I get it, we're all supposed to hate the IRS, but this is a really terrible article about some scumbag lawyers trying to get a quick settlement. This is just an new play on medical malpractice trolling.. And if there's anyone I trust to give me the scoop on the IRS, it's Wesley Snipes' tax lawyer!
From the filing:
A lurid but vague class action accuses corrupt and abusive IRS agents of
stealing 10 million people's medical records without a warrant - including
"intimate medical records of every state judge in California."
Sounds juicy..
After being put on notice of the illicit seizure, the IRS agents refused
to return the records, continued to keep the records for the prying eyes of
IRS peeping toms, and keep the records to this very day.
Peeping Toms? Getting pretty serious..
Adding insult to injury, after unlawfully seizing the records and searching
their intimate parts, defendants decided to use John Doe Company's media
system to watch basketball, ordering pizza and Coca-Cola, to take in part of
the NCAA tournament, illustrating their complete disregard of the court's
order and the Plaintiffs' Fourth Amendment rights.
The IRS agents had the audacity to order lunch and watch TV? How salacious.. So how did they end up stealing so many confidential records?
"Despite knowing that these medical records were not within the scope of
the warrant, defendants threatened to 'rip' the servers containing the medical
data out of the building if IT personnel would not voluntarily hand them over,"
according to the lawsuit. "Moreover, even though defendants knew that the
records they were seizing were not included within the scope of the search warrant,
the defendants nonetheless searched and seized the records without making any
attempt to segregate the files from those that could possibly be related to
the search warrant."
So they executed a search warrant, seized a server related to the financial crime they were investigating, and that server happened to have some confidential medical records too? And this is worth $250 billion in compensatory and punitive damages?
You seek to minimize the illegal conduct of the agents involved in this case, but this is actually very serious. I certainly don't want the IRS having access to my medical records, and in fact HIPAA was designed for exactly this type of thing. What if the IRS decides to keep this information and use it to spawn other investigations? Who is going to stop them once they have the records? If the law allows for $25,000 per person, and they were informed that they were violating the law and did this anyway, then so be it.
They likely won't wind up with anywhere near $250 billion, but someone needs to keep these IRS animals in check. I'd like to see a multi-million dollar judgment, paid personally by the IRS agents involved over the next several decades, while they are forced to work construction. Then I'd like to see pictures of them working in the hot sun to pay this debt published in the IRS employee newsletter as a warning to other power-tripping, pizza-eating, Coke-swilling agents that practice their profession with wanton disregard for the very laws they are supposed to be enforcing. This kind of thing is not OK.
You seek to minimize the illegal conduct of the agents involved in
this case, but this is actually very serious.
You do realize that this is a civil case right?
I'm not even convinced what they did was illegal. Unless you know otherwise, the story reads that the IRS had a subpoena for some electronic files on a John Doe suspected of fraud. They took a 'server' which was likely a file server that contained said files. It appears that the file server also had patient data. How devious of them.
What were they supposed to do? I'm sure John Doe didn't type up a 'master-fraud-plan.doc' and leave it on the desktop.
And in fact HIPAA was designed for exactly this type of thing.
No it wasn't.
What if the IRS decides to keep this information and use it
to spawn other investigations?
The cases would be thrown out almost immediately?
Who is going to stop them once they have the records?
Somewhat ironically, the 4th amendment?
If the law allows for $25,000 per person, and they were informed that
they were violating the law and did this anyway, then so be it.
The law makes no such allowance. Again, this is a civil case. That is how much damage Wesley Snipes' tax attorney thinks was done to the 10 million people that had never heard of this before.
Speaking of the 10 million people, any provider which loses patient information for more than 500 people must file a notice of breach, which is then public information. Looking at 2011 breach notifications, the largest California breach was only 1.9 million people, and was related to IBM losing some drives.[1] It would be outstanding if this dirtbag convinced some judge that a breach actually occurred, which would be enough evidence for the HHS to levy a massive fine against them for failing to report.
Yes. They committed an illegal act; now they are being sued over it.
[Hipaa was't designed for this]
HIPAA was designed to protect medical records from falling into unauthorized hands and/or being misused or mishandled. So yes, this is a HIPAA violation, probably of unprecedented size and scope.
[If the government used this information for other cases] The cases would be thrown out almost immediately
The government routinely intercepts information that it can't use in court because of the way it was obtained. They use it as a starting point. If someone has told their psychiatrist that they were embezzling funds, for example, and this was in their records, they could use that information to know where to begin looking and prosecute a crime that they would not have otherwise known about.
