The Vindication of the IRS Whistleblowers

Gary Shapley and Joseph Ziegler are finally rewarded for their integrity and dedication to service

By Kimberley A. Strassel. Excerpts:

"That is what’s happened in the case of Messrs. Shapley and Ziegler, veteran civil servants who were promoted this week to senior jobs, advising Treasury Secretary Scott Bessent on IRS reform. This comes after years of retaliation, for their sin of treating Hunter Biden like any other lawbreaker—for doing their job well—and for calling foul when colleagues put politics ahead of honest work.

To reprise: Mr. Shapley was an experienced IRS agent when brought in to supervise the Biden investigation in 2020. Under him was the similarly experienced Mr. Ziegler, who’d initiated the Hunter tax case around 2018 after viewing suspicious accounts. Mr. Ziegler had already encountered political interference, including a decision to park the tax case with David Weiss, the U.S. attorney for Delaware, even though Hunter filed taxes in California and the District of Columbia."

"Mr. Shapley’s team was thwarted in attempts to search Joe Biden’s guest house (Hunter’s onetime residence) and a storage facility containing Hunter business documents. The team was instructed not to ask questions about Joe or pursue leads connected to Joe’s grandchildren. It was slow-walked, made to ignore campaign-finance allegations and to strip Hunter’s name from document requests. FBI headquarters even tipped Hunter’s people to a coming round of interviews"

"Mr. Shapley testified that in an October 2022 meeting, Mr. Weiss stunned investigators by saying there would be no tax charges because he was “not the deciding person.” The U.S. attorneys for D.C. and central California, Biden appointees, refused to bring them."

What’s Left for Biden to ‘Stimulate’?

The IRS is mailing out Covid-era credits to anyone still eligible

WSJ editorial. 

"A late bonus is on the way to about one million distracted tax filers. In time for the holidays, the Biden Administration says it will mail a Covid-era credit to people who didn’t claim it by 2021. Any need for “stimulus” is long past, but the feds think it would be a shame to miss one last chance for mass handouts.

The Internal Revenue Service announced last week that it will automatically pay the Recovery Rebate Credit to anyone still eligible for it, with checks set to be mailed by New Year’s Day. The credit is available to anyone who missed at least one of the stimulus checks Congress sent in 2020 and 2021.

Recipients must earn less than $80,000 a year, or $160,000 for couples. The amount of the credit depends on factors such as income level, but it can be as much as $1,400.

It’s one of countless credits that filers can claim on their returns, and it’s far from little-known. It was the second most-claimed credit in 2020, with 31 million claims worth $45 billion. And since it’s a refundable credit, available to people who owe little or no income tax, it’s likely that millions of people filed returns specifically to claim it.

So it’s odd that the IRS would go out of its way to make sure no one misses out years later. Unlike nearly every other credit, the IRS is sending out payments without requiring recipients to claim them, as long as they filed a 2021 return. Even filers who apparently declined the credit—by marking $0 on their returns—will find a check in their mailbox.

These gifts come at a cost to other taxpayers, and the IRS predicts it will distribute $2.4 billion of last-chance checks. That’s nearly as much as the agency spends in a year on taxpayer services, such as fielding calls and investigating claims from filers whose returns they’ve botched.

The rationale for the late payments is the same one behind the last payouts, which Congress passed and President Biden signed well into the post-Covid economic recovery. The payments were popular, and low unemployment and rising inflation were no impediment as Democrats sought political credit.

The payments make even less sense now when there are no pandemic lockdowns and the job market is healthy. But as a new political era dawns, Democrats want to shovel out the door every last dollar they can."

Millions of Taxpayers Call the IRS for Help. Two-Thirds Don’t Reach Anyone.

The agency hired nearly 7,000 new customer-service representatives, but its internal watchdog group says it still falls short

By Ashlea Ebeling of The WSJ. Excerpts:

"Taxpayers successfully reached a human about 31% of the time this tax season"

"Despite this, the IRS rated its service a score of 88%"

"The IRS rating covers just 35 of its 102 customer-service numbers and doesn’t count the many callers who hang up in frustration or get sent to recorded messages, said" [Erin Collins, head of the IRS’s Taxpayer Advocate Service]

"For the 2.1 million people who called the agency’s collections phone line, for instance, less than one-fifth reached a representative"

"As of April, the IRS was taking more than 22 months to resolve certain identity-theft cases, and it had approximately 500,000 unresolved cases in its inventory."

