Media sources have begun warning of a “tax nightmare” ahead for April–filing delays and other administrative headaches , delayed refunds and a variety of mistakes likely to make us crazy.
“Things might be more challenging even than what we anticipate — and what we anticipate is very, very challenging,” a Treasury official told Axios, using the phrase “death spiral” to refer to one set of issues.
Why the warning? Why the situation? Funding. Actually, the lack of adequate funding.
The IRS raises the money America needs. According to official reports, the IRS collects 95 cents of every dollar in federal revenue. So you would think that giving the agency the resources to do its job, and do it efficiently and well, would be a high priority.
It isn’t. Instead, the agency is routinely described as being “in crisis.” Its budget has declined by 20% since 2010, while the number of taxpayers has increased by 19%.
The agency relies on software built in the 1960s, and it is facing a big backlog of paper filings including 6.2 million unprocessed 1040 forms.It doesn’t even have scanning technology– humans open the mail and manually enter information into its system.
According to one report, last year the agency answered only 29 million of the 282 million phone calls it received. And although the vast majority of taxpayers got their refunds fairly promptly last year, the agency was depending upon a significant increase in funding
from the Biden administration’s Build Back Better legislation.
Good luck with that.
So–why has Congress gutted the IRS? Pro Publica tells us in the subhead:
An eight-year campaign to slash the agency’s budget has left it understaffed, hamstrung and operating with archaic equipment. The result: billions less to fund the government. That’s good news for corporations and the wealthy.
The article begins with an example of what we are losing–money that must be made up by law-abiding taxpayers. Us.
In the summer of 2008, William Pfeil made a startling discovery: Hundreds of foreign companies that operated in the U.S. weren’t paying U.S. taxes, and his employer, the Internal Revenue Service, had no idea. Under U.S. law, companies that do business in the Gulf of Mexico owe the American government a piece of what they make drilling for oil there or helping those that do. But the vast majority of the foreign companies weren’t paying anything, and taxpaying American companies were upset, arguing that it unfairly allowed the foreign rivals to underbid for contracts.
Pfeil and the IRS started pursuing the non-U.S. entities. Ultimately, he figures he brought in more than $50 million in previously unpaid taxes over the course of about five years. It was an example of how the tax-collecting agency is supposed to work.
But then Congress began regularly reducing the IRS budget. After 43 years with the agency, Pfeil — who had hoped to reach his 50th anniversary — was angry about the “steady decrease in budget and resources” the agency had seen. He retired in 2013 at 68.
Because the cuts have come over an 8-year period, the utter collapse of the agency has escaped widespread notice. But at this point, according to Pro Publica, the bureaucracy is on life support, and America is losing tens of billions in revenue. (ProPublica estimates a toll of at least $18 billion every year, but admits that the true cost could easily run tens of billions of dollars higher.)
Tax obligations expire after 10 years if the IRS doesn’t pursue them. Such expirations were relatively infrequent before the budget cuts began. In 2010, $482 million in tax debts lapsed. By 2017, according to internal IRS collection reports, that figure had risen to $8.3 billion, 17 times as much as in 2010. The IRS’ ability to investigate criminals has atrophied as well.
And who stands to benefit? Need I share the following paragraph?
Corporations and the wealthy are the biggest beneficiaries of the IRS’ decay. Most Americans’ interaction with the IRS is largely automated. But it takes specialized, well-trained personnel to audit a business or a billionaire or to unravel a tax scheme — and those employees are leaving in droves and taking their expertise with them. For the country’s largest corporations, the danger of being hit with a billion-dollar tax bill has greatly diminished. For the rich, who research shows evade taxes the most, the IRS has become less and less of a force to be feared.
There is much, much more at the link, and it is all depressing. The GOP’s constant insistence that all of America’s ills can be solved with tax cuts is dishonest–and stupid–enough. But tax cuts aren’t the only way the party plays tax games to help its donors–and screw over the rest of us.
YES – They have been “De-funding the (IRS) Police” for years. It IS who they are. Welfare for the rich, screw the rest of us. Nothing new here but I a glad to see that it is getting more attention. The short version: If you get your income on W-2’s and/or 1099’s, YOU get to pay your full tax bill, But If your income stream is more exotic, you can get away with almost any games and tricks and evasions. That is the Republican way. “We got ours – screw you”
I’m liking Andrew Yang’s Forward Party. Emphasis on technology to improve government efficiency is part of the platform.
