’s office ultimately agreed to a deal that would charge Hunter Biden with two misdemeanor tax counts — to which the president’s son agreed to plead guilty — and a felony gun charge for which Biden agreed to enter into a diversion program. Biden will not plead guilty to the gun charge, which will be dismissed if he meets certain conditions. That deal will have to be approved by a federal judge, who has scheduled a hearing on the matter for next week in Delaware.

“At the end of the day, it’s a matter of are we treating everyone the same? Are we treating all taxpayers the same?” Zielger said. “And in this case, no, I don’t think so.”

IRS whistleblowers confused about Hunter Biden charging decision

The decision not to charge the president’s son with tax felonies remains a source of concern and confusion for both of the IRS agents who have now spoken out about the matter. Both men have raised concerns about the possibility that the Biden Justice Department in some way impeded the case.

Weiss pushed back in a letter last month saying he had ultimate authority on these matters and was “never denied the authority to bring charges in any jurisdiction.” 

The U.S. attorney’s office for Delaware declined to comment on this story. 

Attorney General Merrick Garland — who kept Weiss on the job to complete the Biden probe — previously said in response to the allegations that Weiss was “permitted to continue his investigation and to make a decision to prosecute any way in which he wanted to and in any district in which he wanted to.” 

Both Ziegler and Shapely have told congressional investigators and CBS News they were told that prosecutors in Delaware were prevented from bringing charges in other jurisdictions — including California and Washington, D.C. — and Shapley said Weiss told him he was denied special counsel status by the Justice Department. 

“D.C. said, ‘No, we are not gonna assist you with bringing charges in our district. And we don’t think you should bring these charges forward in our district,'” Ziegler explained to CBS News.

Whistleblower “felt handcuffed” during probe

During the investigation, Ziegler said he “felt handcuffed.” For example, he says he wanted prosecutors to obtain a search warrant to access a Virginia storage unit to search for potential business records but they declined to do so. He said requests to interview Hunter Biden’s adult children about the tax payments were frustrated by prosecutors, whom he claims said the requests could “get us into hot water.”

Ziegler’s requests to pursue a number of investigative avenues came when Trump was still in office and Attorney General William Barr had instituted a policy requiring he personally approve any investigation of a president or presidential candidate. Ziegler told CBS that he was not “aware” of any approvals sought from Barr at that time.

On Monday, after the Committee on Oversight and Accountability interviewed an FBI agent from the Wilmington Field Office, the leading Democrat on the committee, Rep. Jamie Raskin of Maryland, accused Republicans of “distort[ing]” evidence in order “to advance Republicans’ false narrative about political interference in the Hunter Biden investigation.”

Hunter Biden’s claim about his father in WhatsApp message

In another instance, Ziegler said he tried to get location data to determine whether Joe Biden was in the room, as his son had boasted in a 2017 WhatsApp message where he appeared to pressure a Chinese businessman to make good on an outstanding payment by mentioning his father.

“I am sitting here with my father..we would like to understand why the commitment made has not been fulfilled,” Hunter Biden allegedly texted to the businessman, according to the transcript. He added, “I would like to resolve this now before it gets out of hand” and “now means tonight.”

Ziegler said the WhatsApp message was found on Hunter Biden’s iCloud account that was obtained through a search warrant. He says he was unable to determine whether Hunter Biden and his father were together when the WhatsApp message was sent. President Biden has said he was never present when any such message was sent and denied any knowledge of this message.

“Anytime we potentially wanted to go down the road of asking questions related to the president, it was ‘That’s gonna take too much approvals. We can’t ask those questions.”

Ziegler said he expected extra approvals when investigating the son of a president, but he said the requests went unmet. 

There would be a point to where it would be like, ‘Well, let’s think about it. Let’s put that on the back burner.’ And it would now move down to item number 50,” Ziegler said.

Click here to read the full article

Ex-IRS Whistleblower Says Middle Class Targeted Under Inflation Bill

William Henck, a former Internal Revenue Service lawyer who was forced out after making allegations of internal malfeasance, said the government will target middle-income Americans with new audits under the Inflation Reduction Act.

