Tuesday, June 16, 2015

WASHINGTON - Sen. Chuck Grassley of Iowa and Sen. John Thune of South Dakota today introduced comprehensive legislation to improve customer service at the IRS, create new taxpayer protections, and update and strengthen existing taxpayer protections.  The Taxpayer Bill of Rights Enhancement Act of 2015 comes amid gross mismanagement and inappropriate actions by IRS employees that have shaken what little confidence taxpayers may have had in the agency.

"The IRS has never been anyone's favorite agency," Grassley said.  "But it shouldn't repel and mistreat the people it exists to serve.  The IRS' level of customer service might be at all-time low.  Taxpayers are at a disadvantage with an agency that has tremendous power over their money.  The IRS might talk about good customer service.  Too often, talk is all there is.  The IRS needs to walk the walk.  Congress needs to act.  This bill will help swing the pendulum away from agency self-preservation and back to taxpayer service."

"This bill is intended to enact a much-needed culture change at the IRS, an agency whose reputation and trustworthiness has severely deteriorated with the American people over the last several years," said Thune. "No American should have to fear that politics could play a role in their confidential tax information being disclosed to a third party?, that they will be targeted based on their political beliefs, or that the IRS would not properly retain its employees' emails. This bill takes an important step toward restoring this agency to one that the American people both expect and deserve."

The bill is necessary to ensure that appropriate safeguards are in place to protect taxpayer rights by preventing IRS abuses, Grassley and Thune said.  Among other provisions, the legislation:

•    Significantly increases civil damages and criminal penalties for the unauthorized disclosure or inspection of tax return information and significantly increases civil damages for improper IRS collection activities.

•    Imposes an affirmative duty on the commissioner of the IRS to ensure that IRS employees are familiar with and act in accordance with all taxpayer protections.

•    Updates the "10 deadly sins" established by the IRS Restructuring and Reform Act of 1998, those actions by IRS employees that require mandatory termination, to include official actions taken for political purposes.

•    Permits the Treasury Department to provide status updates, and in certain instances require status updates, regarding investigations into misconduct by IRS employees -- or in some circumstances third parties - to taxpayers who are the subject of the misconduct.

•    Puts the bite back into a provision, recently called a "toothless tiger" by Tax Notes, that permits taxpayers to bring a cause of action against the IRS for unauthorized collections actions.

•    Extends the declaratory judgment remedy currently available to 501(c)3 to other 501(c) groups, including 501(c)(4) social welfare organizations, in instances where the IRS fails to act on an application in a timely manner or makes a negative determination as to their tax-exempt status.

•    Prohibits IRS officers and employees from using personal email accounts to conduct official business.

•    Provides additional authority concerning the use of taxpayer information to the IRS for the purpose of locating taxpayers due a tax refund.

•    Requires tax-exempt organizations to file Form 990 electronically and mandates that the IRS make such information available in a timely manner.

•    Imposes new requirements on the IRS with respect to email retention consistent with the existing directive from the Office of Management and Budget and the National Archives.

Grassley is former chairman of the Finance Committee, with jurisdiction over the IRS.  Grassley championed the 1988, 1996 and 1998 taxpayer rights laws currently on the books.  Grassley and Thune serve together on the Finance Committee and are joining forces to make the right to quality service a high priority at the IRS.

The bill contains some provisions passed by the House of Representatives in April and additional provisions to address shortcomings that have come to light since the last taxpayer rights bill.

A section-by-section summary of the bill, S. 1578, is available here.  The bill text is available here.  Video of the news conference is available here.

Steps to Save Additional $420 Million

Cancel Funding for Legislative Earmarks

Freeze Non-Transportation Capital Projects

House Speaker Mike Madigan, Senate President John Cullerton and their caucuses two weeks ago finished passing a budget with a $4 billion hole.

Since that time, Speaker Madigan and President Cullerton have refused to pass real, compromise reforms that will grow the economy, pay down the debt and end the era of wasteful spending and broken budgets while implementing parliamentary maneuvers to keep the governor from acting on the budget bills.

In preparation for the possibility of having no budget on July 1, or a budget with a $4 billion hole, the Administration is initiating its second round of steps to responsibly manage the state's finances. However, the options available to the Administration remain limited because the Madigan-Cullerton budget includes no reforms.

"Governor Rauner has compromised repeatedly, but Speaker Madigan and the politicians he controls continue to block any real reform," Rauner spokesman Lance Trover said. "It's deeply troubling to see that Speaker Madigan remains committed to sacrificing the middle class in order to protect the political class."

More steps will be announced as they are finalized.

Statewide

Action Initiated 

·         Notify all State of Illinois vendors to prepare for the potential of a longer delay in receiving payments for goods and services provided to the State.

Effective July 1, 2015

·         Suspend capital projects, including construction at state facilities, schools and colleges.

·         Suspend all capital grants for legislators' earmarks and non-bonded or "pay as you go" capital projects.

·         This freeze does not include road and other Department of Transportation projects.

·         Significantly reduce use of outside legal counsel by eliminating and/or reducing legal contracts.

Department of Healthcare and Family Services

Action Initiated

·         Reinstate timely re-determinations of Medicaid eligibility.

·         Roll back rates for ambulance services and renal care services to SMART-Act levels.

·         Reduce managed care capitation rates.

·         Discontinue special Medicaid payments to some hospitals.

·         Increase eligibility threshold (Determination of Need Score) to a level more consistent with national eligibility levels.

·         Achieve cost savings using new procurement strategy for purchasing durable medical equipment.

Department of Natural Resources

Effective September 1, 2015

·         Suspend operations at the World Shooting Recreational Complex (WSRC) near Sparta.  The site will become closed to the public and not available for events.

o   All events scheduled through August 2015, including the Grand American, will not be impacted by this action.

Department of Agriculture

Effective July 1, 2015

·         Suspend funding to county fairs for premiums and fairground rehabilitation projects.

·         Suspend funding for agricultural extension and 4-H clubs for premiums at agricultural shows.

·         Suspend funding for premiums for Agricultural Education Fairs.

·         Suspend funding for the University of Illinois Cooperative Extension Service.

·         Suspend funding to the Soil and Water Conservation Districts.

Metropolitan Pier and Exposition Authority

Effective July 1, 2015

·         Suspend funding to Choose Chicago for tourism promotion.

Department of State Police

Effective July 1, 2015

·         Suspend FY16 initiative to purchase new forensic equipment.

Office of State Fire Marshal

Effective July 1, 2015

·         Suspend funding for the Chicago Fire Department training program.

·         Suspend reimbursements for fire department training to other local governments.

·         Suspend funding for small fire-fighting and ambulance equipment grants.

Criminal Justice Information Authority

Effective July 1, 2015

·         Suspend the following legislative earmarks:

o   YouthBuild grants;

o   Bullying Prevention grants;

o   Franklin County Methamphetamine Pilot Program; and

o   South Suburban Major Crimes Taskforce.

·         Suspend statewide funding for Operation CeaseFire.

·         Suspend funding for Motor Vehicle Theft Prevention grants. 

Department of Human Services

Effective July 1, 2015

• Suspend funding for Community Services for juvenile delinquency program serving youth and young adults administered by the Chicago Area Project.
• Suspend funding for Immigrant Integration Services.  Access to the Department's programs will continue through local offices.
• Suspend funding for Welcoming Centers. Access to the Department's programs will continue through local offices.
• Suspend funding for the Youth Employment legislative earmark.

Department of Public Health

Effective July 1, 2015

• Suspend funding for Brothers and Sisters United Against HIV.
• Suspend funding to the Tobacco Quitline.

Department of Commerce and Economic Opportunity

Effective July 1, 2015

• Reduce funding for state-funded job training programs and suspend funding to legislative earmarks for job training.  This does not impact the Department's federal job training funds.
• Suspend funding for all coal programs at the Department of Commerce and Economic Opportunity, including discontinuing subsidies to coal companies.
• Suspend funding for the Renewable Energy Program.  This does not impact the Energy Efficiency Portfolio Standards program.
• Suspend funding for the Energy Efficiency Program.

Department of Transportation

Effective July 1, 2015 

·         Reduce funding for Amtrak.

·         Suspend state add-on payment to PACE.

·         Suspend state subsidy for Regional Transportation Authority Reduced Fares grant.

Department of Revenue

Effective July 1, 2015

·         Reduce funding for the following housing programs administered by the Illinois Housing Development Authority:

o   Multifamily Finance Program;

o   Reduce Homebuyer Acquisition Rehabilitation Program; and

o   Reduce Homeowner Emergency Repair Program.

Department of Veteran's Affairs

Effective July 1, 2015

·         Delay opening of Chicago Veterans' Home.

WASHINGTON - Senate Judiciary Committee Chairman Chuck Grassley expressed support for a proposal to clamp down on money laundering and tighten rules designed to prevent terrorists and other criminals from exploiting America's financial system.  Currently, financial institutions are required to verify the identities of customers, but not necessarily the identities of the individuals who control or benefit from a legal entity, such as a corporation, association or partnership.

"White Collar criminals, drug traffickers, and even terrorists can, at this very moment, exploit our financial system and shield their illicit activities behind these anonymous legal entity customers.  This [Notice of Proposed Rule Making] would close the loopholes and require banks to identify the natural person who is the beneficial owner of such an entity," Grassley said in a letter to the Financial Crime Enforcement Network.

The rule, proposed by the Financial Crimes Enforcement Network, clarifies and strengthens provisions under the Bank Secrecy Act's customer due diligence requirement by explicitly calling for financial institutions to identify and verify the beneficial owners of legal entity customers. The proposal also includes new requirements regarding the nature and purpose of customer relationships as well as ongoing monitoring of any suspicious transactions.