Once again, this is not a one-party issue. Both parties have had their chances to fix the issues and haven’t. The insider trading laws and bank regulation laws are right behind the IRS rot. It’s intentional and the corruption has caused decay beyond repair.
The problem is that nobody cares that the IRS is under attack. Everyone hates them.
As of 2014 the US tax code consisted of roughly 2,600 pages of actual current tax laws. And this is supported by another 65,000+ pages of prior versions of the code, regulations, revenue rulings, and case history.
What would become of the IRS’s challenges if the tax code were reduced to 1,300 pages? Or 130 pages? I’m no flat-taxer but clearly US tax code is so hideously complex to even be taken seriously. the reason it is so complex is easy to understand: The way a US Congressperson pays for the $ multi-million campaigns they have to wage every 2 or 6 years is by selling provisions of tax code by the word to corporations, industry trade groups and even individuals. And they have been doing this for roughly 160 years, when President Lincoln and Congress implemented the first income tax to finance the Union side of the Civil War.
One way to dramatically simplify taxation in this country is to phase out its reliance on taxing income, which requires painful attention to detail as to the definitions of expenses which are “eligible” for deduction from revenue to determine taxable income. Instead move to more of a sales tax on any transaction between a business and another business or a business and a consumer. This is often referred to as a value-added tax or VAT tax. Of course, some things could be exempted such as food, medications and health services…possibly also rents for a primary residence.
It wouldn’t solve all our problems with tax administration but it would go a long way towards lowering the cost of it and making it even possible.
In 2011 the GOP cut the IRS budget by 20% and directed the bulk of this cut towards the IRS Enforcement Division. It wasn’t just a straight across the board cut in staff.
Gosh, why would they have made the cut so specific? 🙄
why would the political parties want the IRS to interfere with how they support the rich,and buisnesses that donate? its obvious that over the last decades that one grafts the other. if the need to remove dark money is needed, then live and in color tax dodging is along side this issue also. watch the IRS chase the low income for pennies,while corp lawyers laugh at, us.. we are paying to operate this country, while those who are now a bedrock of anti-tax, who use the highest dollar resources this goverment can muster when they are in trouble, live and home base here,in the U.S. while shitting on what we call America. fact,the rich will not pay taxes,the feel thye are above that.. they have elected a whole party in congress to make sure we pay thier share while we pad thier asses.. if this has gotten this out of hand, then maybe,as Sen Sanders said yesterday, its time the American people know,for a fact,whos doin what… i have been recently trying to rent a work shop in bismarck,n.d. to move my projects into,the rent,bout $1700 a month,,but the 6 people who i talked with had a final cost added to this rent, in thier words,and “you can pay my yearly taxes too” thats about $3600 a year,county,city,whatever.. my words, in trucker/sailer talk GFY! pay your own taxes asshole, while face to face…recent c span discussuion on SBA loans and PPP forgiveness,the R outta florida wants to privatize the org,to decide who gets what…. try buying a truck and going into buisness,, there is no way thats happening..been there..
an interesting addition to Sheila’s blog post this morning,
We received a letter from the IRS saying that they gave us $10 in interest, our accountant said that It better be declared otherwise It will open the door to an IRS audit. In other words, it’s something that they are looking for as a reason to audit folks. It’s just an FYI.
In the United States, a so-called bastion of Christianity, The level of cheating on taxes is astounding. Of course it’s easier to go after the little guy, but, cheating is inappropriate no matter who is doing it. There are millions of crimes that involve cheating and dishonesty concerning taxes every year. the amount the government loses is in the 100s of billions of dollars. A half trillion dollars or more a year could put a serious dent in the budget deficit.
So I will quote this at the risk of making this too long, the Romans 13:1-7 reads;
Let every person be in subjection to the superior authorities for there is no authority except by God, the existing authorities stand placed in their relative positions by God. Therefore, whoever opposes the authority has taken a stand against the arrangement of God; those who have taken a stand against it will bring judgment against themselves. For those rulers are an object of fear, not to the good deed, but to the bad. Do you want to be free of fear of authority? Keep doing good, and you will have praise from it; For it is God’s minister to you for your good. But if you are doing what is bad, being fear for it is not without purpose that it bears the sword. It is God’s minister and Avenger to express wrath against one practicing what is bad. There is therefore compelling reason for you to be in subjection, not only on account of that wrath but also on account of your conscience. This is why you are also paying taxes; for they are God’s public servants constantly serving this very purpose. render to all their dues: to the one who calls for the tax; the tax, to the one who calls for the tribute; the tribute , to the one who calls for fear; such fear, to the one who calls for honor; such honor.