Yes. They committed an illegal act; now they are being sued over it.
They're being sued in civil court because this would be laughed out of criminal court.
So yes, this is a HIPAA violation, probably of unprecedented size and scope.
You don't have any idea whether or not this is a HIPAA violation, so stop pretending like you do.
1. The law makes clear exceptions for information gathered during the course of an investigation.
2. Health information is supposed to be encrypted in transit or at rest, so if the company was in compliance, there's a distinct possibility that the data isn't even accessible.
The government routinely intercepts information that it can't use
in court because of the way it was obtained. They use it as a starting
point. If someone has told their psychiatrist that they were embezzling
funds, for example, and this was in their records, they could use that
information to know where to begin looking and prosecute a crime that
they would not have otherwise known about.
Citation?
I'll leave it to the courts to determine the outcome, but I predict this is the last we hear of this.
If they knowingly took HIPAA-protected records, and the taking of those records was outside the scope of the search warrant, they violated HIPAA. You can spew your pro-government nonsense all you want, but that simple fact cannot be changed.
They where authorized to have access to that machine and the data on it. HIPAA is just one law amoung many and you can't assume it automatically overrides everything else just because you are emotionally atached to the idea.
> And this is worth $250 billion in compensatory and punitive damages?
If you ever heard about RIAA cases where defendants were punished $250,000 per downloaded song, or $450,000,000 in total "damages", something like this should not surprise you.
The RIAA has an actual law (however absurd that law may be) on their side to award damages.[1] HIPAA has no such law, they can fine health companies for failing to maintain privacy standards, but there is no right to individual tort.
It's worth noting that the largest HIPAA fine to date was $3mm -- .001% of the sought-after amount.
I don't see why this is such a big deal. Under the new healthcare laws, the IRS is going to be managing a vast majority of American healthcare records anyway. I think these agents were just being proactive!
Remember it's "theft" until you get someone to pass a law requiring people to voluntarily give you what you want.
the IRS is going to be managing a vast majority of American healthcare records anyway
For those interested, I found more info in the following links. Though, it still does not appear that the IRS would be privy to the exact details of medical care.
The only health-related records that the IRS will have under the ACA are information about what kind of a health insurance plan the taxpayer has. Under the law, people will be required to have a qualifying health insurance policy or pay a penalty to the government.
Am I reading this article correctly, that the IRS didn't sieze medical records but rather a collection of records that included a small number of financial records they needed and then a large number of medical records they didn't care about?
As I read it, they were looking for one guy's financial records, ended up taking millions of health records -- even after repeated warnings they were screwing up.
"...According to the case, the IRS agents had a search warrant for financial data pertaining to a former employee of the John Doe company..."
What makes you think they didn't care about the medical records? Because they weren't listed in the search warrant?
I wonder who gained access to this data after it was seized?
What political party hack would not want access to "psychological counseling, gynecological counseling, sexual/drug treatment and other medical treatment data" of current or future political figures?
Right: If my tax-deductible Health Savings Account money is actually going to get me "stress-related therapy" in the form of a hand job, the IRS wants to know.
And probably more than they usually want to know about these things.
The IRS is an unwieldy animal (I hesitate to say "brute"; YMMV) that will only get unwieldier as the tax code gets more and more bloated. The average IRS agent is, let's face it, not a genius, and even a genius would probably get lost in that code nowadays. I got married last year and was astounded that the joint tax return with my wife this year ran to 50 pages and cost me $1,500 in accounting fees to prepare.
I dream of the day when a simpler system like a national sales tax could replace the whole thing.
Sales tax penalizes those living hand to mouth more than is probably advisable. I don't mind progressive taxation, but I would love to see them stop trying to do social engineering with the tax code and just charge a fixed rate based on income, period.
sales tax is usually coupled with a reverse income tax (cash grant to the poor that decreases to 0 as your income increases) to offset exactly the problem you mention.
I got married last year, and my tax situation was moderately complicated (the two of us lived in and earned income in three different states, we had a baby and various student loan/tuition-related deductions), and our joint tax return involved $120 in TurboTax fees and about 2 hours on a website.