"The customer-service system is inefficient in its use of existing staff, Collins said. While some lines have long wait times, representatives on others lines often “are sitting around waiting for the phone to ring,” the report said. Representatives were waiting for calls about 25% of the time they were assigned to answer the phones, the report said."

The IRS Money Hole Gets Deeper

The agency is already pleading poverty despite its 2022 windfall

WSJ editorial. 

"The Internal Revenue Service can’t write its own checks, which means it has to ask Congress for funding like any other agency. But if lawmakers have been tracking its misspending, they’ll turn down the tax collectors’ new $104 billion budget request and demand an audit instead. 

Commissioner Danny Werfel appeared before the House Appropriations Committee recently and told legislators that the IRS faces financial collapse. “Resources are limited,” he said, and the agency “will likely use them entirely before the funding expires.” In other words, the IRS doesn’t think the $60 billion bonus it received from Congress in 2022 is enough, though it is supposed to last through 2031.

The IRS has a brilliant solution for this cash burn: Add more to the pile. Instead of explaining where the money went, Mr. Werfel asked the House to look away and grant his team another massive funding boost, this time through 2034. The extended bonus he seeks would bring total supplementary funding to $104 billion over 10 years.

Mr. Werfel also hinted at mass layoffs if Congress doesn’t pay up. The bad news for taxpayers is that jobs would be cut from the customer service team rather than the growing audit squad. “The vast majority of taxpayers would be unable to reach an IRS representative for assistance,” Mr. Werfel warned. He’s betting that voters will blame their representatives who don’t give him the money he wants and then the agency keeps taxpayers on hold for an hour. This is called political blackmail.

Missing from the IRS’s request was an accounting of how its last round of funding has been run down so quickly. The money it received in the 2022 Inflation Reduction Act (IRA) was meant to fund a strategic overhaul, but not much of the plan has been carried out.

The biggest dud so far has been the hiring spree the agency promised. The strategic plan called for about 20,000 new hires by the end of 2024, and another 10,000 by next year. The IRS fell short of its first-year target and has struggled in particular to recruit auditors, one of its highest-paid types of staffer.

The agency has had an even worse start reforming its taxpayer service arm. Early reports suggest that progress has been flat since the last round of funding. By December the IRS said it had almost 700,000 returns still waiting to be processed, most of which were filed earlier last year.

Another money pit is Direct File, the new government-run platform for submitting returns. Democratic lawmakers have sought in-house tax filing for years to push private preparers out of business, and they funded an IRS study of the program. Yet the IRS went ahead and launched a pilot this year, spending about $114 million for a platform currently serving only 140,000 filers.

All of this is proof of mismanagement at the agency, which howled in protest when House Republicans clawed back $20 billion from the original $80 billion Democrats gave the agency in the 2022 IRA. Despite his pleas, Mr. Werfel is making a strong case for stripping the remainder instead of adding another cent of additional cash."

IRS’s Most Wanted: The $200,000 Man

Sixty-three percent of new audits last year were aimed at middle-class filers

WSJ editorial.

"The Internal Revenue Service got an audit of its own in time for Tax Day, and two irregularities jump out. President Biden’s plan to hire a new army of tax collectors is falling flat, and the agents already at work are targeting the middle class.

Those are two findings of the IRS’s watchdog, the Treasury Inspector General for Tax Administration (Tigta). The report examines IRS progress on mandates from the Biden Administration backed by tens of billions in new funding. The first supposed goal was to audit more ultrawealthy and fewer middle-class filers, but it’s not going so well.

By last December the IRS decided that it wouldn’t begin tracking its progress until later this year. That’s because the agency has been slow to shift its focus to high-income taxpayers, who make up a small share of total filings. Its April 2023 strategic plan pledged that future audits would disproportionately target individuals making at least $400,000, but “did not include specifics on how the IRS was going to ensure it met this commitment,” says Tigta.

