Coincidence? Two Ex-FBI Leaders Selected for Intense IRS Audit

IRS auditFrom outward appearances, it could appear that the Internal Revenue Service (IRS) weaponized its compliance search audit to harass two civil servants who fell out of favor with the former administration.


The Taxpayer Compliance Measurement Program (TCMP) is now known as the National Research Program (NRP). The NRP is a type of tax audit that is performed for reasons other than concern for tax fraud or a related tax crime. Instead, NRP audits are used to develop compliance data used to assess the tax gap—the difference between taxes paid and taxes that should be paid on an annual basis. 


According to the IRS, random selection identifies those chosen for an NRP audit each year. That random choice is combined with an algorithm to identify taxpayers with certain features, such as those above or below a particular income level, and possibly other characteristics. The opacity of that algorithm and the coincidental selection of two former officials of the Trump administration is now the subject of an investigation by the U.S. Treasury Inspector General for Tax Administration (TIGTA).


What is the issue with NRP audits?

IRS civil and criminal tax audits are commonplace—not so with NRP audits. Only a few thousand NRP audits are conducted each year, compared to approximately 160 million individual returns that could be filed. Because of the length and depth of NRP audits they are called “audits from hell,” or “an autopsy without the benefit of death.” An NRP audit is a line-by-line review of a tax return, requiring evidence to support the entry made for each item. The audits can last over a year and require extensive engagement with the IRS and usually the use of a private accountant or tax attorney to work with the IRS. 


Despite the rare and random nature of these audits, both James Comey, the former FBI director dismissed by Donald Trump, and Andrew McCabe, former deputy to Mr. Comey and later Acting FBI Director (who was also fired by Donald Trump), were selected for these intense audits. Mr. Comey and his wife were targeted in 2019 while Mr. McCabe and his wife were contacted in 2021 by the IRS. 


John Koskinen, a former IRS commissioner between 2013 and 2017 said, “Lightning strikes, and that’s unusual, and that’s what it’s like being picked for one of these audits. The question is: Does lightning then strike again in the same area?  …You don’t need to be an anti-Trumper to look at this and think it’s suspicious.” The current IRS commissioner, Charles Rettig, a Trump appointee, declined comment and interview on the matter. Facing quick and intense pressure on the topic, on the day following a New York Times expose on the matter, Mr. Rettig requested the review by TIGTA.


The audit of Mr. Comey and his wife stretched over a year and determined the couple had overpaid their federal income taxes in 2017. As a result, they received a $347 refund. In the audit now believed to be completed, Mr. McCabe and his wife were found to owe a small sum of money which was paid. 


Did the secret IRS algorithm set aside its purported “random” nature to select two men who worked together and whom both earned the anger of a president who loudly and publicly called their finances into question while he was in office? Or is it a coincidence that algorithms and hazy IRS research objectives just happened to point the finger at Mr. Comey and Mr. McCabe? The TIGTA investigation might answer the question or it might not. Most disturbing is that these questions are being asked at all. 


Strong legal representation if you are facing a civil or criminal tax audit or tax controversy

If you receive an IRS audit letter or are challenged by a tax litigation in Cleveland, Chicago, or elsewhere, the tax attorneys at Robert J. Fedor, Esq., LLC can help. We deliver seasoned, strategic criminal tax defense. Call us at 800-579-0997 or contact us online.


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