Henck, who worked at the IRS for 30 years until departing in 2017, slammed the IRS and others who have argued additional funding would only result in increased audits for billionaires and corporations. The Inflation Reduction Act, which President Biden signed into law , would nearly double the IRS’ budget, appropriating an additional $79 billion to the agency over the next decade.

“The idea that they’re going to open things up and go after these big billionaires and large corporations is quite frankly bulls–t,” Henck told FOX Business in an interview. “It’s not going to happen. They’re going to give themselves bonuses and promotions and really nice conferences.”

“The big corporations and the billionaires are probably sitting back laughing right now,” he continued.

Henck added that he thought it was “insane” to double the agency’s budget. He said the IRS will target businesses who don’t have enough money to hire Washington lobbyists.

Americans with an annual income of less than $75,000 would be subject to nearly 711,000 new IRS audits under the legislation, according to a House GOP analysis that used historic audit rates. By comparison, individuals making more than $500,000 will receive about 95,000 additional audits as a result of the Inflation Reduction Act.

However, IRS Commissioner Charles Rettig pushed back on reports of new audits, saying “audit rates” would remain the same and that the bill was “absolutely not about increasing audit scrutiny on small businesses or middle-income Americans.” White House press secretary Karine Jean-Pierre told reporters last week that there would be no new audits for people making less than $400,000 per year.

“There will be considerable incentive to basically to shake down taxpayers, and the advantage the IRS has is they have basically unlimited resources and no accountability, whereas a taxpayer has to weigh the cost of accountants, tax lawyers — fighting something in tax court,” Henck told FOX Business.

New hires at the IRS will also be assigned simpler cases, Henck said, meaning an added focus on small-business audits.

“If you own a roofing company, you better count on getting audited because that’s what they’re going to be doing,” he continued. “They’re going to be going after your car dealerships, roofing companies.”

Henck said during his time at the agency, he had observed IRS agents specifically targeting elderly taxpayers, some of whom were World War II veterans, because they could easily be forced into settlements.

“I protested both internally and externally, but I was ignored,” he told FOX Business. “In their last days on Earth, these taxpayers were being bullied by the same government they had fought for as young men and no one cared.”

Click here to read the full article at NY Post

IRS could easily block Democratic scheme to increase CA tax deductions

Tax formDemocratic state lawmakers’ interest in pursuing an unprecedented plan to minimize the hit that California’s high-income residents face because of the federal tax overhaul’s $10,000 cap on deductibility of state and local taxes may be losing momentum – undermined by strong warnings from Treasury Secretary Steven Mnuchin, who oversees the Internal Revenue Service, and by a new analysis that says the IRS could easily squelch the maneuver.

Senate President Pro Tem Kevin de Leon, D-Los Angeles introduced Senate Bill 227 early this month. It would allow the estimated 6 million Californians who itemize their federal income taxes to effectively continue to write off state and local tax deductions in excess of $10,000 by allowing them to pay their state taxes to a state charitable foundation, the California Excellence Fund.

Tax experts note that states have long allowed tax deductions for charitable donations and say de Leon’s ploy is protected by the fact that tax laws are traditionally subject to stricter interpretation than most federal laws because of concerns that a rogue IRS could target individuals or companies it didn’t like.

Democratic lawmakers embraced de Leon’s proposal, saying the move would allow the 6 million state taxpayers who itemize deductions to save an average of more than $8,000 a year.

Washington Post: California shows how to take on Trump

But after Washington Post coverage of the legislation asserted it could create a “national boilerplate for skirting Trump tax changes,” the Trump administration took notice of what California was up to.

Politico reported that Mnuchin called the proposal in California and similar proposals in other high-tax states “ridiculous.” Mnuchin emphasized that the IRS was allowed to decide what qualifies as an IRS-recognized charity.

“Let me just say again from a Treasury standpoint and IRS, I don’t want to speculate on what people will do, but I think it’s one of the more ridiculous comments to think you can take a real estate tax that you are required to make and dress that up as a charitable contribution,” Mnuchin told reporters at the White House. He described the ploy as an obvious attempt by states “to evade the law.”

Mnuchin’s comments were backed up in a report by the Washington, D.C.-based Tax Foundation.

“This proposal, while interesting, is fairly obviously in violation of existing law and jurisprudence,” wrote veteran tax analyst Jared Walczak. “Just because the IRS has not consistently cracked down on some minor efforts here and there does not mean it would turn a blind eye to a concerted effort to contravene the tax code by providing a contribution in lieu of taxes program.”