The most recent data suggests the IRS is still focused on the middle class. As of last summer, 63% of new audits targeted taxpayers with income of less than $200,000. Only a small overall share reached the very highest earners, while 80% of audits covered filers earning less than $1 million. Don’t forget to save those charitable-giving receipts.

Sluggish hiring might explain the slow shift. To its credit, the IRS never claimed it would decrease its middle-class audits, only that audits on higher-earners would become a majority. A fleet of new agents were supposed to turn their sights on rich tax dodgers. But apparently the job is in scarce demand. 

Tigta reports that revenue-agent recruitment is “far below” the agency’s target, and it hired only 34 in the first six months of its expansion, according to trade publication Government Executive. That compares with its goal of 3,700 in the first year.

The agency faces the same tight labor market as any other employer, but the job specs aren’t bad. A typical salary for these agents is about $125,000, plus public-employee perks such as up to $60,000 in student-loan forgiveness. But for one reason or another, America’s treasurers and accountants aren’t lining up to become federal tax collectors.

All of this should encourage the House Republicans working to claw back more of the $80 billion that Democrats funneled to the IRS. For all that new money, Congress is so far getting the same old agency."

IRS Slows Refund Payments for Pandemic-Era Tax Break

Agency warns of fraud in employee-retention tax-credit program

By Richard Rubin and Ruth Simon of The WSJ. Excerpts:

"The Internal Revenue Service has slowed the payment of tax refunds to employers under a pandemic-era program, as the agency struggles to combat what it says are fraudulent and overstated claims for the employee-retention tax credit. 

“We remain deeply concerned about small businesses being scammed and dubious Employee Retention Credit claims being submitted amid aggressive marketing to the business community,” the IRS said Tuesday. “The IRS has slowed our processing of these claims to guard against fraudulent or incorrect submissions as we work to enhance our procedures and controls to best protect small-business owners and taxpayer dollars.”"

"Congress created the employee-retention credit, or ERC, in 2020 as part of its response to the coronavirus pandemic. The aim was to reward employers for keeping workers in their jobs. Eligible employers that experienced revenue declines or had their operations suspended by government orders can get up to $26,000 per employee."

"As of early March, the IRS had paid more than $150 billion in ERC refunds, according to the agency. It likely paid $220 billion through July before payments started slowing down in August"

"That is roughly triple the original congressional estimates."

"The government has also been facing pressure in the opposite direction, from business owners and lawmakers concerned about refund backlogs that sometimes stretched for months."

Biden’s IRS Chases Chump Change

The amount of improper pandemic payments dwarfs what its new agents stand to recoup for taxpayers

By Phil Gramm and Jodey Arrington. Excerpts:

"The Government Accountability Office estimates the federal government made $528 billion in improper payments in 2021 and 2022. Some were the result of honest mistakes. But many swindlers saw opportunity in the blizzard of pandemic relief programs, filing false claims and outright stealing taxpayer money. As astonishing as half a trillion dollars in estimated improper payments is, the real cost of the unprecedented mismanagement and fraud is much higher. GAO numbers exclude improper payments in major programs like Pandemic Unemployment Assistance and food stamps because the federal agencies running those programs didn’t bother reporting them, despite being required to do so by law."

"fraudulent payments made under the Pandemic Unemployment Assistance program alone could be as high as $400 billion, only $5 billion of which has been recovered."

"Julie Su, who ran the Pandemic Unemployment Assistance at the Labor Department, has been offered a promotion. Mr. Biden has nominated her to be labor secretary."

"Estimated overpayment rates [of food stamps] rose from the prepandemic average of 4.2% to 9.8% in 2022. The actual fraud rate is worse, since the food-stamp program doesn’t count overpayments of up to $48 a month as improper payments."

"in 2021 that same Congress provided only $2 billion to deal with fraud in pandemic-era programs—and the administration didn’t use most of it."

"in 2022 alone the IRS itself made an estimated $25.4 billion in improper payments in only three programs: earned-income tax credits, additional child tax credits and American opportunity tax credits. The GAO estimates that the level of improper payments by the IRS in these programs runs as high as 28% of all payments made."

"78% to 90% of the money extracted from underreported income would come from those making less than $200,000 a year. Only 4% to 9% would come from those making more than $500,000 a year."

