Tax Attic: The current story of the IRS

In a moment of weakness or perhaps, “extreme curiosity”, might be a better way to state it, I turned the TV to C-Span last Saturday afternoon to watch the House of Representatives debate concerning the government shutdown. After a few minutes, I decided “self-inflicted torture” was the best description of what I was watching. However, like a moth drawn to a flame, I continued to watch until the House voted down a proposal to send a Continuing Resolution to the Senate that could have potentially ended the shutdown. To their credit, most of the time the Congressmen and Congresswomen were polite in calling each other liars. That’s not to say the Chair didn’t have to gavel down interruptions from time to time when the ones being called liars at that moment seemed to take it personally. Politics at that level should be above the “taking things personally” stage. I do have to admit that’s easier said than done but by the time these people get to Washington; they all know how the game is played. One day you are on the hot seat and are the dirty rat and the next day or minute it’s the person next to you who fulfills that role. Actually, watching the C-Span proceedings was the perfect set-up for Saturday night. Deb and I went to see the play, “All The Way”, at the Civic Theatre. The play is the story of the first year of Lyndon Johnson’s presidency picking up right after President Kennedy’s assassination and running through his victory over Barry Goldwater. It shows Johnson’s struggles to pass the Civil Rights Act of 1964 as he inter-acted with the Congressional leaders of the day, such as Everett Dirksen and Hubert Humphrey, and other important leaders, such as Martin Luther King Jr., and government officials like J. Edgar Hoover, all the while trying to win the presidential election in 1964. It was quite the play and, true to form, it warned everyone in advance that the language used through-out the play, especially by Johnson, tended to be quite “salty”. In fact, it was darned salty but entertaining as well. During Johnson’s 5-year term as President, we tend to forget that he passed several major laws including instituting the Medicare and Medicaid programs; the Voter’s Right Act; the Immigration and Nationality Act of 1965; the Equal Opportunity Act; the Job Corps; and started the War on Poverty. All of these were part of what Johnson coined as America becoming the “Great Society”. He indeed had a number of successes, many of which were lost in the morass that was the Vietnam War. Ultimately, Johnson could not politically survive that war and did not run for re-election in 1968. The play was a good story.

 

Something that is not necessarily a good story is the current story of the Internal Revenue Service. One might say it has been having difficulties for the last several years. Since 2010, Congress has steadily reduced the IRS’ funding in real dollars; over one billion dollars. In addition, like other employers, baby boomers have been retiring at a record clip. Coupled with the loss of budget dollars, hiring freezes have taken place so many of those leaving have not been replaced. The subsequent affect is that taxpayer assistance and enforcement activities have been dramatically affected and training has been reduced for those remaining and those who were hired. It’s not unusual to wait 30-45 minutes on hold when attempting to discuss an issue with the IRS’ customer service. It’s also unusual to see taxpayers get audited in the traditional manner of an in-the-office audit. It’s more common to see a letter where a taxpayer is requested to supply copies of receipts via the mail to one of many offices such as Cleveland or Kansas City. In addition, the IRS has been hampered in its ability to establish minimum competency requirements for tax preparers by two court cases, Loving V. IRS and Ridgely V. Lew. Both cases restricted the definitions of how and who the IRS had constitutional authority to supervise in the realm of tax preparation. Both cases severely reduced the IRS’ authority to regulate non-licensed tax preparers. This lack of over-sight hurts the entire tax preparation business. Many in the business have called upon Congress to increase the IRS’ funding to at least it’s 2010 level as well as passing legislation specifically giving authority to the IRS to establish “minimum standards of competence” for all tax preparers who participate in the entire tax preparation process including tax planning, preparation, and providing post-filing activities such as litigation help. This legislation would allow the IRS to put everyone on a level playing field and it’s hard to argue with that. This is Jerry Coon signing off.

 

Jerry Coon is an Enrolled Agent.

He owns Action Tax Service on Northland Dr in Rockford.

Contact Jerry at www.actiontaxservice.com.