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How Did We Get Here? A New Series …

Posted on Feb. 23, 2022

These days, the news has been filled with stories about the disastrous state of the IRS this filing season and how this is attributable, in part if not in entirety, to underfunding of the IRS over the last decade. Now, I agree the IRS needs more funding to accomplish its dual mission of collecting revenue and administering social benefit programs. In fact, in the 2006 National Taxpayer Advocate Annual Report to Congress, I proposed a legislative recommendation to completely revise the budget procedures with respect to the IRS, based on the recognition that unlike other branches of the federal government, one dollar spent on the IRS actually raises more than one dollar for the public fisc – i.e., it pays for itself and more. But lately, the “lack of resources” has become the response to any and all shortcomings or critiques of the agency.

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I heard this “no resources” mantra almost every day of the 18 years I served as NTA, coming in response to perfectly actionable recommendations TAS employees made to their counterparts in IRS functions.  This response is actually pretty insulting, both to the nonprofit and private business sectors, and even to IRS employees.  I’ve founded and run two small nonprofits in my lifetime, The Community Tax Law Project and the Center for Taxpayer Rights, and we never had enough resources to do what we wanted and needed to do, yet somehow we did amazing things.  This is true for small and medium sized businesses just trying to stay afloat in an uncertain economy.  And by justifying poor organizational performance with the excuse of “no resources,” the IRS stifles the creativity and curiosity of IRS employees – why bother trying new approaches if you don’t have the resources to implement them?  How self-defeating, and how insulting to the rest of us.

Again, the IRS does need more funding. It also needs better direction and oversight on how it spends that funding, because, frankly, its track record on spending infusions of cash hasn’t been impressive.  But it also needs to better utilize the resources it has. The problems that seem to be so immediate today – massive backlogs in mail and return processing; low levels of telephone service; low audit rates; e-filing and identity authentication  – have been simmering for decades. The pandemic just exacerbated the issues.

But here’s the good news.  As Little Finger told Varys in Season 3 of Game of Thrones, “Chaos isn’t a pit. Chaos is a ladder.”  I’m not saying we should adopt the approaches of Little Finger or the other vying factions in that series, but we should use this chaotic filing season to analyze the root causes of what brought us to this place and to envision what we want our tax system to look like when we emerge.

So, occasionally, over the next several months, I’ll be exploring various issues in a series of posts called, How Did We Get Here? In some ways, these posts will be deeply personal, because in writing them, I will draw not only from my published writings, including the Annual Reports to Congress and my congressional testimony, but also from my diaries and notes of meetings held with IRS personnel and others over the last two decades.  In doing so, I hope to show that all is not lost. During this period, many people, inside the IRS and outside it, made perfectly reasonable suggestions that, if adopted, would have moved the IRS a little closer to modern tax administration and made the impact of covid less severe. Each of the recommendations were relatively modest, but taken as a whole, over time, would have been transformative. And that is precisely what the IRS needs at this point – a transformation.

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