Walczak warned state lawmakers that when it comes to de Leon’s Senate Bill 227, the IRS could readily thwart it under precedents that allow it to block deductions for charitable donations if the agency concluded there was no “charitable intent” to the donations.

Given that de Leon and other backers of the bill have openly described it as being designed to reduce Californians’ payments to the U.S. Treasury, lawyers defending the bill if it became law and was rejected by the IRS would face a difficult task: making a plausible case that a “charitable donation” that was undertaken with the goal of reducing an individual’s or family’s tax obligations meets the requirements set by the IRS for allowable charitable deductions.

The latest IRS overview of which deductions are allowed – Publication 526, released in 2016 under the Obama administration – doesn’t seem to allow such self-serving deductions.

It says that for a donation to qualify for a deduction, it must be “made without getting, or expecting to get, anything of equal value. … Qualified organizations include nonprofit groups that are religious, charitable, educational, scientific or literary in purpose, or that work to prevent cruelty to children or animals.”

This article was originally published by

Major Blow to Obamacare Mandate

MedizinHow much difference does a single line on a tax form make? For Obamacare’s individual mandate, the answer might be quite a lot.

Following President Donald Trump’s executive order instructing agencies to provide relief from the health law, the Internal Revenue Service appears to be taking a more lax approach to the coverage requirement.

The health law’s individual mandate requires everyone to either maintain qualifying health coverage or pay a tax penalty, known as a “shared responsibility payment.” The IRS was set to require filers to indicate whether they had maintained coverage in 2016 or paid the penalty by filling out line 61 on their form 1040s. Alternatively, they could claim exemption from the mandate by filing a form 8965.

For most filers, filling out line 61 would be mandatory. The IRS would not accept 1040s unless the coverage box was checked, or the shared responsibility payment noted, or the exemption form included. Otherwise they would be labeled “silent returns” and rejected.

Instead, however, filling out that line will be optional.

Earlier this month, the IRS quietly altered its rules to allow the submission of 1040s with nothing on line 61. The IRS says it still maintains the option to follow up with those who elect not to indicate their coverage status, although it’s not clear what circumstances might trigger a follow up.

But what would have been a mandatory disclosure will instead be voluntary. Silent returns will no longer be automatically rejected. The change is a direct result of the executive order President Donald Trump issued in January directing the government to provide relief from Obamacare to individuals and insurers, within the boundaries of the law.

“The recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden,” the IRS said in a statement to Reason. “Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.”

The tax agency says the change will reduce the health law’s strain on taxpayers. “Processing silent returns means that taxpayer returns are not systemically rejected, allowing them to be processed and minimizing burden on taxpayers, including those expecting a refund,” the IRS statement said.

The change may seem minor. But it makes it clear that following Trump’s executive order, the agency’s trajectory is towards a less strict enforcement process.

Although the new policy leaves Obamacare’s individual mandate on the books, it may make it easier for individuals to go without coverage while avoiding the penalty. Essentially, if not explicitly, it is a weakening of the mandate enforcement mechanism.

“It’s hard to enforce something without information,” says Ryan Ellis, a Senior Fellow at the Conservative Reform Network.

The move has already raised questions about its legality. Federal law gives the administration broad authority to provide exemptions from the mandate. But “it does not allow the administration not to enforce the mandate, which it appears they may be doing here,” says Michael Cannon, health policy director at the libertarian Cato Institute. “Unless the Trump administration maintains the mandate is unconstitutional, the Constitution requires them to enforce it.”

“The mandate can only be weakened by Congress,” says Ellis. “This is a change to how the IRS is choosing to enforce it. They will count on voluntary disclosure of non-coverage rather than asking themselves.”

The IRS notes that taxpayers are still required to pay the mandate penalty, if applicable. “Legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe‎,” the agency statement said.

Ellis says the new policy doesn’t fully rise to the level of declining to enforce the law. “If the IRS turns a blind eye to people’s status, that isn’t quite not enforcing it,” he says. “It’s more like the IRS wanting to maintain plausible deniability.”