On the counter, there's nothing fair about stealing someone's property either. If a person works for 40 years, pays off their mortgage, and has little money in old age, the idea of the government stealing their property due to failure to pay property taxes is extraordinarily vicious. I assume you'd back an exclusion for the primary residence (one home per person, or at least an income requirement).
It's based on the reality that people tend to buy houses based on the monthly payments they can afford, and property tax influences that reality. The old person living in a house may be paying the same amount of money in property tax:
It puts a general price pressure on decreasing housing prices. I would also put a much higher property tax rate on long term unoccupied property to increase rental supply to further decrease property values. California with it's relatively low property tax schemes favoring older people pays for it in overpriced property prices.
> I assume you'd back an exclusion for the primary residence (one home per person, or at least an income requirement).
No need for that. If the only taxes were on real estate, that would free up a vast amount of capital that the elderly are currently paying in taxes on their IRA withdrawals. Even if their current property taxes were tripled, they'd likely end up with a net gain (or at least no net loss) due to the eliminated income taxes.
Hell, for $25,000 I'd let anyone take a look at my medical records!
On a serious note, it's been a bad week for the IRS, but that agency is seriously struggling right now with a slashed budget and increased responsibilities. As David Cay Johnston, puts it "The IRS is drowning." http://www.cjr.org/united_states_project/the_other_irs_scand...
I am struggling to find budget statistics that go back to earlier than 2010, but since that time the budget has been flat at $11.8 billion (1.5 billion less than Obama requested), and thanks to the sequester they are experiencing a $600 million cut this year. At the same time, they have been required to take on new duties and are struggling to maintain the employment they need. Read more: http://www.reuters.com/article/2013/04/25/us-usa-tax-irs-hea... and http://www.irs.gov/pub/newsroom/budget-in-brief-fy2013.pdf
What's absurd is that estimates of ROI on IRS funding range from 7:1 to 10:1. So it's really not about the budget. I'll leave it as an exercise for the reader to speculate on what's really behind the underfunding of the IRS.
As with many large and powerful organizations, it is not the top that is always the problem but the mid level players who wield their power either incorrectly or criminally.
IRS agents are given tremendous power. When they abuse it, they should face harsher penalties than those not so empowered.
Last night I heard on NPR the story of a New Zealand expatriate that did not file US taxes for several years as is required by every US citizen no matter where they live or how long they've lived outside the US. He voluntarily notified the IRS of his oversight and paid the $20,000 in back taxes. The IRS then told him his penalty exceeded $140,000.
> given tremendous power. When they abuse it, they should face harsher penalties than those not so empowered.
I think this is a concept that should be applied with a broad stroke across society. When someone who is empowered by the people (afforded special privileges or abilities by a government that is democratically elected) commits a crime, that crime is inherently twofold. Liability needs to increase in proportion to the amount of power that has been granted.
> The IRS then told him his penalty exceeded $140,000.
His penalty did exceed $140,000 though, they didn't make this up to punish him. That's what happens when you just ignore federal laws.
After meeting with the IRS, the penalty was reduced to $25k.[1] A New Zealand savings account would have averaged ~4%/year over that time period, so subtracting the gains from his owed $20k leaves about $20k in penalties.
What's an appropriate amount to discourage tax cheats? They're called penalties for a reason... are we just supposed to trust everyone who, when caught, claim they 'didn't know' about the law?
Van Horn contacted the IRS's Taxpayer Advocate Service, which agreed to
work on his case. After a series of offers and counter-offers, he says,
the result was a single "non-willful" FBAR penalty of $5,000 per year,
or $25,000 total.
Snark aside, there's a huge difference tax negligence and tax fraud.
Not filing taxes for 5 years is fraud.
Filing and paying taxes while working for the IMF -- but not realizing you should've been paying the 'employer' half of payroll taxes as well -- is negligence.
The USA is the only country that requires tax returns & payments of expats that make no income from their home country and no longer live there. I'm not surprised many 'normal' people are very unaware of these facts when they move away from the USA.
On top of that you have huge accountant costs to file these complicated penalty prone returns even if you end up not owing any taxes year over year.
It's still 'negligence', your IMF example is just in part instead of in full.
I can sympathize with Geithner about his errors, but his situation seems much more obvious than the notion that you'd have to pay US taxes even if you're living and working outside the US. I bet most people would not even think that it was something that needed to be done, and I doubt the IRS sends you friendly reminders about it.
Perhaps my snark should've more explicitly called out Charlie Rangel. Nothing like misreporting your income while also being chairman of the Ways & Means Committee.
