Tags: IRS | TIGTA | report | Congress

Congress at Fault for IRS’ Growing List of Failures

Monday, 11 Feb 2013 07:40 AM

By Denis Kleinfeld

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The Taxpayer Inspector General for Tax Administration (TIGTA) is one of a number of governmental oversight bodies whose duties are to audit and report to Congress on the IRS.

Its newest report on the IRS makes clear that the IRS is crumbling and the fault lies with Congress. In sum and substance, the report finds that the IRS is underfunded, overburdened and undermanned.

While Congress enacts massive tax laws, the IRS is less and less able to implement and enforce them.

History shows that an income tax system was tried by various kings, emperors and such during the last 6,000 years. The income system has always failed, basically for the same reasons, and so did the governments that relied on it.

The TIGTA report, as well as the annual Taxpayer Advocate and General Accountability report, shows that the same thing is happening in the United States.

Between the complexity of the endless of amount of new income tax laws, the systemic human capital and computer system failures at the IRS and the fact that Congress has starved the IRS of funding, the U.S. income tax regime is more and more unadministratable.

It’s hard to avoid coming to the conclusion that the tax system is falling and so will the government. It may not be all that far away.

If the IRS were a stock market, there would be no doubt that an awful lot of people would be shorting the market. Double that if in the case of Congress.

“In addition to facing budget cuts and the potential retirement of many experienced employees, the work performed by the IRS employees continually requires greater expertise as tax laws become more complex and far reaching. For example the Patient Protection and Affordable Care Act contains an extensive array of tax law changes that will present many challenges,” the report states.

“The IRS will administer the law’s numerous tax provisions and estimates that at least 42 provisions will either add to or amend the tax code and at least eight will require the IRS to build new processes that do not exist within the current tax administration.”

Then there are the problems of dealing with identity fraud, limited resources for taxpayer assistance, inability to hire and even correcting computer applications to find out if IRS employees are tax-compliant.

There is a lot more.

The IRS is expecting a large number of retirements over the next several years. Particularly with regard to the executive staff and nonexecutive managers. (At least 40 percent are eligible to retire in five years.)

The report finds that the IRS business units have not always been able to replace all the mission-critical employees they were losing.

IRS recruiters believed that their efforts were not always directed at the most productive activities and locations. Further, “The IRS is not able to hire the most qualified employees capable of providing taxpayers the best possible quality service to meet their tax responsibilities.”

The report explains how this happened. “[T]he IRS was unable to meet the level of budget reduction without substantially reducing its work force.”

The IRS instituted an agency-wide hiring freeze in 2012 and accepted early retirements and buyouts, “which represents a significant challenge since many of these employees possessed unique skills and institutional knowledge that will be hard to replace.”

Consider that before 2013, the IRS did not have to oversee either the Patient Protection and Affordability Act (with perhaps 16,000 new IRS employees) nor the Foreign Account Tax Compliance Act (with thousands more).

The IRS may be getting the blame, but the fault is with Congress.

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