Tax software companies are already making note of the change. Drake Software, which provides services to tax professionals, recently sent out a notice explaining the change in policy. As of February 3, the notice said, the IRS “will now accept an e-filed return that does not indicate either full-year coverage or an individual shared responsibility payment or does not include an exemption on Form 8965, as required by IRS instructions, Form 1040, line 61.”

The mandate is a key component of Obamacare’s coverage scheme, which is built on what experts sometimes describe as a “three-legged stool.” The law requires health insurers to sell to all comers regardless of health history, and offers subsidies to lower income individuals in order to offset the cost of coverage. In order to prevent people from signing up for coverage only after getting sick, it also requires most individuals to maintain qualifying coverage or face a tax penalty. While defending the health law in court, the Obama administration maintained that the mandate was essential to the structure of the law, designed to make sure that people did not take advantage of its protections.

In a 2012 case challenging the law’s insurance requirement, the Supreme Court ruled that the individual mandate was constitutional as a tax penalty. The IRS is in charge of collecting payments.

Some health policy experts have argued that the mandate was already too weak to be effective, as a result of the many exemptions that are included. A 2012 report by the consulting firm Milliman found that the mandate penalty offered only a modest financial incentives for families making 300-400 percent of the federal poverty line. More recently, health insurers have said that individuals signing up for coverage and then quickly dropping it after major health expenses is a key driver of losses, and rising health insurance premiums.

It’s too early to say whether the change will ultimately make any difference. But given the centrality of the mandate to the law’s coverage scheme and the unsteadiness of the law’s health insurance exchanges, with premiums rising and insurers scaling back participation, it is possible that even a marginal weakening of the mandate could cause further dysfunction. Health insurers have said the mandate is a priority, and asked for it to be strengthened. Weaker enforcement of the mandate could cause insurance carriers to further reduce participation in the exchanges. One major insurer, Humana, said today that it would completely exit Obamacare’s exchanges after this year.

It is also possible that congressional Republicans will make it moot by repealing much of the law, including its individual mandate, which, as a tax, can be taken down with just 51 Senate votes.

Regardless of its direct impact, however, the change may signal that the Trump administration intends to water down enforcement of the health law’s most controversial requirement, even if those steps are seemingly small. The Trump administration may not be tearing Obamacare down entirely, but it appears to be taking steps to weaken the law, however subtly, one line at a time.

This piece was originally published by

Stolen Social Security number? The IRS doesn’t care

IRSThe IRS is giving away money to people who file tax returns with stolen Social Security numbers, and they intend to keep right on doing it.

That was the message from IRS Commissioner John Koskinen to the Senate Finance Committee during a recent hearing on cybersecurity failures and other problems at the Internal Revenue Service.

“These are cases in which someone uses someone else’s identity, their name or their Social Security number, to get a job illegally,” Sen. Dan Coats, a Republican from Indiana, explained.

The IRS knows but doesn’t care.

Sen. Coats was a bit frustrated. “The IRS continues to process tax returns with false W-2 information and issues refunds as if they were routine tax returns, saying, ‘That’s not really our job,’” he said.

Although the Social Security Administration notifies the IRS when a name does not match a Social Security number, these notifications are ignored. IRS employees are not allowed to tell the real holder of the Social Security number that someone is using their identity, and nobody alerts employers that they have submitted false W-2 information.

Last year, the IRS identified 200,000 new cases of employment-related identity theft.

Koskinen winked at the problem. Sometimes Social Security numbers are “borrowed from friends or acquaintances,” he said, “and people know they’ve been used. Other times they don’t.”

The priority for the IRS, Koskinen told the committee, is “collecting those taxes.”

That’s very misleading.

Millions of low-income people in America don’t owe any income taxes and pay little or nothing to the U.S. Treasury during the year, yet they still receive thousands of dollars in a “tax refund.”

That’s because over the last 40 years, Congress created a financial assistance program which is run through the Internal Revenue Service. For those who qualify, the Earned Income Tax Credit can be worth over $6,000, the child tax credit is worth $1,000 per child, and education credits are worth thousands more. These credits are fully or partially “refundable.”

Most people assume that everyone who receives a tax refund is simply getting back the money they overpaid during the year. Not so.

“Refundable” tax credits are paid out in a tax refund, even if no taxes at all were paid in. The money comes from the U.S. Treasury; in other words, from other taxpayers.

