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Posts Tagged ‘Internal Revenue Service’
September 28th, 2012 at 1:37 pm
AARP’s Questionable Tax Reporting Merits New IRS Audit

My column this week explains how AARP, formerly known as the American Association of Retired People, exploited its relationship with liberal politicians to reap a $2.8 billion windfall from ObamaCare.  The massive payout comes from regulatory exemptions that help AARP increase its lucrative Medigap endorsement scheme.

But it’s not like President Barack Obama’s landmark health law ushered in a new era of revenues for the premier non-profit advocate for seniors.  With $458 million in revenues for 2011, AARP would rank as the sixth most profitable for-profit health care company, according to a report by staff members to Senator Jim DeMint (R-SC).

This puts AARP just behind Humana and ahead of industry giants like Coventry, Amerigroup and Health Net.

Best of all for AARP, because it designates much of its revenue as “royalty fees” instead of “commissions” for endorsing certain private Medicare plans it gets to avoid paying taxes on millions of dollars in income to the Internal Revenue Service.

An investigation (pdf) by House Ways and Means Committee members has asked the IRS to investigate whether AARP’s reporting practices violate federal law, and for good reason.

The investigators note that “In 1994 AARP paid the Internal Revenue Service (IRS) a one-time settlement payment of $135 million in lieu of taxes, resolving an audit over tax returns for years 1985 through 1993 for failure to fully pay unrelated business income tax (UBIT) on its commercial activities.”  And, “In 1999, the IRS and AARP once again reached a settlement to conclude tax years 1994 through 1998 with respect to the treatment of revenues AARP received from licensing and selling its name and logo to insurance companies.”

Sounds like AARP merits more scrutiny from the IRS.

March 10th, 2011 at 5:43 pm
“Collegegate”: Obama Education Department to Track Private, Individualilzed IRS Records?
Posted by Print

Remember when the Obama Administration proposed thousands of new Internal Revenue Service (IRS) agents to enforce ObamaCare’s mandate that American businesses file 1099 tax forms every single time they spent over $600 with any supplier?  The resulting uproar was loud and justified.

Unfortunately, reports suggest that Obama’s Department of Education (DOE) similarly seeks to snoop through private IRS records to enforce its destructive “Gainful Employment Rule” against for-profit career colleges.

We at CFIF have chronicled the Obama Administration’s ongoing effort to cripple for-profit colleges via that rule, which would limit financial aid to students attending career colleges based upon arbitrary income data.  Along the way, we reported allegations of collusion between DOE personnel and short-sellers who had wagered that for-profit college stocks would decline.  Those allegations were sufficiently grave to trigger investigation by Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina).  Then, the GovernmentAccountability Office (GAO) withdrew, then revised and republished a defective study originally released last summer involving undercover “students” sent to capture information on for-profit colleges.  The GAO’s revisions all slanted in one direction – the original report inaccurately cast career colleges in an unfavorable light, while the revisions indicate that the GAO’s undercover students may have intended to entrap career college admissions personnel.  According to the GAO’s own estimate, only 1 percent of reports require correction, and the statistical likelihood that all of its flaws skewed in the same direction (unfavorably toward for-profit colleges) was 1 in 65,536.  Tellingly, the stock value of for-profit colleges reportedly fell 14%, or $4.2 billion, following the GAO report.

Now, instead of simply using aggregated, readily-available Bureau of Labor Statistics (BLS) data to enforce their Gainful Employment Rule, the DOE seeks to access private, individualized IRS records.  Not only does this intrude upon individual citizens’ private information, it serves to deter Americans from exercising free will in choosing the colleges that best fits their needs.  Additionally, as noted by Cesar Conda in The Washington Times, the Obama DOE’s effort constitutes a new get-rich scheme for the trial lawyer lobby:

The Department of Education should admit that it is using the Internal Revenue Service to send a not-too-subtle message to prospective students:  Attend a for-profit college, and risk that your private financial data may be analyzed to ensure that all your financial transactions are accounted for and allowed.  Thus, the Department of Education, rather than putting the interest of students first, is forcing hardworking adults to go through yet another hurdle to pursue upward mobility.  In their war against individual freedom and personal choice, the nanny bureaucrats never rest; they also roll out the red carpet for the trial lawyers. Clearly, the actual impact of such tracking of student incomes by the IRS will create a new business opportunity for class-action law firms, which will use these new student financial statistics, assembled and provided the Department of Education, to justify billion-dollar litigation.”

So in addition to crippling private career colleges that it considers politically unfavorable, the Obama Administration apparently wants to pore through students’ confidential IRS individual data.  Congress must maintain its current effort to defund this Obama Administration abuse, and Americans must support that effort and maintain its resolve.