More IRS Budget Cuts

[Number Six]

The recently passed US "Cromnibus" budget bill mandates increased cuts in the IRS budget: http://www.politico.com/story/2014/12/i ... 13651.html

"The IRS will freeze hiring and stop overtime as a result of the budget cuts just passed by Congress, according to an email obtained by POLITICO.
IRS Commissioner John Koskinen on Wednesday told employees that the $346 million cut to the agency budget is bound to reduce tax collections from potential tax cheats by at least $2 billion and hurt taxpayer services.
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“Our hiring — already limited at a ratio of one hire for every five people who leave — will be frozen with only a few mission-critical exceptions,” he wrote in an email to employees. “We will stop overtime except in critical situations.”
But there’s potentially more to come, as IRS leadership decides what else to cut over the next nine months of the fiscal 2015 budget, he warned. Koskinen also said IRS leadership is “consulting with the leadership of the NTEU” — referring to the National Treasury Employees Union, meaning the cuts in some way could affect employees.
“There’s no doubt we will have to take some difficult steps, he said.'"

How bad is tax enforcement likely to get with this latest round of cuts?

[Judge Roy Bean]

...

How bad is tax enforcement likely to get with this latest round of cuts?

I'm reminded of a comedic bit from many years ago in which the phrase (directed at the Pentagon in a helicopter aerial video shot) was " ... there they are, thousands of people doing poorly that which should not be done at all."

Our income tax system is hopelessly crippled. Pouring more money into enforcement of it is roughly the equivalent of buying trainloads of aspirin and bandaids to treat an ebola outbreak.

[Duke2Earl]

I agree that our tax system is badly broken but I fail to see the benefit in simply giving up and not trying to improve it.

[fortinbras]

Cutting the budget, and thereby cutting the staffs, of the IRS is going to make the tax system more broken. Inadequate and overworked staffs will make mistakes, overlook or avoid some complicated cases, and generally let sophisticated (and well-lawyered) tax cheats get away with their million dollars frauds, while focusing on the easier cases that will bring in less money.
The IRS is the agency that brings in most of the govt's revenue. When the IRS brings in less money, other govt operations will falter and the federal debt will increase.

[Number Six]

The IRS and state agencies are arms of law enforcement that pursue and convict many criminals for the cause of justice. Though tax reforms are way overdue, the present functions of the tax agencies are vital resources for maintaining some accountability in society. Though I would prefer a European type system, we have to live with what we have. Or they could at least partly privatize it and pay tax fraud detection businesses a percentage based on the numbers and level of tax cheats they find. Certainly the technologies exist to do that and cash incentives to interdict tax fraud would cause far more cases to get scrutinized.

[operabuff]

Statistics seem to show that each dollar spent on IRS enforcement wages yields multiple dollars in tax revenue, so this doesn't make much practical sense. No doubt the IRS's problems with its EO audits have made them a target for Congressional payback and the administration didn't want to spend the political capital to fight back.

[LaVidaRoja]

I rather like what NumberSix said. Let private contractors go after abuses and fraus. You think Congress hears about "jack-booted thugs" NOW??

[operabuff]

A story from the WP on this topic:

http://www.washingtonpost.com/blogs/won ... n/?hpid=z5

[operabuff]

So far the IRS's experience with private debt collection has been pretty unfavorable. Here's a report from the Taxpayer Advocate on the subject:

http://www.taxpayeradvocate.irs.gov/use ... entory.pdf

[Famspear]

A few minutes ago, I called the IRS Practitioner Priority Line. The recorded message on the menu has been changed. Apparently, they're so flooded with calls that they can't even put you on hold for an hour (as they have been doing for the past few months). Instead, I now get a message that says that they're just too busy, and to try again some other time.

I share the concern about IRS budget cuts. These spending cuts don't "hurt" the "evil, mean ol', bad ol' tax collector," and they don't correct any problems at the IRS. They hurt the taxpayer who cannot get problems resolved in an expeditious manner.

[Famspear]

...Our income tax system is hopelessly crippled. Pouring more money into enforcement of it is roughly the equivalent of buying trainloads of aspirin and bandaids to treat an ebola outbreak.

On this point, I must respectfully and emphatically disagree. In my view, the system is nowhere near being "crippled."

In the case of many government programs, I would normally agree that throwing more money at the "problem" is not a solution. In the case of the Internal Revenue Service, however, we are talking, literally, about the most efficient of all government agencies in terms of cost-benefit analysis. By definition, the IRS pays for itself many, many, many times over.

Yes, systemic incompetency at the IRS is a severe problem. Yes, the training of IRS personnel is problematic. But these situations can be improved not by cutting budgets but by better management and, in some cases -- yes -- with more money allocated to be spent inside the agency (gasp!).

There. I said it.

[Famspear]

The IRS Practitioner Priority Line is in bad shape today, though. I called back this morning, and was on hold for just over two hours with that lovely music, when a recording came on and announced that they were having technical difficulties. I gave up at that point.

Bear in mind that this is the Practitioner Priority Line -- not the general phone lines for public use. If the Priority Line is in this bad shape, I shudder to think what "regular" folks are having to endure.

So, this particular part of the IRS service has been "crippled" -- on that I agree.

[Duke2Earl]

I cannot really address this in detail because of our political discussion ban. However, the only way to fix the difficulties is to provide the resources necessary to make improvements.

[Pottapaug1938]

More on the subject:

http://www.nbcnews.com/business/taxes/t ... do-n304951

In other words, peddlers of taxation snake-oil are all but free to peddle their legal snake oil with impunity.

[Judge Roy Bean]

According to the article, there were 748 "successful sentencings" in 2014.

Given an estimated ~$20B annual fraud problem and the hundreds of millions in expenses for investigation and prosecution of just a tiny fraction of the perpetrators, would it not seem more appropriate to eliminate the opportunity for fraud, rather than throwing money at post-crime response?

[The Observer]

As long as there is priority emphasis on getting refunds to taxpayers quickly as possible, there is always going to be an open door for fraud to happen.

[Jeffrey]

IRS Budget cuts were the topic of the latest John Oliver episode:

https://www.youtube.com/watch?v=Nn_Zln_4pA8

Nobody likes the IRS. But recent budget and staff cuts have made it increasingly difficult for the department to do its very important job. Don’t take our word for it. Ask Michael Bolton.

[fortinbras]

John Oliver hit the nail on the head.

The IRS is the ONE govt agency whose job is to make money flow into the govt, instead of making it flow out. It actually predated the income tax by originally focusing on collecting mostly excises, tariffs and import duties. Crippling the IRS, however much you may dislike the IRS, results in crippling the govt - resulting in soldiers not being adequately equipped, bridges not being adequately repaired, borders not being adequately patrolled, terrorists not being adequately tracked, etc - you get the idea.

Rafael Cruz wants his followers to imagine an America without an IRS, but then who collects anything to keep the lights on in the Congress or the White House? Actually Americans pay less in taxes than citizens in nearly all other industrialized countries. And being the country that set foot on the moon, that defended Vietnam from Communists, that defended Iraq and Syria from ISIS, etc., costs serious money.

[Judge Roy Bean]

... Actually Americans pay less in taxes than citizens in nearly all other industrialized countries. ...

Actually, that's a convenient generalization. Some pay less - in fact, they are net beneficiaries. Some pay more if they don't take advantage of what might be taken advantage of.

[Duke2Earl]

Yes, every individual's tax situation is different but the essential point remains, on average, the overall tax burden on americans is not out of line with what is paid in other industrialized democracies around the world...and is less than many of them.