These annual “tax refunds” are routinely worth thousands of dollars, which is why you see storefront tax preparers pop up in low-income neighborhoods every January, why retailers like Walmart offer to cash tax refund checks for customers who don’t have bank accounts, and why there’s so much fraud — over $15 billion in fraudulent refunds for 2014 alone.

However, it’s perfectly legal for undocumented workers to claim the child tax credit and the education credit and to receive a taxpayer-subsidized tax refund.

The government knows who’s working illegally, because the IRS gives undocumented workers an Individual Taxpayer Identification Number, or ITIN, that can be used to file a tax return. An ITIN can’t be used to get a job, because employers aren’t supposed to hire unauthorized workers. Hence, stolen Social Security numbers on the W-2s of people who file their tax returns with ITINs.

The IRS, which will happily send you a threatening letter if you fail to report 12 cents in interest income, has no interest at all in enforcing the laws against working in the United States without legal authorization.

They just process the returns and send out the refunds.

They know they are sending money to people who filed false W-2 forms with somebody else’s Social Security number.

And now, so do you.

Power to investigate the government mustn’t be erased

congressHere are two important questions which are often obscured by the noise and spatter from the blood sport of electoral politics.

Does honest government matter?

Can anything be done to prevent dishonest government or clean it up?

The answer to the first question is yes, it matters. Voters make choices based on the information they have. A government that makes dishonest statements cannot claim to have the consent of the governed. Instead, it’s governing by force and fraud.

The answer to the second question is yes, unless the government is dishonest.

The tools for preventing and cleaning up dishonest government include laws like the Inspector General Act of 1978, which created internal watchdog offices in government agencies, Justice Department prosecutions and congressional oversight.

It’s easy to dismiss congressional investigations as politically motivated, but the Constitution gives Congress broad authority to conduct oversight, per the language of Article II, Section 4: “The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.” The House of Representatives “shall have the sole Power of Impeachment,” and “the Senate shall have the sole Power to try all Impeachments.”

A necessary part of the power to impeach is the power to investigate.

The House has just initiated impeachment proceedings against IRS Commissioner John Koskinen. He’s accused of failing to respond to a lawful subpoena for documents, obstructing a congressional investigation, giving false and misleading statements under oath, and failing to competently oversee an investigation into “Internal Revenue Service targeting of Americans based on their political affiliation.”

Because the definition of “high crimes and misdemeanors” is left to our elected representatives, impeachment is completely different from criminal charges, which the Justice Department declined to bring against anyone in the case of the alleged IRS targeting of conservative groups seeking tax-exempt status.

“Our investigation uncovered substantial evidence of mismanagement, poor judgment and institutional inertia,’’ Assistant Attorney General Peter Kadzik said in a letter to Congress. “But poor management is not a crime. We found no evidence that that any IRS official acted based on political, discriminatory, corrupt or other inappropriate motives that would support a criminal prosecution.’’

They may have found no evidence because 422 back-up tapes containing the e-mail correspondence of IRS official Lois Lerner were degaussed (magnetically erased) by IRS employees. The Treasury Department’s inspector general said the destruction of the tapes happened “on or around March 4, 2014, one month after the IRS realized they were missing emails from Lois Lerner, and approximately eight months after the House Committee on Oversight and Government Reform requested ‘all documents and communications sent by, received by or copied to Lois Lerner.’”

Was it a misunderstanding or a successful cover-up?

Consider this: Last year, 47 inspectors general signed a letter protesting that three agencies, including the Justice Department, were obstructing investigations of alleged wrongdoing. Then in July, the Justice Department issued a new policy that blocks IGs from gaining access to certain kinds of evidence, including grand jury and wiretap information, unless they first obtain the permission of the head of the agency they’re investigating.

Nixon was run out of town for less.

If an administration won’t investigate itself, there’s no tool in the toolbox except congressional oversight and, if necessary, impeachment.

The only other check on dishonest government is the ballot box. But first, voters would have to believe that honest government matters.

California’s Government Unions Collect $1 Billion Per Year

PileOfMoney“If you say there is an elephant in the room, you mean that there is an obvious problem or difficult situation that people do not want to talk about.”