"Nearly half of the audits would hit Americans making $75,000 a year or less." 

Bad Ideas From the IRS to Collect More Taxes

The conflict of interest in the IRS preparing my return seems significant and irreconcilable.

Letter to The WSJ.

"In “The IRS Wants to Prep Your Taxes” (op-ed, June 1), Jason Altmire argues for increased Internal Revenue Service enforcement, saying that the gap between taxes owed and taxes paid has reached an “astonishing $1 trillion.” But the latest official IRS estimate of the tax gap is $540 billion for 2017-19, and relative to the size of our economy, it has shrunk slightly over the past two decades. Academic studies also indicate that the U.S. tax gap is lower than the typical tax gap in Europe.

More aggressive IRS enforcement would mean higher compliance costs for honest taxpayers and losses in our civil liberties. The IRS makes a lot of mistakes, so enforcement imposes collateral damage on the economy. A better way to reduce the tax gap is for Congress to simplify the tax code and for the IRS to improve its accuracy, efficiency and filing help for taxpayers.

Chris Edwards

Cato Institute

Washington"

IRS Needs a Cage, Not More Cash

The cases of the whistleblower Gary Shapley and journalist Matt Taibbi show why the GOP should claw back that $80 billion infusion

By Kimberley A. Strassel. Excerpts:

"This week brought two more examples of IRS roguery that build on its already unsavory record of leaks, incompetence and partisan behavior. The first is the alarming story of journalist Matt Taibbi, who may have been targeted by the IRS in retribution for documenting the joint censorship efforts of Big Tech and the federal government.

Mr. Taibbi in March told the House Judiciary Committee a disturbing tale: an IRS agent had made a surprise visit to his New Jersey residence on March 9—the same day Mr. Taibbi testified before another House committee about censorship at Twitter. The journalist was subsequently told there were “identity theft” concerns with his 2021 and 2018 tax returns. The 2018 claim particularly troubled Mr. Taibbi, since his accountants possessed documentation showing the return had been electronically accepted, and neither they nor he had ever received notification of a problem. Judiciary Chairman Jim Jordan demanded the IRS explain.

The IRS earlier this month provided Mr. Jordan documents that only add to the appearance of targeting. It seems the IRS officially opened its examination of Mr. Taibbi’s return on Dec. 24—not only Christmas Eve but a Saturday. What could be urgent enough to inspire a government employee to work overtime? That was the day Mr. Taibbi capped three weeks of reporting with his ninth installment of the Twitter files, an exposé of a wide sweep of federal agencies working with social-media companies to censor online speech.

Documents also show that in addition to the unannounced house call, an IRS agent dived deep into Mr. Taibbi’s personal life, compiling a file of his voter-registration records, whether he had a concealed-weapon permit and even whether he possessed hunting or fishing licenses, among other data. The file contained his Wikipedia page detailing his Twitter files work. The IRS launched this excavation even though Mr. Taibbi didn’t owe the IRS any money.

More notable is what the IRS didn’t provide the House: any proof of letters it claimed to have sent to Mr. Taibbi alerting him to the purported 2018 problem. It also failed to cough up internal communications related to the case, despite Mr. Jordan’s demand and Mr. Taibbi’s signed waiver to allow Congress to see information related to his return."

"Then there’s IRS Supervisory Special Agent Gary Shapley, the congressional whistleblower who this week went public with his claims of Justice Department political interference in the Hunter Biden probe. A 14-year IRS veteran, Mr. Shapley oversees a team that specializes in international tax and financial crimes. He says he was assigned control of the Biden investigation in 2020, but again and again watched prosecutors engage in “deviations” from the normal process, in ways that “seemed to always benefit the subject.” He explained he “couldn’t silence my conscience anymore.”

Mr. Shapley’s attorneys informed Congress that their client and his team had recently been yanked off the probe “at the request of” the Justice Department—which looks like clear (and forbidden) retaliation for his speaking out. IRS Commissioner Danny Werfel will undoubtedly try to slough this off on Justice, but a request is only a request, and nothing excuses Mr. Werfel from his own obligation to see tax justice done or protect whistleblowers. The IRS can hardly claim to need more money to pursue tax cheats when it is sidelining top investigators pursuing tax cheats."

