July 14, 2022

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Fake charities

Tax return preparation and planning are the cornerstones of many accounting firms. This means relying heavily on the Internal Revenue Service for all kinds of things, including processing returns, responding to notices, resolving disputes, and virtually anything related to taxes. It’s arguably the most important federal government agency. It employs over 70,000 people and is responsible, I’m fond of saying, for overseeing the financing of the largest, most complex government of the world’s largest, most complex economy. 

And, as we’ve discussed occasionally, it’s not going great. The IRS’s troubles directly affect many accounting firms and their clients, and the consequences that result can range from mildly annoying to catastrophic. Not to mention, there are countless examples of stuff just not working well. Like a guy on Staten Island creating over 70 laughably fake charities that the IRS let pass through:   

The “American Cancer Society of Michigan,” state authorities say, was a fake charity. And not even a good fake.

It was not in Michigan, for one thing. When the group applied to the Internal Revenue Service to become a tax-exempt nonprofit in 2020, it listed its address as a rented mailbox on Staten Island. It was not the American Cancer Society, either: In fact, the real American Cancer Society had already warned the I.R.S. that the leader of the sound-alike group, Ian Hosang, was running a fraud.

The I.R.S. approved the group anyway. Soon after, it also approved another operation run by Mr. Hosang: “the United Way of Ohio,” which was also registered to the Staten Island address.

Mr. Hosang, 63, is now accused by prosecutors in New York of operating a long-running charity fraud that has astounded nonprofit regulators and watchdogs — and raised concerns about the I.R.S.’s ability to serve as gatekeeper for the American charity system.

Not because the alleged scheme was so good.

Because it was terrible. And it worked.

I don’t like piling on the IRS mainly because it’s a convenient target for people acting in bad faith, but even I have to admit that missing this is like airballing a layup. Over 70 nonprofits with names very similar to other, very well-known nonprofits, all with the same post office box on Staten Island? It doesn’t sound even remotely legitimate, and the IRS missed it for six years. Come on; even the Securities and Exchange Commission catches Dr. Evil.  

And sure, maybe overlooking a bunch of phony charities isn’t your biggest concern. Still, it does seem like a symptom of a much bigger problem at the IRS, which should probably concern most accountants. That is, lots of mistakes are being made, and if the status quo remains, it’s unlikely to get better anytime soon. If I ran an accounting firm, I think I’d either: a) figure out a way to run a firm that had minimal exposure to the IRS, or b) tell anyone who would listen to stop scapegoating it because everyone knows full well that it’s been methodically undermined for decades. Then, start demanding it be turned into a 21st Century government agency. Or at least one that can catch the people running the Human Fund. 

WFH WIP

Before the pandemic, lots of people worked in offices and didn’t think much about working from home, ever. Since the pandemic began, lots of people stopped working in offices and didn’t think much about working in an office again, ever. 

Now that the plague has eased (right?), a fair number of people want to return to the office for its social and creative advantages, while a fair number of people want to stay home for its flexibility and efficiency advantages. As far as I can tell, the stay-home side seems to be winning. And that’s fine for some people, writes Derek Thompson, but not for many others, including young people who are new to the workforce, people who are new to working with each other, and people working on new ideas. Why?

“Whenever we read a sentence on Gchat or Slack that seems ambiguous or sarcastic to us, we default to thinking, You fucker!” Bill Duane, a remote-work consultant and former Google engineer, told me. 

“But if someone had said the same thing to your face, you might be laughing with them.” In many contexts, remote work without physical-world reunions can flatten colleagues into simplistic caricatures and abstractions. It sounds hokey but it’s true: To see our colleagues as whole people, we have to literally see them as whole people—not just two-dimensional avatars.

Thompson’s essay is about the need for a new kind of middle manager: the synchronizer. And if “synchronizer” is a little too close to “synergizer” for your taste, I’m with you. 

Anyway, even if these synchronizers would essentially be responsible for forcing people to socialize, it does seem to make sense. Right now, we’re in this cold war between Homers and Officers who want to decide where and how people work going forward. The Officers have lost what they love about… the office. The Homers are afraid of losing what they love about… working from home. The workplace status quo seems to have shifted to WFH, so it’s likely it’s here to stay and will be preferred by many workers. 

But working IRL… with people… in an office has compelling strengths, and businesses that figure out how to break the impasse will inevitably be better workplaces and better employers. So yeah, there could be a need for an internal pseudo-diplomat to bring people together—even if just to prevent folks from immediately screaming obscenities at their colleagues’ oddball instant messages. I can get on board with that.

Fresh from Gusto (and friends)

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Webucation

Join me on Thursday, July 21, 2022, when I interview Gusto’s Chief Revenue Officer, Tolithia Kornweibel, for Foundational Marketing for Growing Firms. 

Not sure what your marketing dollars are actually doing for you? Curious about whether to hire a marketing agency? Or just unsure of where to begin? Attend this live webinar to hear my chat with Tolithia, who’ll answer your questions.

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Caleb Newquist Caleb is Editor-at-Large at Gusto. In 2009, he became the founding editor of Going Concern, the one-of-a-kind voice on the accounting profession, serving in the role for 9 years. Prior to Going Concern, Caleb worked as a CPA for nearly 6 years in New York and Denver. He lives in Denver with his wife, two daughters, and two cats.

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