–  Cambridge Dictionaries Online

If you study California’s Legislature, it doesn’t take long to learn there’s an elephant in both chambers, bigger and badder than every other beast. And considering the immense size of that elephant, and the power it wields, it doesn’t get talked about much.

Because that gigantic elephant is public employee unions, and politicians willing to confront them, categorically, in every facet of their monstrous power and reach, are almost nonexistent.

Government reformers and transparency advocates are fond of attacking “money in politics.” They attack “soft money” and “dark money.” Most of the time, these reformers are on the so-called political left, concerned that “rich billionaires” and “out-of-state corporations” have too much political influence. They are misguided and manipulated in this sentiment. Because billionaires contribute to both major political parties (and both political wings) roughly equally, and the largest corporations – in state and out of state – play ball with the government unions because, as monopolies or aspiring monopolies, large corporations and government unions have an identity of interests that far outweighs any motive for conflict. At the state and local level in California, there is no amount of money, anywhere, that comes close to the sums that are deployed by government unions to control our government.

Thanks to a lack of transparency so thick that public corporations, and even private sector unions, are required to submit far more publicly available reports on their operations than public sector unions, it is almost impossible to estimate how many government union members there are in California. From the U.S. Census we know that California’s “full-time equivalent” state workforce numbers 397,348, for local governments, 1,313,344, meaning there are – on a full time basis – about 1.7 million state and local workers in California. But how many of them pay dues? And what is their total statewide revenue?

If you turn to the 990 forms that government unions file with the IRS, you’ll note that the California Teachers Association’s 990 reported “dues revenue” of $172.3 million in 2012. You’ll also know they were sitting on $100 million in cash and securities, net of all long and short term liabilities and not including their fixed assets and real estate. But that’s just the financials for the CTA’s state office. If you search for “California Teachers Association” on Guidestar, here’s the message you get on the results screen: “Your search for California Teachers Association produced 1,083 results.”

As we noted in a 2012 CPC study entitled “Understanding the Financial Disclosure Requirements of Public Sector Unions:”

Most of the statewide unions, such as the CTA, the CSEA, the CFT and the CPF, collect revenue from members through their local affiliates, which themselves retain most of the money for local collective bargaining and political expenditures. There are over 1,300 CTA local affiliates, 20 (public sector) SEIU local affiliates, 42 AFSME local affiliates, 45 AFT local affiliates, several hundred CSEA (School Employees) local affiliates, and hundreds of CPF (Firefighter) local affiliates. Then there are federations of various unions, such as the California State Employees Association and the Peace Officers Research Association of California, which also collect revenue from members through local affiliates.

There are over 6,000 local government union organizations in California, each of them an independent financial entity, each of them merely required to file a minimal 990 form that barely, and with a maddening lack of clarity, discloses financial transfers between entities. Against this opacity, there is no precise way to learn just how much money California’s public sector unions collect every year, no way to determine how many members they’ve got, no way to determine their annual dues assessments.

An article published nearly five years ago on UnionWatch, “Public Sector Unions and Political Spending,” estimates the total annual dues revenue of California’s public sector unions at $1 billion per year. While the number of state and local government workers has actually declined slightly since 2010, the percentage of unionized state and local government workers has increased, as has their average pay upon which dues are calculated. That estimate, $1 billion per year, is probably still accurate.

Behind closed doors and off the record, Democrats resent government union power with increasing intensity. But apart from an isolated whisper here, a passing utterance there, they are silent. Just like their Republican colleagues who grasp for their own pathetically minute share of government union contributions, they fear the wrath of the elephant in the room at the same time as they keep taking the money.

*   *   *

Ed Ring is the executive director of the California Policy Center.

CARTOON: Tax Freedom Day!

Tax Freedom Day

Eric Allie,

Humor and History on Day Tax

“April is the month when the green returns to the lawn, the trees — and the Internal Revenue Service.” So observed Evan Esar, a collector of humorous sayings who understood that humor is the ultimate therapy. All of us need this therapy now that tax time is here.

Fortunately, a rich vein of humor and wry observations exist about taxes to help us through this time.

When tax day comes, most citizens pay what they owe … or what they think they owe. Discovering what you owe can be a challenge. Even one of the century’s greatest geniuses, Albert Einstein said, “The hardest thing in the world to understand is the income tax.”

