IRS Tax Leak Investigation Grows

By:
Chris Gaetano
Published Date:
Jun 11, 2021
Leak

An investigation into the leak of IRS documents, which allowed ProPublica to report on the mechanisms by which the ultra-wealthy are able to pay little to no income tax, is now being joined by several federal agencies, Accounting Today reported. Speaking before Congress earlier in the week, Douglas O’Donnell, the IRS’s deputy commissioner for services and enforcement, said that the matter is currently under investigation by the Office of Inspector General, the FBI and the U.S. Attorney’s Office for the District of Columbia. FBI Director Christopher Wray, in a separate hearing, said that there have so far been no arrests made in connection with the incident.

The ProPublica piece found that, after using a wide variety of legally allowed tax avoidance measures, the 25 richest Americans had an average tax rate of about 3.4 percent over a five-year period, and some had a much lower rate, depending on the year, reaching 0 percent in many cases. A big part of the analysis has to do with the rules around unrealized gains, which allow billionaires to boast of a $1 salary while still maintaining a lavish lifestyle. It is common, according to ProPublica, for the ultra-wealthy to use unsold assets as collateral for loans, which apparently is where their actual spending money comes from. Since the assets' gains are unrealized, and because the loans don't count as income, this means that, despite being literally richer than Marcus Licinius Crassus at the height of his wealth and power, these billionaires technically would have little to no taxable income.

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