A Closer Look At Zach Nunn’s IRS Claims, Businessman Examples

Congressional hopeful Zach Nunn said a portion of the Inflation Reduction Act that provides the IRS additional funding is an attack on people like Iowa businessman Mark Daggy, which is somewhat true considering Daggy has over 5 million dollars in assets across Iowa and has been sued for his business practices.

“Agents are going to be looking at businesses like Mark’s, where they are going to try to recoup the deficit spending they have been doing for years now in an attempt to reclaim through taxation and in audits, which will disproportionately impact small businesses,” Nunn said while visiting MacDonald Letter Service Co. on Aug. 11.

A Republican state senator from Bondurant, Nunn is challenging Democrat Cindy Axne for the right to represent Iowa’s 3rd Congressional District, which includes Des Moines and Polk County.

Nunn’s criticism of funding for the IRS has become a common refrain for Republican candidates this election cycle, with many of them greatly distorting the scope and purpose of new IRS employees the agency looks to hire.

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But his uplifting of this particular businessman may not have been particularly useful to his argument, instead adding another questionable claim to Republicans’ rhetoric on the matter.

During his visit with Daggy, Nunn was joined by Sen. Lindsey Graham (R-South Carolina) and Nunn painted a picture of Daggy as a small-time businessman dealing with the forces of big government overreach.

When speaking with Nunn and Graham, Daggy said he was audited 26 times, a claim that Republicans in the state and nationally then shared around.

This small business has been audited 26 times by the IRS — hours and hours of red tape and bureaucracy for a hardworking Iowan.

The kicker? The most in unpaid taxes that the IRS ever found was $~25.

A small sample of what to expect from Biden's proposed 87k new IRS agents. https://t.co/f2u8hfp6Xl

— Kush Desai (@K_SDesai) August 11, 2022

But for Daggy to be audited 26 times, that would mean he was audited for every single year he has owned MacDonald Letter Service, which he purchased in 1996 and became the registered agent for in 1997.

According to the IRS, audits (or examinations) are done to ensure income, expenses, and credits are being accurately reported, and they play a key role in identifying errors and detecting fraudulent activity, but they are rarely performed. From 2011-19, only 0.55% of individual returns and 0.92% of corporate returns were audited.

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However, Daggy isn’t exactly running a ma-and-pa print shop and a lawsuit from a former employee revealed at least one confirmed instance of questionable bookkeeping.

In his suit, Eugene Williamson, the former employee, noted he was working as a pressman for Daggy’s Acme Custom Print business, but his paychecks came from Nite Owl Print and Copy, a separate incorporated business registered to Mark Daggy’s wife, LeeAnn.

Screenshot from Eugene Williamson’s lawsuit against Mark Daggy.

Williamson, who is Black, said Daggy told him he was fired because he had filed an Iowa Civil Rights Commission complaint against a former employer for racial discrimination. Daggy admitted being warned about Williamson in an unemployment hearing when the fired employee sought benefits.

Screenshot from Eugene Williamson’s lawsuit against Mark Daggy.

The fired employee sought “damages including, but not limited to, mental and emotional distress; fear; anguish; humiliation; embarrassment; lost enjoyment of life; lost wages, benefits, future earnings, and other emoluments of employment.”

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The suit was later dismissed with prejudice, but Daggy was attached to another since dismissed business lawsuit.

In 2012, the Gold-Eagle Cooperative sued Daggy after he was contracted to deliver 10,000 bushels of soybeans and 30,000 bushels of corn. According to the since-dismissed lawsuit, Daggy didn’t deliver a single grain to the cooperative.

Screenshot from Gold-Eagle Cooperative lawsuit against Mark Daggy.

MacDonald Letter Service Co., where Nunn and Graham met with Daggy, is one of several businesses Daggy owns outright or is affiliated with. A few others include Acme Custom Print, Acme Printing Co., Envelopes Tomorrow, and Nite Owl Printing/Nite Owl Print and Copy, all of which are in Polk County.

Daggy and his wife also outright own nearly 330 acres of farmland in Humboldt County not including the land he jointly owns with his son, according to county property records. 

Mark and Lee Ann Daggy’s properties and land in Humboldt County.

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About that IRS funding…

A recent line of attacks Nunn has used against Axne noted her support of the Inflation Reduction Act, a sweeping piece of federal legislation that addresses many issues from climate change to capping insulin costs for Medicare recipients. 

The bill also provides an additional $80 billion in funding to the IRS, but Nunn and other Republicans have twisted the facts about how that funding will be applied. 

Nunn claims the IRS wants to hire more than 80,000 new federal agents to go after people like Daggy, who he repeatedly referred to as a small business owner, in the singular form. This is despite Daggy owning several commercial and residential properties in Polk County and owning more than 300 acres of farmland in Humboldt County, which was selling for $11,506 an acre in 2021.

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According to the White House, people and small businesses that make less than $400,000 annually won’t see any additional taxes under the Inflation Reduction Act. However, there will be a 15% minimum tax on corporate profits for the largest, profitable corporations, 55 of which paid nothing in federal incomes taxes in 2020.

About those IRS agents…

The estimated number of new IRS agents is overblown. According to PolitiFact, the 87,000 number Nunn and other Republicans have cited comes from a 2021 Treasury Department report, but the true number of new hires has not been decided yet. 

Additionally, not all of the new hires will be tax agents as the IRS is also hiring specialized enforcement staff, updating its information technology department, and investing in taxpayer service.

Taxpayer service includes “pre-filing assistance and education, filing and account services, taxpayer advocacy services, and other services,” according to the text within the 730-page bill. 

Furthermore, PolitFact notes the IRS currently employs about 80,000 people—the lowest amount since the 1970s—and expects 50,000-60,000 retirements within six years, so a number of new hires would be filling some of those jobs in addition to the new specialty areas.

In a letter to Congress, IRS Commissioner Charles Rettig said his agency has been understaffed for years, and “enhanced IT systems and taxpayer service will actually mean that honest taxpayers will be better able to comply with the tax laws, resulting in a lower likelihood being audited and a reduced burden on them.”

by Ty Rushing
08/23/22

To contact Senior Editor Ty Rushing for tips or story ideas, email him at [email protected] or find him on Twitter @Rushthewriter 

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