What Happened When the IRS Got Audited

Obsolete software. Archaic code. Tech so old it makes the typical member of Congress look young. The IRS has an IT problem.

By Ben Cohen of The WSJ. Excerpts:

"33% of the custom-built software applications critical to the agency’s operations counted as “legacy IT,” which means they relied on archaic code or tech so old that it makes the typical member of Congress look young."

"right now it’s closer in age to the Apollo space program than Apple products."

"IT complications usually come down to having too much information or not enough technology. The IRS suffers from both. 

The agency doesn’t function like a bank or credit-card company, where the person you call on a toll-free line instantly pulls up your account. It can’t. There is no single point of access for every specific piece of data about individual taxpayers. Even the “Where’s My Refund” tracker has a hard time answering that very question, since the disparate parts of the IRS’s patchwork system are incapable of working together. “There are 60 different case-management systems throughout the IRS,” said Nina Olson, the former national taxpayer advocate, “and they don’t all talk to one another.”"

"There were hundreds of IRS applications that have been around for at least 25 years and dozens that have been in existence for more than 50. There were also pieces of software running 15 updates behind the current version"

"Even the most important application used by the IRS requires employees to be fluent in a programming language no longer taught in schools."

"fewer people every year have the niche expertise to keep the agency’s essential systems working properly."

This Is Your IRS at Work

Official audits show a record of incompetence. Democrats are still giving the tax agency an $80 billion raise.

WSJ editorial. 

"The new Inflation Reduction Act has many damaging provisions, but for sheer government gall the $80 billion reward to the Internal Revenue Service stands out. The money will go to hire 87,000 new employees, doubling its current payroll. This is also doubling down on incompetence, as anyone can see in the official reports of the Treasury Inspector General for Tax Administration (Tigta).

We’ve read those reports for the last several years so you don’t have to, and the experience is a government version of finding yourself in a blighted neighborhood for the first time. You can’t believe it’s that bad. The trouble goes beyond the oft-cited failures like answering only 10% of taxpayer calls, or a backlog of 17 million unprocessed tax returns. The audits reveal an agency that can’t do its basic job well but will terrorize taxpayers whether deserving or not.

***

Consider the agency’s chronic mishandling of tax credits. By the IRS’s own admission, some $19 billion—or 28%—of earned-income tax credit payments in fiscal 2021 were “improper.” The amount hasn’t improved despite years of IRS promises to do better.

• A January Tigta audit found that an estimated 67,000 claims—totaling $15.6 billion—for the low-income housing tax credit from 2015 to 2019 “lacked or did not match supporting documentation due to potential reporting errors or noncompliance.” 

• A May audit found that 26% ($1.9 billion) of its American opportunity tax credits for education expenses were improper in fiscal 2021, and 27% ($541 million) of its net premium tax credits (ObamaCare) were improper in fiscal 2019 (the most recent year it estimated). The same May audit said the IRS acknowledged that 13% ($5.2 billion) of its enhanced child tax credit payments were improper.

• How did it handle $1,200 stimulus checks, the sick and paid family leave credit, or the employee retention tax credit? Unknown, since the agency didn’t estimate failure rates—for which Tigta rapped its knuckles.

• A September 2021 audit found the IRS in 2020 issued 89,338 notices to taxpayers insisting that “balances were owed even though the taxes were not actually due.” Why? Because the feds had extended the filing deadline amid Covid but the IRS apparently didn’t notice.

• A February audit found the IRS department responsible for ensuring retirement-plan tax compliance suffered a 23% decline in the quality of its examinations from fiscal 2018 to fiscal 2020. In the past seven months, Tigta has issued searing reports on IRS mismanagement of everything from its partial-payment program for delinquent taxpayers, to its auditing of partnerships, to its struggle to handle internal employee misconduct.

• This ineptitude extends to programs Democrats insist will now raise revenue—those targeting higher earners. In 2010 Congress passed the Foreign Account Tax Compliance Act, which was supposed to identify wealthy Americans using undisclosed foreign accounts. Congress’s Joint Committee on Taxation said this would raise some $9 billion in revenue by fiscal 2020. Yet an April Tigta audit noted that while the IRS has spent $574 million to implement the law, the agency has drummed up only $14 million in compliance revenue.

• A July 2021 audit related the failure of the IRS small-business/self-employed division’s strategy, which began in 2010 to examine more returns from “high-income individual taxpayers.” The IRS defines high earners as those with income greater than $200,000. Yet from fiscal 2015 to the end of fiscal 2017 (when the strategy was shut down), 73% of returns targeted by the strategy fell below $200,000.

Democrats say a turbocharged IRS won’t pursue taxpayers earning less than $400,000, but don’t believe it. Middle-income Americans are easier marks, as they are more likely to write a check than engage in years of costly litigation.

***

The Tigta site shows the IRS is good at one thing: punishing those who resist its demands. A March audit chastised the IRS for using lien foreclosure suits to confiscate “principal residences” from delinquent taxpayers, a process that does “not provide [taxpayers] the same legal protections as seizures.”

A March 2017 report related the agency’s crackdown on businesses flagged as potentially evading a law that requires financial institutions to report currency transactions exceeding $10,000. The IRS took to seizing property from its targets before even conducting interviews. Tigta reports that even when interviews were conducted, the IRS failed to advise the accused of their rights or the purpose of the interview, and failed to consider “realistic defenses or explanations.” Tigta found that “most” of those targeted (owners of gas stations, jewelry stores, scrap-metal dealers, restaurants) had not committed crimes, though many were never able to regain their property.

This is the IRS that Democrats are now arming with more money and manpower to unleash on Americans. The $80 billion is a demonstration of their priorities, and further proof of the rule that failure in government is invariably rewarded with a bigger budget."

IRS Revenue Boost From Stronger Enforcement Is Scaled Back in CBO Estimate

Income limits on household tax audits, staffing challenges are projected to trim what IRS can collect by $23 billion

By Richard Rubin of The WSJ. Excerpts:

"Income limits on household tax audits and staffing challenges will reduce by $23 billion what the Internal Revenue Service is projected to collect from its expanded enforcement operations, according to the Congressional Budget Office. 

The CBO outlined the revised estimate Thursday in a letter issued by its director, adjusting the projected 10-year revenue generated by the nearly $80 billion in IRS spending included in the law President Biden signed last week. The 10-year funding boost is now estimated to raise $180.4 billion, down from $203.7 billion, according to the CBO. 

Treasury Department officials have long said the real numbers would be far higher; a spokeswoman declined to comment Thursday afternoon."

"Those restrictions will make the IRS less effective at policing the tax system, according to CBO."

"CBO now projects that the IRS will hire more slowly than had been expected."

"Overall, despite Ms. Yellen’s directive, taxpayers making under $400,000 will still pay a “small fraction” of new revenue gleaned from tougher enforcement, according to CBO"

The Middle Class Won’t Escape the New IRS Audit Wave

A CBO analysis belies a White House claim about new funding for federal tax collectors

WSJ editorial. 

"Democrats spent last week swearing that only high earners would be squeezed under their plan to beef up the Internal Revenue Service. It took only a few days for the Congressional Budget Office to put that narrative to rest. A quick analysis from the budget scorer confirms that the audit expansion will ensnare the middle class.

The CBO made the point in an Aug. 12 letter to Sen. Mike Crapo, who had sought to bind Democrats to their promise to limit audits to high earners. If the IRS expansion plan “is not about folks who make less than $400,000,” as White House press secretary Karine Jean-Pierre claimed, why not make that clear in the bill? Mr. Crapo proposed an amendment to ensure new audits would exclude taxpayers earning less than $400,000, but Democrats voted it down 51 to 50.

Mr. Crapo then asked the CBO to calculate the effect his amendment would have had. The agency found that increased scrutiny on filers earning less than $400,000 would account for $20 billion over 10 years, out of a total of about $204 billion that Democrats hope to collect through a bigger, badder IRS. In other words, the IRS expansion as it’s currently designed could collect billions in revenue from new middle-class audits.

The problem is that for every tax cheat the IRS identifies, several more compliant tax filers will be subjected to needless scrutiny. Many of the hundreds of thousands of people audited each year are chosen at random, and most taxpayers can’t afford a lawyer to go to Tax Court to contest IRS claims of tax liability. They write the check to end the relentless IRS pursuit, whether or not they think it’s fair.

Cracks had already emerged in the White House narrative before CBO weighed in. Treasury Secretary Janet Yellen, who oversees the IRS, wrote to the agency’s commissioner last week to clarify the funding plan.

The additional $80 billion, she wrote, “shall not be used to increase the share of small business or households below the $400,000 threshold that are audited.” [Emphasis added.] Contrary to the White House, Ms. Yellen promised only that new audits wouldn’t be directed disproportionately at the middle class. She didn’t dispute that thousands more middle and low earners will face scrutiny.

On Friday House Democrats passed the tax- and-spending bill that includes the supersize IRS on a party-line vote, and President Biden will sign it this week. Good luck to readers as the taxman cometh."

Not so simple as just giving the IRS more money

By Tyler Cowen.

"That is the topic of my latest Bloomberg column.  After detailing the very backward, often-1970s level of IT at the IRS (yes it will horrify you), the column continues;

It’s easy to say that the IRS has not had the staff or the money to do the necessary upgrades. But hold on: These software upgrades are supposed to save money by enhancing productivity, letting organizations do more work with fewer people. A reasonable person can be forgiven for asking whether an agency with a $13.7 billion budget really doesn’t have enough to front some cash.

You might argue that IRS was too liquidity-constrained to shell out the cash up front, but is that argument believable? The improvements from better software usually pay off rather quickly, precisely because the software is labor-saving. The US has plenty of small to mid-sized businesses and non-profits with shrinking staffs and budgets. Yet most of those institutions have been able to upgrade to better software, often repeatedly. Unlike the IRS, many state tax agencies at least use scanners, and those are hardly the wealthiest or most nimble institutions in American society.

When I see that the IRS reduced staff by 22%, I imagine an alternate reality in which the IRS had replaced a good deal of its office staff with better information technology, as many American businesses started to do in the 1990s. In this parallel universe, the staff of the IRS is down and the productivity of the IRS is up, as has happened to so much white-collar office work. But that is not the world we live in.

The advocates for additional funding should better understand why not everyone in America is thrilled with the agency’s new budget boost. It’s not just a bunch of kooks who fear “an army” of weapon-toting IRS agents, or rich people who feel they shouldn’t have to pay their fair share. It’s normal people who think it’s a bad idea to reward an agency that seems so dysfunctional.

I say make the funding conditional on progress in advance.  Overall I remain astonished how little critical scrutiny the Biden bills are being subject to.  By the way, here is a standing history of attempts to reform the IRS/give it more funding.  Most have failed."

The Saturday I Spent Five-and-a-Half Hours in Line Waiting for the IRS

There has to be a better way to help taxpayers with their problems 

By Laura Saunders of The WSJ. Excerpts:

"On Saturday, May 14, I waited 5 ½ hours for a meeting with a courteous and helpful IRS employee. I was at the agency’s Taxpayer Assistance Center in Harlem, one of two New York City IRS offices open that day—along with three dozen others across the country—for walk-in visits. No more walk-in days at any IRS office are scheduled for the rest of 2022."

"Several, like me, needed to verify their identities so the IRS would release 2021 refunds. The agency wants taxpayers to verify IDs online, but that involves turning over personal records to an outside contractor that holds them for several years or longer, which bothers some people.

I also learned that as different as we were, our problems shared a common feature: None of us, despite mighty efforts, had been able to reach the IRS by phone.

“The letters tell you to call on the phone, but then you can’t get through. They don’t want to talk to us on the phone!” said an angry woman, as others agreed.

National Taxpayer Advocate Erin Collins, who heads an independent group within the IRS that safeguards taxpayer rights, confirms that recently only about one in 10 callers to the agency has gotten through. Many others aren’t even put on hold but are cut off in a “courtesy disconnect.” That’s what happened with my many calls to the IRS before my in-person visit.

Two people in line complained that they had gone to that IRS office during the week and—although the waiting room was empty—were turned away because they didn’t have appointments. But when they called for appointments, they couldn’t get through. There’s no online option for making an appointment."