Daily Tax Update - June 6, 2013: IRS Officials Apologize for Excessive Spending at Conferences

IRS Officials Apologize for Excessive Spending at Conferences:  Today, in testimony before the House Oversight and Government Reform Committee, senior IRS officials apologized and said that the IRS is working to address the issues and “move forward with a stronger and more effective IRS.”

IRS Small Business/Self-Employed Division Commissioner Faris Fink apologized for the videos made for the conference and said that “they are embarrassing and I regret the fact that they were made."  Fink added, “But we're now in a very different environment."  Fink said, "In hindsight, many of the expenses that were incurred in this 2010 conference should have been more closely scrutinized or not incurred at all, and were not the best use of taxpayer dollars.  Given the new procedures and restrictions on spending, we would not hold this same type of meeting today."

Acting IRS Commissioner Daniel Werfel testified, “While it continues to be agency practice to periodically conduct training meetings on a national scale, the IRS has dramatically cut the number of meetings involving travel since 2010.  Sweeping new spending restrictions have been put in place at the IRS, travel and training expenses have dropped more than 80 percent since 2010, and similar large-scale meetings did not take place in 2011, 2012 or 2013.  Under the leadership of the Secretary and Deputy Secretary of the Treasury, the IRS has taken bold steps to ensure travel and conference spending is appropriate, limited, and undergoes a thorough review and approval process.  In addition to the focus of Treasury and IRS leadership on this issue, cutting down on excessive and inappropriate travel has been a personal priority for me.  In my previous position as Federal Controller at the Office of Management and Budget (OMB), I led the development and issuance of multiple government-wide policy directives requiring Federal agencies to reduce their total amount of spending on administrative expenses, including travel and conferences, as well as putting in place strict policies for the review, approval, and public reporting of conference expenditures.  As the Acting IRS Commissioner, I will do everything possible to ensure that tight spending protocols are in place at the agency to protect the use of taxpayer dollars.”

Testimony can be accessed here.

Rep, Brady: "We are Past" Tax Reform Discussion Drafts and Working Groups:  Today, House Ways and Means member Kevin Brady (R-TX) said that the Committee is finished with releasing discussion drafts and holding working group meetings on tax reform.  Brady said, “We are past that. We are moving.”  Brady also said that he does not think Chairman Camp has finalized a timeline for marking up a tax reform bill.

Senate Student Loan Bill With Revenue Raisers Fails to Advance:  A Senate bill (The Student Loan Affordability Act of 2013 - S. 953) to keep student loan rates low failed to secure the 60 votes needed to advance.  The bill contained $8.6 billion in revenue raisers.  The revenue raisers included tightening the limitation on the deductibility of interest paid by an expatriated entity to related persons.  In addition, the carryforward for disallowed interest would be limited to ten years, and the carryforward of excess limitation (that is, adjusted taxable income) would be eliminated.  The bill contained a provision requiring retirement savings accounts to be distributed within five years of the death of the account holder, unless the beneficiary is within 10 years of the account holder's age, an individual with special needs, a minor, or the account holder's spouse.  The provision also applies to qualified annuities and defined benefit pension benefits. The bill would have also clarified the Oil Spill Liability Trust Fund Tax.

Miscellaneous Guidance Released:
Revenue Ruling 2013-14 describes a typical fideicomiso or Mexican Land Trust (MLT) and concludes that the arrangement is not a trust within the meaning of § 301.7704-4(a).