Even Christ said before the Apostle Paul made the above statement,
Matthew 22, The entire chapter you should read, When the Pharisees and Sadducees approached Jesus, They were trying to entrap him on paying taxes. He asked for them to show him a coin, a tax coin. He asked whose name and inscription was on this coin? They replied, Caesars! Then he said Therefore payback Caesars things to Caesar, but God’s things to God.
The Pharisees and Sadducees of the Sanhedrin were a religious entity but they also were political. man forced the mosaic law, But they also served as law enforcement so to speak. They could have individuals stoned to death for transgressions and other things. But the Sanhedrin was a two-party system. And they conducted everything as a Congress so to speak.
I love seeing these comments about the IRS by citizens that actually live in the states. Now, I could tell you stories about what it takes for an American living abroad! We have to file US tax forms every year and we do not get any benefits from this step. No roads, no services, no refunds for over paying either! Yes, we can deduct an income up to nearly 107k if we pay taxes in our country of residence, but seriously, why do we have to file every bloody year? Because that’s the law. Only one other country in the world requires its citizens to file taxes every year and the name of the country escapes me because it’s so tiny. We are not considered rich by any means but can’t contribute to social security or Medicare even if we decide to move back. Suck it up folks. Sorry, not sorry.
Aging girl,
You can always give up your citizenship.
The millionaires and billionaires and soon-to-be trillionaires, the aristocracy of the States formerly United, don’t want a government, they just want power. They want to be the power, make the rules, run the lives of others, and they believe that now that the river of wealth redistribution up has become a torrent, they can just buy it.
They also have the propaganda machine, now so pervasive and effective that they can rely on us to give all of the power to them.
They well may be right.
That, they propose, is our new Constitution.
John Song, you’re kidding right? How dare you? WTF? You spout those bible verses, why?
What citizenship should I have then? I will always be an American by birth. How about you?
Do you have any idea how much it costs to give up your citizenship? It’s in the thousands! And then what?
There is no reason to have Americans abroad file taxes unless they are hiding millions that the IRS is looking for. Lucky for us, we’re just working stiffs.
Nancy, in 2011, the Democrats controlled the Senate and President Obama was in the White House. Pretty sure you can’t blame all these cuts on the GOP.
Aging girl,
Well that was a very interesting spaz! Obviously you must have some other issues going on. As far as Bible verses, I’m wondering how long you’ve been waiting to say that? If you had an explanation why you didn’t give up your citizenship, you could rationally explain it, but instead you’re running around with your hair on fire. We’ve all had beds that we’ve made and are sleeping in. In that regard you are not special. When we were thinking about moving to Italy or American samoa, we definitely would not have kept our American citizenship. And I looked into the costs, as far as money goes, there are thresholds you have to reach to start paying a lot of extra money. I suppose you would have to consider what would make you more financially fluid? Paying the taxes or paying to get rid of your citizenship. Are the taxes more in the country where you live? Many European countries tax at a much higher rate than america. In the uk, it’s pretty expensive to live. Although they do have quite a few social programs that put ours to shame.
Anyway, I hope you feel better. But, you started out by slamming everyone who lives in the States! So, I made my comment. And I don’t believe it was inappropriate.
I agree it is difficult to blame only Republicans for some tax inequities. Many are baked into the cake.
Property taxes are a great example.
“Homeowners have long complained about inequitable assessments, and past studies have documented problems in particular cities. A new nationwide analysis led by Christopher Berry of the University of Chicago reveals that the inequities in tax assessments are both very large and very common.
For example, in Cook County, Ill., which includes Chicago, 1,015 homes were sold for exactly $100,000 from 2007 to 2016. Their average assessed value before the sale was $151,585. During the same decade, 149 homes sold for exactly $1 million. Their average presale assessed value: $647,030.
These distortions in assessed values carry through directly to tax bills. Nationwide, from 2007 to 2016, homes in the bottom 10 percent of property values in a given county were taxed, on average, at an effective rate that was twice as high as the rate for homes in the top 10 percent of property values.”
https://www.nytimes.com/2021/04/03/opinion/sunday/property-taxes-housing-assessment-inequality.html
They are updating statistics for 2016 – 2021 now.
