How IRS Incompetence Has Allowed The Killing Of Positive Tax Policies
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How IRS Incompetence Has Allowed The Killing Of Positive Tax Policies


Written By: Anton Sawyer

IRS, Public domain, via Wikimedia Commons
IRS, Public domain, via Wikimedia Commons

Because of my dedication to research and making sure the information I write about is as accurate as possible, there are times where the rabbit hole takes a turn. On occasion, I will make a hypothesis about a situation, and then the facts show my initial impression was wrong; this article is just such an example.


When President Biden unveiled his infrastructure bill in early 2021, a portion of it was set to increase funding to the IRS. This was done to allow them to collect more tax revenues by having the resources to go after those who have successfully skirted this American standard in the past. When I heard about this, I was hopeful that it would pass. Given it was hammered out in a bipartisan way by both DNC and GOP senators, I thought it had legs. I was wrong. When it got struck down by the Republicans in July, I was ready to pounce. In my heart, I knew that there was some kind of mega-manipulation going on in an attempt to save the wealthy from being financially accountable for taxes they’d dodged for years. As we know, feelings lie. Upon researching, I found that a lot of the blame for this rests firmly upon the IRS and its ineptitude.

 

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Now, we could look at those congressional members who shot down this accountability law and pick apart their voting history one by one, and we would see that there is a correlation between their history and keeping taxes away from corporations. But this is just a small part of a larger problem. In fact, the GOP has a very good reason for their mistrust of the IRS.


As I mentioned before, the feelings of hope were running pretty high when it came to seeing the plan pass. In mid-July, reality came crashing down. The proposal to strengthen IRS enforcement to crack down on tax scofflaws and help fund the nearly $1 trillion bipartisan infrastructure spending was officially taken off the table in a statement made by Ohio Republican Senator Rob Portman. This is somewhat surprising given that IRS Commissioner Charles Rettig said at a congressional hearing in April that the national gap between federal taxes owed and actually collected is about $1 trillion annually, more than double what official government estimates have previously indicated. When asked about killing that provision, Portman (who is involved in negotiating the bill) cited “pushback” from fellow Republican lawmakers who dislike the idea of expanding the reach of the IRS, which they have accused over the years of unfairly targeting conservatives. This is where IRS mismanagement and overall ineptitude comes in to play.


During the Obama administration, there had been some conservative groups that applied for tax-exempt status and were denied due to potential political affiliation. These groups claimed they were non-political, and were, therefore, the attack of bias by the Obama administration. The claims were that Obama was using the IRS as an additional branch of government to attack any conservative movement of any kind. Former Speaker of the House Republican John Boehner boosted this sentiment claiming, "My question isn't about who's going to resign, my question is who's going to jail over this scandal? There are laws in place to prevent this type of abuse. Someone made a conscious decision to harass and to hold up these requests for tax-exempt status. I think we need to know who they are and whether they violated the law. Clearly, someone violated the law." The GOP made sure to keep this scandal in the news and made as much hay as they possibly could. After several years and hundreds of court cases, eventually, the IRS relented. In 2017 the rulings were made clear. In an official statement, the IRS "expressed its sincerest apology" for mistreating the conservative organization called Linchpins of Liberty—along with 40 other conservative groups—in their applications for tax-exempt status. In a second case, NorCal Tea Party Patriots and 427 other groups suing the IRS also reached a "substantial financial settlement" with the government. It seems easy enough until you look at what else the IRS was doing at this same time frame. The same year these verdicts were reached, a third audit of the tax-exempt application showed how the process went off the rails. The Treasury Department's inspector general for tax administration, or TIGTA, who was overseeing the audit, found the IRS had targeted not just conservatives but also scores of groups with words like "progressive" in their names. The TIGTA audit didn't absolve the IRS but rather found the situation was much worse. Democratic Senator from Oregon Ron Wyden said the overall picture was "equal opportunity mismanagement and equal opportunity bedlam." Yet, there was never any compensation or any kind of acknowledgment of wrongdoing except for the targeting of conservative groups—the DNC got nothing. To recap: the IRS had horrible management that was giving their agents bad information that was almost guaranteed to end in disaster. The IRS gets caught implementing these dubious tactics. When they are caught, they only acknowledge the wrongdoings of those who made the loudest argument and ignore all other misdeeds. That’s a pretty healthy level of ineptitude. Even putting this aside, the GOP also has a valid argument when it comes to the concerns of the IRS managing anything correctly.


Since becoming a working taxpayer at the age of 16, tax season is one of the most stressful times of the year. The thought of a potential audit or jail time due to some small mistake lingering about intensifies the anxieties. Upon researching and looking at the numbers, the IRS is dropping the ball all over the place. In a 2019 article written by Bishop Toups of the tax law firm "Daily, Montfort, and Toups" it was revealed just how minuscule any real accountability is when it comes to non-compliance of your taxes. Though the IRS estimates that 15.5% of us are not complying with the tax laws in some way or another, only 0.0022% of all taxpayers were convicted of tax crimes. Those numbers are astounding. Knowing approximately 15% of all people are non-compliant with paying taxes, yet only a thousandth of a percentage is being held accountable, gives an indication of how huge the problem is.


I know that something needs to be done. As I’ve written before (Working Class Americans Subsidizing Taxes For The Wealthy, Carrying The Weight For All), the number of wealthy persons in America that pay absolutely nothing in taxes is a travesty. It directly puts the tax burden on the lower and middle classes, and it must be stopped. I am sure the computer/backend systems of the IRS need upgrading badly. In fact, I am sure almost every area of the organization needs an upgrade. But it is really hard to look at the last decade of IRS mismanagement and think that giving them $80 billion is going to fix a majority of it. Throwing money at a problem doesn’t get to the root cause and fix it, it only covers it up temporarily. Given Biden’s past of throwing money at problems, this should come as no surprise.

 

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