When the Crooks Enforce the Law

David Kautter, IRS Commissioner

David Kautter, IRS Commissioner

The United States has a new Commissioner of the Internal Revenue Service. His name is David Kautter. When the international accounting firm Ernst & Young was running an illegal tax dodge scam, Kautter was one of the directors of Ernst & Young. When Ernst & Young tried to cover up its crimes, Kautter was still a director of Ernst & Young. Now he’s the director of the IRS.

A team of employees at Ernst & Young – code-named “Viper” –  developed and sold tax “products” that allowed wealthy individuals to avoid $2 billion in taxes from 1998-2005. The “products” were frauds, absolutely crooked schemes. That story ended with four people in jail and Ernst & Young paying the Internal Revenue Service $123 million to avoid prosecution. For the period 2000 – 2005, Kautter was the head of US national tax services at the Ernst & Young. He was the supervisor of the accountants who were hawking the tax frauds. He claims not to have known about the scam. By several reports, Viper was a highly profitable part of Ernst & Young’s U.S. tax service. It boggles belief that Kautter didn’t know.

Can you imagine what the IRS would do to you or WC if we were caught cheating on our taxes like this? The IRS publishes a long list of tax cheats it prosecutes each year. But if you help your clients avoid $2 billion in taxes, you get to be in charge of the IRS.

After teaching at American University 2011 – 2015, Kautter has worked as a lobbyist as the head of the Washington office of the accounting firm RSM LLP. So we can add the revolving door effect – lobbyist to bureaucrat to lobbyist – to the reasons to be deeply suspicious of David Kautter.

Remember, too, that President Trump claims his tax returns are being audited by the IRS; it’s his excuse for not producing his tax returns.

So now United States’ tax collection is in the hands of a man who supervised an illegal tax scam. What could possibly go wrong?