This isn’t new. I remember an column by David Broder in the Washington Post in the late ’80s on how by cutting the enforcement division when he took office, tens of billions of dollars worth of taxes were going to reach their statute of limitations – that is Reagan for those who forget.
Have you noticed how the usual “simplify the tax code” usually involves flattening it by eliminating tax brackets, which eliminate ZERO lines from the form?
Now, I was only audited once by the IRS – they sent me a check for $16 for overpaying – never happened again.
Indiana, on the other hand, is always telling me I owe them thousands because they lost pages included with my tax forms and I have to send it to them again. It is an annual event.
Still, I like my father’s take – paying taxes meant supporting government services, but mainly, it meant his business was MAKING MONEY. (too many years of bad times after the riots in ’67)
Excellent point Rick Smith,
In illinois, if you’re disabled and own your property, they can tax the mess out of you even though you are on a fixed income. I spoke with one of the appraisers, and he said that if you’re disabled or you’re a senior citizen and you can’t pay your taxes, you should sell your property! I guess that’s the American way. Commercial property owners can deduct depreciation on their property to quit paying taxes, or if you’re an army veteran or navy veteran or Air Force veteran and for some reason you’re disabled, you don’t have to pay any property tax whatsoever. Yep, the good old American Way. The government just loves to separate people by whatever means necessary. My taxes in the past 4 years have gone from $4,000 a year to $10,000 a year. That’s a pretty big hit. Why or how that happens. And they’ll never answer your questions. And, Governor Pritzker hides when he hears that question asked. So there you go! Fair? Equitable? Never in a billion years! All you are or all anyone is, just a commodity to be used and abused until you are planted in the ground.
Song, your post said
“Aging girl,
You can always give up your citizenship.”
Yes, I took offense. Because if you complain about something Americans do, they tell you to leave. We left because of my spouse’s job. It’s wasn’t my choice. I live with it because that’s how you support your spouse. Maybe try it sometime and stop repeating the GOP mantra, “if you don’t like it, leave” crap. sheesh
Aging Girl,
I really could not care any less about this or any other government. Everyone is a free moral agent, free will is a god-given right. It’s admirable that you left because your spouse needed to be somewhere else for their career. And I’m sure you gave up yours for theirs. My original comment was just, why put yourself through the grief? Just give up your citizenship. Take into consideration what your citizenship is done for you? And what it hasn’t done for you! Myself, me or mine are not tied here. And, if there is a place where we all could go and feel it would be a much better fit, I’d be on a first boat out or playing for that matter which is unusual for me because I hate to fly.
And, if you’ve read my comments over the years, you would know that I am an extremely liberal minded person even though I believe in scripture. Obviously, citizenship and taxes are a very pain causing sore spot with you. So I will refrain from discussing that particular issue concerning you. I truly hope that you find the spot that most fits and suits you, and, you can be where you need to be. I wasn’t telling you to leave if you don’t like it, because, I don’t like it! so I suppose we’d be on the same boat or jet or whatever with you, lol!
This government just treats its citizenry as commodities. The disposable commodities are also the ones in the middle or lower classes in a country where there’s not supposed to be any classes. Once they suck you dry the chaff is dumped in the burn bin. Then it’s the next in line, maybe a younger generation that they can bleed for another 40, 50, or even 60 years.
As I mentioned in another post, each day brings its own anxiety or some might say badness. So, don’t let it build up Aging girl. King Solomon mentioned that time and unforeseen circumstance befall everyone, no matter their stature. As a matter of fact, the Old testament prophet Daniel quoted Solomon to King Nebuchadnezzar during the Jews 70 years of bondage in babylon. And, it turned out that he was correct! Because Nebuchadnezzar’s son was overthrown after the king’s mental faculties were lost. Anyway, hang in there Aging girl.
john sorg (today’s spelling of your name); your comment claiming to be “extremely liberal minded person even though I believe in scripture.” is an oxymoron of the highest level. And the tax amount you claim to pay is barely below my barely above federal poverty level annual income; AgingLGirl being unqualified to pay into Social Security and Medicare while living abroad DUE TO HER HUSBAND’S EMPLOYMENT will put them in a bind when they move back to this country and reach retirement age.
Suggesting she give up her citizenship must not be an issue found in the Bible or you would have quoted chapter and verse to prove your point…the only way you attempt to prove any point. Your comments debasing AgingLGirl are totally unChristian; but at least you didn’t suggest she be stoned.