Tax Analysts Blog

Don’t Bother Fixing the Tax Code Unless You Fix the IRS Too

Posted on Sep 10, 2015

Republican presidential candidate Jeb Bush wants to fix the nation’s tax law. Which is great – it needs a lot of work. But so far, Bush doesn’t seem very interested in fixing something even more important: the IRS. Because even a good tax law will fail when administered by a bad agency.

The IRS is badly broken, not to mention deeply unpopular. That’s not surprising for an agency that exists to separate people from their money. As Edmund Burke observed in 1774, “To tax and to please, no more than to love and to be wise, is not given to men.”

National Taxpayer Advocate Nina Olson made a similar observation in her most recent annual report to Congress. “The IRS will never be a beloved federal agency, because it is the face of the government’s power to tax and collect,” she said. “But it should be a respected agency.”

Unfortunately, the IRS isn’t respected, either. That’s partly because Republicans have been demonizing it for years (decades, really). Some GOP complaints are opportunistic and self-serving, designed to curry favor with the voters, while others are more legitimate. And a few – like the ongoing controversy over the agency’s targeting of Tea Party groups – manage to be both.

But the real scandal is less lurid and more serious: the abysmal state of taxpayer service.

According to the IRS mission statement, taxpayer service is job one. The agency is committed to providing Americans with “top quality service by helping them understand and meet their tax responsibilities.” Sadly, that’s pretty much an empty promise these days. “Service” might be in the IRS’s name, but it’s absent from its operations.

Lousy customer service is a direct result of inadequate IRS funding. As Olson has said, “the budget environment of the last five years has brought about a devastating erosion of taxpayer service, harming taxpayers individually and collectively.”

Republican congressional leaders deserve the blame for that budgetary failure. When asked, they describe their punitive budget cuts as a form of administrative oversight. “We deliberately lowered the IRS's funding to a level that will make the IRS think twice about what you are doing and why you are doing it, because you don't have a single dime to spare on anything frivolous,” explained Florida Republican Rep. Ander Crenshaw in comments to Doyle McManus of the Los Angeles Times.

It’s understandable that Republicans are frustrated; the IRS has mishandled its relationship with Congress, ignoring complaints and obfuscating issues whenever possible. The Tea Party scandal is more about ineptitude than corruption, but the IRS has lent credence to the most serious accusations by refusing to be fully transparent and cooperative.

Nonetheless, budget cuts are not the answer. It’s simply crazy to complain about IRS performance and then cut funding even further. Say what you will about waste and mismanagement, at some point, the IRS can’t do more with less. And we are well past that point.

Now that Congress is back from its summer vacation, IRS funding will again be up for debate. And Republicans are already committed to punishing the agency with even more budget cuts.

I’m sure that’s satisfying. If nothing else, it guarantees that IRS-bashing will remain a viable sport on Capitol Hill, since an underfunded agency will continue to underdeliver. But the real victims of budgetary punishment will be taxpayers, not the IRS. More phone calls will go unanswered, fewer letters will be sent, and taxpayers will be left to struggle on their own in meeting their legal obligations.

“Why would anyone want to go this route?” Olson asked in her report last December. That’s a good question – and one that still needs a good answer.

Read Comments (5)

edmund dantesSep 9, 2015

"The Tea Party scandal is more about ineptitude than corruption, but the IRS
has lent credence to the most serious accusations by refusing to be fully
transparent and cooperative."

If you have evidence of the absence of IRS corruption, could you please share
it with the rest of us? Everything I see points to a deliberate weaponization
of the IRS, using the agency for political purposes. And successfully, I
should add. The public at large sees this politicization. I believe that they
hate the political use of the IRS even more than any perceived lack of
"service."

The IRS does not suffer from a lack of funds, it suffers from mistaken
priorities and very poor leadership. There is no accountability. Control of
the IRS budget is the only tool available to Congress to pry even limited
cooperation from the agency.

Given the tremendous rise in electronic filing over the past decade, the costs
of running the IRS should be falling, not rising. When private companies
invest billions in computer systems, other costs go down--the same should be
true in government, but it never is.

I suspect that at this point the IRS is so thoroughly tainted that the only way
forward is to dismantle the agency and start over. That will be a more potent
political message than Jeb's tax reform plan.

AMTbuffSep 9, 2015

From the outside, the IRS appears to be partisan from top to bottom. How else
to explain the complete absence of whistleblowers on the pursuit of right-wing
exempt organizations once they decided to copy MoveOn? How else to explain meek
compliance with every Administration effort to make de-facto amendments to
immigration laws and to the health care law? Where is the non-partisan voice
saying "Stop. Show us a court order saying this is OK before we comply."? You
know, like the IRS did to Nixon.

That non-partisan voice will appear some day, the same day a Republican becomes
President. The IRS is a biased referee, blowing the whistle only on Republican
fouls. Everyone knows this. The IRS isn't fooling anyone.

The IRS has made its partisan bed and must lie in it.

I'm willing to be proven wrong. If the IRS meekly agreed to index the basis of
capital assets at the request of a future Republican administration, that would
be almost as big an accommodation as the ones they have made for the current
administration.

Jack FergusonSep 14, 2015

I disagree with your point that the IRS treatment of certain groups was inept
rather than corrupt. The IRS is getting the budget it has deserved.
We know at the IRS that it was high level officers (not low level employees)who
gave disparate treatment to groups in opposition to the current administration.
The groups were Z-Street, National Organization for Marriage as well as the Tea
Party and other groups. The IRS should have lanced this boil but instead uses
the DOJ to keep a lid on it while obstructing oversight at every turn. The DOJ
has had over 800 days to get to the bottom of this and refused to enforce the
Contempt of Congress referral for Lois Lerner. The IRS when dragged to court
does not attempt to find truth or justice, but obstructs to hide the
corruption. Congress has rightly had enough of this and uses their only
remaining power, that of the purse. Fortress IRS is being starved by Congress
and battered by Federal Judges who have had enough. The litigation production
on cases like Z-Street and Common Cause will bring the walls down. Once this is
finally exposed and rectified, then the IRS with new leadership will get a
valid budget.

bob kammanSep 14, 2015

IRS is broken largely because of its obsolete hardware and software. Give Jeb
Bush some credit for his visit to Estonia in June, to learn about that
country’s use of technology in both the public and private sector.

As Politico reported,

He listened avidly and asked several questions during the presentations about
Estonia’s unique use of technology in government and across many spheres of
private life; people here interact with teachers, access their healthcare
records, transfer money, vote and pay taxes quickly — all online.

“All of these things are an example of moonshot kind of thinking, going way
beyond where you are,” Bush told reporters afterward. “That’s what I’ve learned
from these trips and that’s what I think the United States needs a lot more of.”

Bush made sure to contrast the Estonian story with the seemingly dysfunctional
government in Washington.

“They transformed their country,” Bush said. “In anticipation of technological
changes that are now commonplace, they embraced using information technology
the right way.

“We have a static government on top of our dynamism that’s choking us off,”
Bush continued, pointing out the technological struggles of the federal health
insurance marketplace created under President Obama’s Affordable Care Act. “I
mean, $800 million to build a website that didn’t work?”

edmund dantesSep 15, 2015

Given Koskinen's repeated lies to Congress, there is no chance of him being
given more money to waste. Here are Rep. Chaffetz views.
http://www.thespectrum.com/story/opinion/2015/09/15/with-koskinen-at-hel...
nnot-be-trusted/72255120/

IRS had a Commissioner hired for his IT expertise--what happened to the
billions he spent?

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