IRS accused of illegal sting operation

By Chandra Lye | Aug 10, 2017

Citizens and business owners need to get promises in writing when it comes to working with the Internal Revenue Services (IRS), one tax attorney says.

The comments come after a group of businesses sued the IRS for not reimbursing them for the costs they faced being involved in a sting operation. The money was used as bait to try and catch those filing fraudulent tax returns. 

“I think it is unusual for the IRS to use a private business in a sting operation,” Betty Williams of Williams Law Associates told the Northern California Record in an email. “If the plaintiffs are not made whole, this is simply a very sad story because they really had no choice based on the way the IRS claimed they would be impeding a tax investigation.”

The businesses were used by the IRS in a sting operation to catch citizens filing false tax returns, according to a court decision.

Part of the agreement was that the plaintiffs would be reimbursed for money they spent during the operation. However, they say they did not get repaid. 

“It sounds hard to believe that the IRS could get away with using the plaintiff’s money in this way. Hopefully, the plaintiffs will ultimately get an award for what the IRS’ actions,” Williams said.

She added it was a good warning to other businesses about getting involved with the organization:

“Maybe the advice to other would-be sting-partners with the IRS would be to get the promises in writing up front.”

In the original ruling, filed June 16, a panel changed a district court ruling on the case that had dismissed the case alleging immunity. The case was remanded for further proceedings. 

A rehearing has been granted in the case by the Ninth Circuit United States Court of Appeal.

There were also some changes made to the court decision including “millions of plaintiff’s dollars” changed to “plaintiff’s money” and the word “bankruptcy” was changed to out of business. 

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