Humorist Will Rogers put it this way: “The income tax has made more liars out of the American people than golf has. Even when you make a tax form out on the level, you don’t know when it’s through if you are a crook or a martyr.”

Indeed, taxes and golf are comparable. You drive your heart out for the green, and then end up in the hole.

The first income tax in this country was levied during Abraham Lincoln’s administration. Money was needed to fund the Union war effort. That income tax was repealed in 1872, seven years after the war ended.

Later attempts to bring back an income tax were thwarted by the United States Supreme Court, which declared the tax unconstitutional because it represented direct taxation on the citizenry. During the Civil War the Court had ignored this concern.

A constitutional amendment was necessary to establish an income tax. In arguing for such an amendment, proponents asserted that the income tax would only tax the rich. (Sound familiar with some of the tax increase strategies here in California?)

Rep. James Monroe Miller of Kansas said, “I stand here as a representative of the Republican Party of the central west to pledge you my word that the great western states will be found voting with you for an income tax. Why? Because they will not pay it!”

It was generally believed that residents of perhaps six wealthy industrial states in the Northeast would pay nearly all of the new income tax.

Well, you can’t fool all of the people all of the time. Editors of The Nation magazine warned at the time: “It is possible for a government to increase repeatedly the rates of such a tax.”

Or as Will Rogers put it: “Noah must have taken into the Ark two taxes, one male and one female. And did they multiply bountifully! Next to guinea pigs, taxes must have been the most prolific animals.”

In 1913 the 16th Amendment was passed, which allowed Congress authority to directly tax a citizen’s income.

The first year under the income tax, 357,598 Form 1040s were filed. Yes, the form carried that famous number even then. (Jay Leno explains Form 1040: For every $50 you earn, you get $10 and they get $40!)

The tax rate was one percent on incomes above $3,000 and rose to seven percent on incomes above half a million. This first income tax affected only one percent of the population.

Before the 16th Amendment, tariffs and excise taxes provided 90 percent of the federal revenue.

By 1920, the income tax was the dominant revenue raiser for the federal government. Middle income taxpayers were hit by the income tax to help fund World War I. Top tax rates eventually climbed to 91 percent before President John F. Kennedy proposed cutting them.

Taxes increase and government expands in times of crisis. Great growth in government and taxes occurred when this country began, during the Great Depression and when at war, particularly, the Civil War, World War I and World War II. American Patriot Thomas Paine saw this clearly at the nation’s founding. “War involves … unforeseen and unsupposed circumstances … but one thing certain, and that is to increase taxes.”

As a people, we have always been wary of taxes. U.S. Supreme Court Chief Justice John Marshall is often quoted from his groundbreaking decision in McCulloch v Maryland (1819): “The power to tax involves the power to destroy.”

However, 109 years later another Supreme Court Justice, Oliver Wendall Holmes, wrote: “The power to tax is not the power to destroy while this Court sits.”

On the façade of the mammoth IRS building in Washington, D. C., other renowned words of Justice Holmes are chipped in stone: Taxes are what we pay for a civilized society.

It should be noted, however, that Holmes made his famous remark in 1904 before the income tax was sanctioned. Taxes at that time took about seven percent of average incomes.

But even in Holmes’ day there were complaints about taxes. Two years before Holmes issued his famous saying, Mark Twain wrote in his notebook, “What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin.”

Of course, we need money to run the government. The argument is over how much and how it is spent.

Will Rogers recognized the problem in his inimitable way. “Of course we know our government is costing us more than its worth, but do you know of any cheaper government that’s running around? … You can try Russia! There’s no income tax in Russia, but there’s no income.”

Still, today the IRS has hundreds of different tax forms, plus pages of additional information to explain how to fill out those forms. The original Tax Code had 11,400 words; today it has over 7 million.

Despite the complexity, taxes are not avoidable and woe to him or her who tries evasion. Al Capone got away with vice, and he got away with murder, but he didn’t get away with not paying his taxes.

So we have to pay our taxes.

For most of us, however, tax time has us simply agreeing with Mark Twain’s admonishment, “[I] shall never use profanity except in discussing (house rent) and taxes.”

Originally published by Fox and Hounds Daily

Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee