Bloomberg Tax
Free Newsletter Sign Up
Login
BROWSE
Bloomberg Tax
Welcome
Login
Advanced Search Go
Free Newsletter Sign Up

IRS Audits Sweeping up Ex-FBI Chiefs Not Improper, Watchdog Says

Dec. 1, 2022, 5:04 PM

A Treasury Department watchdog said in a report released Thursday it didn’t find misconduct during a review conducted in the wake of revelations of IRS audits of former FBI Director James Comey and former acting and deputy FBI Director Andrew McCabe.

The Treasury Inspector General for Tax Administration review came at the request of then-IRS Commissioner Chuck Rettig and members of Congress, following a July New York Times article that reported that Comey and McCabe had both been selected for intensive audits as part of the National Research Program, which does research on tax compliance. Comey and McCabe were both targets of former President Donald Trump’s ire during his time in office.

The focus of TIGTA’s audit was to assess whether the IRS randomly chose individual tax returns for National Research Program audits of 2017 and 2019 returns. Comey’s 2017 return and McCabe’s 2019 return were subject to audits under the program.

TIGTA said that initially, samples of more than 10,900 returns were selected for audits under the program for the 2017 and 2019 tax years, and the watchdog found that the IRS randomly selected these returns. TIGTA said that the computer programs used to select the audits “did not include malicious code that would force the selection of specific taxpayers for an NRP audit.”

TIGTA posed questions to Rettig, a Trump appointee, as part of its review. Rettig told the inspector general that he never discussed National Research Program audits with the Trump or Biden administrations, was not involved in selecting samples for audits and did not direct anyone at the IRS to include specific taxpayers in samples. An IRS deputy commissioner also told TIGTA that Rettig never tried to influence the selection of taxpayers for audit, according to the report.

Because of resource constraints, the IRS reduced the original samples for both years to subsamples of 4,000 returns, and IRS officials didn’t document new “seed numbers” used to select the subsample before starting, TIGTA said.

“Because the seed numbers were not selected independently and documented prior to initiating subsampling, there is a risk that the seed numbers used could have ensured that specific taxpayers from the original sample remained in the subsamples,” TIGTA wrote. “Although we did not identify misconduct during our review, TIGTA is taking additional steps to assess the process used to select the seed numbers.”

House Ways and Means Committee Chair Richard Neal (D-Mass.) said in a statement that the TIGTA report “alleviates some concerns.” Neal noted that last month he asked TIGTA for “a deeper probe into the former president’s use of the IRS against his political enemies and hope to have more from TIGTA soon.”

To contact the reporter on this story: Naomi Jagoda at njagoda@bloombergindustry.com

To contact the editors responsible for this story: Meg Shreve at mshreve@bloombergindustry.com; Kim Dixon at kdixon@bloombergindustry.com