To Fix the IRS, You Have to Fund It

Feb 18 2014, 12:00pm CST | by

In my recent observations about the IRS, I have carefully avoided using the C-word – corruption. But something is clearly wrong at this agency. The regulatory side, the Office of Chief Counsel, seems to function in a more or less arbitrary and capricious manner — in other words, without adult supervision. Lois Lerner, who was at the heart of the exemption application fiasco, is the poster child for how bad things are over in what is known as the commissioner’s side of the operation. Enforcement, compliance, and taxpayer service are all becoming a joke. And speaking of jokes, that pretty much sums up the “training materials” that Tax Analysts has unearthed so far as a result of its Freedom of Information Act suit against the IRS. Leaders are supposed to see to it that their staff is properly trained, and that isn’t happening at the IRS.

This agency is so mismanaged that there may very well be corruption. But I have no proof of that. I do, however, agree with those who are calling for a special prosecutor. Because the way House Democrats are behaving – ignoring that there is any problem at all – is almost scandalous, and what the Obama administration is doing is useless.

And that brings me to the House Republicans. They think it’s a good idea to punish the IRS by cutting its budget. That won’t fix the problem, and it’s the classic cutting-off-your-nose-to-spite-your-face move.

An article in last Sunday’s New York Times illustrates the point. It says the IRS enforcement budget has been cut from $5.9 billion in 2010 to $5 billion in 2013. Over the same period, revenue from audits “plummeted $7 billion.” That’s genius! You punish the IRS and put the country deeper in debt. Come on, even a member of Congress can figure these numbers out.

A few days earlier, the American Bar Association Section of Taxation sent a letter to Congress urging members to properly fund the IRS. That letter states in part, “We are gravely concerned that the recent trend of funding reductions for the Service is negatively impacting its ability to serve taxpayers and enforce the tax laws that Congress enacts.” Gravely concerned. These are tax practitioners, and they know what they’re talking about.

Fix the IRS but fund it. Investigate the IRS, yes. And you can start that investigation with the Office of Chief Counsel, which has been seriously off the rails since the George W. Bush administration. That’s where a lot of what we have today began.

Source: Forbes Business


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