Jim McTague‘s latest “D.C. Current” column in Barron’s ponders potential political implications of pending IRS failures.
Taxpayers will suffer miserably at the hands of an understaffed Internal Revenue Service in fiscal 2015, but neither Congress nor the Obama administration, both guilty parties in the looming fiasco, are likely to pay a political price. …
… Voters, it seems, don’t hold politicians accountable for the failings of the IRS. This is odd. Congress heaps complex tax laws on the IRS while simultaneously cutting its manpower, crimping service and preventing it from the arduous pursuit of wealthy, sophisticated tax evaders.
Ever the skeptic, I called the IRS press office first thing Friday morning to ascertain that a first-class fiasco in fact was unfolding. A recorded message informed me there was no human presence to answer the telephone. The message implored me to dial another number, which I did. Another recording informed me that this second number recently had been disconnected.
IRS officials are blaming underbudgeting and Obamacare paperwork for its current woes. The IRS budget has been reduced 10% since fiscal 2010, which began in October 2010. President Obama requested $12.9 billion for the IRS in his fiscal 2016 budget, up $2 billion from $10.9 billion in 2015. The GOP is unlikely to accede to the request because it continues to fume about the alleged targeting of Tea Party groups discovered in 2013 by Obama political appointees at the IRS. An alleged attempt to cover up related e-mails is under criminal investigation.
TAXPAYER ADVOCATE Nina Olson has told Congress that the understaffed IRS is likely to respond to only 43% of the phone calls from taxpayers with problems, versus 64.4% in fiscal 2014, and probably will answer 1.9 million fewer pieces of correspondence than it did in fiscal 2014, when the response rate was an abysmal 50%. Olson predicts taxpayers won’t get their math errors corrected or penalties abated, leading to incorrect assessments and expensive downstream dispute-resolution activities, including audit reconsideration, appeals, and litigation.
The IRS reached a high-water mark in fiscal 2004, when it answered 87% of calls from taxpayers with hold times averaging 2.5 minutes, she said in a report to Congress.
David Hariton, a corporate tax lawyer at Sullivan & Cromwell in New York, sighs at the political silliness. “It takes a a lot of work to administer an income tax effectively in today’s complex world,” he says. In effect, shortchanging the IRS lowers revenue and administrative efficiency, penalizing honest taxpayers. Remember this the next time you turn out to vote.
