The IRS in Trouble over Tax Credits

Last updated on July 22, 2013

The IRS seems to have one controversy after another. After the Tea Party controversy, the IRS has now found itself in trouble over tax credits. The IRS passed $2 billion worth of tax credits that benefitted the paper industry.

According to a report by The Washington Post, William Henck, an IRS employee who was the legal advisor to a team reviewing a tax credit issue for one paper company said, “Most paper companies initially reported the payments as taxable income, but several companies took an aggressive position, and IRS examination agents were told to stand down and not challenge the position that refundable tax credits were not taxable income.” He said those instructions came from senior IRS officials.

“Once the other companies found out, they filed refund claims,” Henck added. “Once again, exam agents were told not to challenge the claims.”

It is believed the paper industry invested in lobbying to ensure the decision would sway their way. According to The Washington Post, International Paper spent $1.15 million in lobbying the IRS and other government departments on tax issues in 2010.

The IRS has not yet recovered from the Tea Party controversy, and now has to answer for clearing tax credits worth billions to the paper industry.  For the IRS, the storm rages on.