ALBUQUERQUE, N.M. — One of the sad facts of recent government action is the evisceration of the IRS budget.
Since 2010 Congress has embarked on a war against the IRS. The IRS is responsible for administration of our tax laws. One part of the IRS role is to collect the revenues that fund the goods and services that we demand (yes, demand) from government.
While the IRS has never been loved, the recent war (yes, war) on the agency is new. Perhaps it is part of a broader effort to attack the institutions of government in general.
Embattled former IRS Commissioner John Koskinen made outgoing remarks on the state of the IRS on Nov. 6, 2017. I want to report the facts, directly from the former commissioner’s statement.
What follows is from the former commissioner. I’ll first report the facts as the commissioner did in November, and then make a few comments.
Tax administration will fail in one of two ways. About 64 percent of IRS IT systems are out of date and out of warranty. Twenty-two percent of software products are two or more releases behind industry standard.
If a catastrophic failure of IRS systems occurred in tax season, lengthy interruptions in processing and paying $275 billion in tax refunds could occur. This could have a devastating effect on the economy.
The other significant problem is the ability of a declining IRS workforce to ensure that the tax laws are complied with. IRS has lost 20,000 employees since 2010, including 7,300 enforcement personnel.
IRS now has less than half the number of revenue officers than in 1954. The number of criminal investigation special agents is the smallest since 1971.
IRS audits conducted in 2017 were the fewest in 14 years. Criminal investigations are down by 36 percent since 2010, and criminal prosecutions are down by a third in the last four years.
We have what is referred to as a “voluntary” compliance system. The tax collectors for Rome decided how much tax was owed – some for Rome and some for them. This is why Pharisees asked the disciples of Jesus why their teacher eats with tax collectors and sinners.
The IRS does not visit your house to determine your tax liability. If you are the target of the rare IRS audit, the agent may try to get more for the government than is properly owed. But there are protections to fight back, and the agent is not looking to keep some of the tax for himself.
Like many of you, I believe in law and order. Like many of you, I would like to see more police officers in Albuquerque to fight our crime. Like many of you, I would like to see more FBI agents and Homeland Security to protect against internal and external threats to public safety. Like many of you, I would like to see a strong military to protect against threats to our system of government.
It takes money to make these things happen. And if we also believe that we should each pay the share of taxes that we properly owe based on the laws of our country, we should support the IRS budget, proper staffing of agents, and current technology to do their job.
The war on the IRS has damaged law and order in our tax system. I simply cannot comprehend why someone who champions law and order in all of the things I listed above reviles it when it comes to our tax laws.
Criminal investigations are down. This does not mean fewer resources to go after law-abiding citizens. It means fewer resources to go after money laundering, criminal gangs, and the very few in each community who believe that they have no common bond to our society that requires a shared sacrifice.
Budgets, including government budgets, reflect values. We elect people to make decisions how our shared values should dictate our spending. But we need revenues also. And we need our laws enforced fairly. Cutting the IRS budget hurts revenues and fair administration of the system.
I remain perplexed how people who support laws and their enforcement also cheer targeting the IRS. It makes me wonder if they mean what they say.
Jim Hamill is the director of Tax Practice at Reynolds, Hix & Co. in Albuquerque. He can be reached at email@example.com.