But really, all of the examples just underscore how insane the tax code has become.
Rangel's tax problems are probably less 'bad' than Geithner's. He owned a condo in the D.R. for 20 years, and over that time earned a total of $75k by renting it out. Less than $4k per year...
His excuse for not claiming the income is plausible too since the payments went straight against the mortgage through the resort it was attached to, so the money never hit his savings account. If you owned a home, rented a room on AirBnB, and then AirBnB paid off a small part of your mortgage, would most people know to claim that money as income?
That being said, the Nabors tax shelter mess, the unreported checking accounts, the multiple rent-controlled apartments, etc. all add up to show Rangel as a typical corrupt politician.
But really, all of the examples just underscore how insane the tax code has become.
I couldn't agree more. It's a problem when something like 50% of tax returns are wrong upon close examination.
I remember someone telling me that ignorance of the law is no defense. And I would think it wouldn't be too much to ask that a Federal Reserve Bank President be aware of tax consequences/implications.
I imagine if he lived abroad and still managed to owe $20k by his reckoning, his income and/or assets are non-trivial, and the IRS may have some cause to think he owes more (that's not to say they are correct).
Unfortunately the US tax system is a very adversarial one.
A programmer earning around $100k could easily accrue that kind of tax liability over a few years, even after deducting payment of foreign taxes. (But not penalties and interest for the delayed payments)
So he'd probably have less than 50k in income liable to taxation, and that puts him in the 15% bracket, so for 3 years his tax would be about 25k. How they got from there to 140k is an interesting question -- that's a hell of penalty & interest charge.
But you are obligated to file, even if you have zero income, and you are obligated to disclose assets, even if they're your spouse's.
There are several more requirements not related to income, or even if the citizen ever lived in the US (many people have US citizenship and have never stepped foot here), each of which can carry a substantial penalty if violated.
There are many people living in fear -- and many in substantial debt -- not about income tax problems, but about IRS filing requirements. The system is a monstrosity.
This is not scary at all in the context of the IRS just admitted to going after groups that are political opponents of the current administration. Nope nothing to see here.
Stop right there and read your own post carefully.
If those groups are indeed "political opponents" of the current administration, then the IRS has good reason to believe those groups are "political". Political groups have a different tax status than a group that is a church or other non-profit fraternal organizations. That is the law, and the IRS is correct to scrutinize them, in order to properly ascertain what category they fall under.
All 75 (ie: 100%) of the groups that the IRS selected for an audit based on their name were granted tax-exempt status by the IRS. So no, that is not a good criteria to base an audit on. And I find it appalling that you believe that it is acceptable to treat differently anyone the current administration thinks is their political opponent... and that you think it's a "slam dunk" that the IRS wasted resources auditing 75 groups, and then granted every single one of their applications.
A tragic story, but my money is on the IRS in this one. They do not have to have an ongoing criminal or civil case. The Congress back in 2008 saw fit to that.
Remember the law where you had to start creating 1099s for every vendor you ran across? People yelled at that got taken care of, but there's a lot more in that law yet to come. [inset long discussion about the exact nature of that requirement]
I'd be interested in knowing if it is still possible to keep your health records private. I used to self-pay and this was not a problem. But now? Where I have to be part of some aggregate that then assesses health risks? I'm not sure how it works. (And note the use of the word "private", not "anonymous")
For starters, I'd like to know how they handled those records. Was it in a HIPAA-compliant fashion?
Regardless of use or potential misuse of such data, us "mere mortals" can face serious challenges just for improperly maintaining it.
Is all this stuff sitting on some agents' laptops, somewhere? Given the security requirements for the IRS's own inherent data (or, I would hope they have such requirements), one might hope that the records are reasonably secure. But I can't help being somewhat skeptical on this point. And... such IRS requirements may not be HIPAA compliant.
My point is, amongst everything else, if the government is going to run around vacuuming up data wholesale, we can also look at whether they are even prepared to... "properly", and consistent with the government's own requirements, manage the data that they hoover.
From the filing:
Sounds juicy.. Peeping Toms? Getting pretty serious.. The IRS agents had the audacity to order lunch and watch TV? How salacious.. So how did they end up stealing so many confidential records? So they executed a search warrant, seized a server related to the financial crime they were investigating, and that server happened to have some confidential medical records too? And this is worth $250 billion in compensatory and punitive damages?