Grassley has long worked with colleagues in a bipartisan manner to increase transparency of corporate beneficiaries and strengthen laws designed to prevent money laundering and combat terrorist financing. A signed copy of Grassley's letter can be found here. Full text of the letter is available below.

June 8, 2015

VIA ELECTRONIC TRANSMISSION

Ms. Jennifer Shasky Calvery

Director

Financial Crimes Enforcement Network

U.S. Department of the Treasury

P.O. Box 39

Vienna, VA 22183

RE:      Docket No. FINCEN-2014-001; (RIN) 1506-AB25

Customer Due Diligence Requirements for Financial Institutions

Dear Director Shasky Calvery:

I write to express my support for FinCen's efforts to address gaps in the customer due diligence (CDD) requirement for financial institutions through the above referenced Notice of Proposed Rulemaking (NPRM).  I agree that banks should be required under the Bank Secrecy Act (BSA) to identify the beneficial owners of legal entity customers (i.e., corporations, partnerships, and limited liability companies) and this proposed rule would go a long way towards enhancing financial transparency and safeguarding our financial system against illicit use.

Current BSA regulations are helpful to enforcement efforts.  They ensure that banks know their customers and mandate the reporting of suspicious activity to law enforcement.  But certain gaps exist in the current regulatory framework.  In particular, it is unclear to me how banks and other financial institutions can ever truly "know" a legal entity customer if they cannot identify the natural person who ultimately controls it (or otherwise benefits from it).  White collar criminals, drug traffickers, and even terrorists can at this very moment exploit our financial system and shield their illicit activities behind these anonymous legal entity customers.  This NPRM would close the loophole and require banks to identify the natural person who is the beneficial owner of such an entity.

As you may be aware, I have been working with my Senate colleagues for a number of years - on both sides of the aisle - to develop legislation that would strengthen our anti-money laundering laws, combat terrorist financing, and mandate the disclosure of corporate beneficiary information to increase transparency and help our law enforcement and regulatory agencies protect our financial system.  But until these efforts bear fruit, FinCen's NPRM offers one of the most realistic and effective means of advancing these goals.

I would like to thank you for your efforts to ensure the integrity of our financial system.  Please direct any inquiries on this issue to Jeffrey Snyder of my committee staff at (202) 224-5225.

Sincerely,                    

Charles E. Grassley

Chairman

By Jason Alderman

Setting a few hours aside for a midyear financial checkup in June or July can help you review how you're doing with savings, investing, spending and debt. It can give you the opportunity to spot irregularities and adjust your budget well in advance of year-end.

If you already work with a qualified financial or tax advisor, consider discussing this review process with them so they can guide you to any specific money issues you should be tracking.

Start by requesting at least one of your three credit reports. The idea is to make sure your credit balances are accurate and to check closely for any irregularities that might signal identity theft. Federal law requires that each of the major credit agencies - Experian, Equifax and TransUnion - give you your most recent credit reports for free (https://www.annualcreditreport.com/index.action) once a year.

If you discover unusual charges or accounts you didn't open, alert your advisors, take any steps they recommend and otherwise follow the U.S. Federal Trade Commission's step-by-step identity theft guide (http://www.consumer.ftc.gov/features/feature-0014-identity-theft) to help you take action. Remember to stagger receipt of each of your credit reports throughout the year so you have the opportunity to catch potential irregularities every few months.

Next, turn to your budget or start one if you've never made one before. The midyear review should focus on whether adjustments can be made to save or invest more or pay off more debt if more money is coming in from a raise or other resources. If spending is up by midyear, it's always important to know why and whether funds can be reallocated to better purpose.

Review your retirement and whether you're maximizing your contributions at work or in your own personal retirement accounts. Those who reach age 50 by the end of the calendar year will be able to take advantage of additional catch-up contribution allowances to beef up their balances as they approach retirement.

Midyear is also a good time to check the adequacy of one's emergency fund (http://www.practicalmoneyskills.com/calculators/emergency). Emergency funds help keep you from tapping your credit or savings balances in a sudden cash emergency. The amount of money you keep in your emergency fund should fit your needs, but consider a balance of four to seven months of everyday expenses in case there's a short-term job loss or an emergency repair. Consider keeping a year-round list of potential home, car or personal expenses and decide whether your emergency fund is adequate or you might need to set up other savings accounts to address bigger needs.

Make sure your tax withholding levels are correct. This is particularly important if your income has changed during the first six months of the year and you might be closing in on a higher or lower tax bracket. Consult your tax advisor for assistance, and the IRS features its own withholding calculator (http://www.irs.gov/Individuals/IRS-Withholding-Calculator) to help you decide.

Finally, make sure all your recordkeeping is up to date. Midyear is a good time to look over all your spending, saving and investment records to make sure all the numbers add up and underlying paperwork is in order. Also consider online banking, investing and bill payment as a way to save more time and money.