Today’s post by guest blogger Karen Lapekas is a thoughtful reflection on Commissioner Rettig’s remarks given at the ABA Tax Section meeting last week. I was not at the meeting – I had just returned from international travel and was hunkering down to make sure I did not have COVID – so I am relying on this description, which notes that the Commissioner “called out” tax attorneys for not defending the IRS when politicians and commentators fear-monger about the $80 billion funding in the Inflation Reduction Act. Now, I find this a very strange reaction. The Tax Section has written and testified before the House and Senate Appropriations Committees in support of increased IRS funding for as long as I can remember. Historically and definitely during the recent funding debate, members of the Section have written letters individually, spoken to the media, and spoken to members of Congress and their staff, explaining what happens to taxpayers when the IRS doesn’t get sufficient funding. And here at PT Les, in The Fear Over IRS Funding, called out politicians using inflamed rhetoric to describe the Inflation Reduction Act.
Since 2006, I have been calling for additional funding for the IRS and consistently testified before the Appropriations and tax-writing committees of Congress about this issue. (See page 442-457 of my 2006 Annual Report to Congress here; it’s also worth reading my 2013 Most Serious Problem on IRS lack of funding.) Unlike the enforcement-driven debate today, the case I made to Congress was that funding the IRS is a constituent service. The IRS will do whatever job it is given; even with inadequate funding it will still plow forward – but in that plowing forward, with inadequate funding core services such as answering the phones and core taxpayer rights such as providing prompt appeals hearings and correct, clear, informative notices go by the wayside. Looked at from that perspective, adequate funding of the IRS – whether for service or compliance activities or information technology – is something every elected official should desire.
So why is this not the case? First, the IRS collects taxes and has awesome powers to do so. As a matter of strategy (overrated and even misguided, I think) it believes that the more people fear being audited or face enforced collection, the more they will comply with the law. So it’s not surprising that people react with fear when they hear the IRS will get more funding. Second, people tend to remember negative things rather than positive things. Thus, although the IRS pulled off a near-miracle during COVID distributing Economic Impact Payments, the Advance Child Tax Credit, and other pandemic relief provisions, when asked to think about the IRS, taxpayers are more likely to remember the Tea Party 501(c)(4) debacle of a few years ago or their own negative interaction with the IRS. Third, in the last three decades the geographic presence of IRS employees in most of the United States has all but vanished. Taxpayers no longer know IRS employees who are members of their religious organizations or PTAs or gyms. This makes it easier to see IRS employees as nameless and faceless automatons.
These three tendencies make the IRS an easy target. How to combat this? Well, “combat” is not the right approach – that just brings on more yelling. Being defensive doesn’t help; complaining that people aren’t appreciative enough of all the IRS’s good work isn’t going to win converts either. I personally agree with Ms. Lapekas that we tax lawyers need to speak up, but we should speak as taxpayers, not tax lawyers. We should take every opportunity we can to talk to our neighbors, our friends, our colleagues about why taxes matter, why tax compliance matters, and then, and only then, why we need a tax agency that functions well. Let’s not make the conversation about the IRS – that just triggers negative reactions. Instead, let’s make the funding conversation about achieving a fair and just tax system, something no one will say they don’t want. — Nina
Chills ran down my spine when IRS Commissioner, Charles Rettig, said these words about the IRS to a room crowded with hundreds of tax attorneys.
They weren’t chills because I feared an overgrown IRS, but because I hadn’t before truly appreciated how important its work was, how thankful I am for it. Its work is important not only for the collection of 96% of the funds that support this country, but for the work it does in protecting and serving the individuals that call it home.
Yes, the IRS protects and serves. It fights fraud, terrorism, money-laundering, child exploitation, and human trafficking (to name just a few things). It’s in everyone’s best interest to support it, fund it, and work to improve it. And before you dismiss me as a brainwashed civil servant, know that I make a living fighting against the IRS. My career is finding the IRS’s faults and mistakes and exposing them. I pay my bills by fighting the IRS’s wrongs. Am I proud of my work? Hell yes. But what makes me even more proud? Living in a country where it’s possible.
read more…Chuck (the name he goes by, he reminded us) reminded us that the IRS has tracked and helped seize Russian oligarch’s yachts around the world, took control of Al Qaeda and Hamas websites and diverted donations from those sites to victims of terrorism, and took down the largest child pornography website in the world. The child porn website takedown resulted in the arrest of 337 users within the United States alone.
When Chuck concluded his speech (which went over-time, as usual), I tried to talk to other attorneys about it. Two of them said they didn’t attend the speech because they’d heard him speak many times before and thus (said with a roll of their eyes), had heard his same stories at least twice that many. Another attorney who did attend mentioned that the Commissioner was a great orator, but dismissed the speech as a rah-rah campaign for the IRS. (No, Mr. Rettig is not eligible for re-appointment and by his account is looking forward to returning to his humble public-school, immigrant-raised, military supporting, beginnings in Los Angeles).
Something was different about this speech though. The Commissioner called us out. He criticized us tax practitioners. Repeatedly. Why? Because as the media has excoriated the IRS’s recent $80 billion funding boost and spread fake news about 87,000 new gun-toting agents, we said nothing. Worse, some practitioners rode the media frenzy for personal gain from the hype to spew false information and feed the fire. Doing so has literally caused increased death threats against IRS employees and put them in harm’s way. It has certainly eroded the country’s confidence in the second-most important government agency in the United States (the first being the military, Chuck reminded us).
When public confidence in the IRS wanes (even further), voluntary tax compliance wanes. And that hurts all of us.
Why would the Commissioner of the IRS express disappointment in a room full of tax attorneys? Why would he call on private practitioners to speak out IN SUPPORT OF the IRS? We make a living fighting it, after all.
He didn’t say. But I think I know why.
Because we know the truth.
When everyone was seemingly inflamed by the $80 billion infusion into the IRS, there was a group that largely wasn’t. It was tax attorneys. From the most Trump-supporting, die-hard Republicans to the snow-flakiest Democrats; we supported it. All the tax attorneys I know said the same thing about the increased IRS budget. They agreed, “It’s about damn time.”
We didn’t say this publicly, of course. Because if we speak out in support of the IRS our clients would think we wouldn’t put up a bull-dog fight against it. Our clients would be wrong if they thought this. But we fear losing them, nonetheless.
We support increased funding to the IRS because fighting the IRS works. It works because, when the IRS operates properly, taxpayers can win. Yes, tax administration can (and should) be improved. But there are checks and balances in place, opportunities for appeals, IRS employees who care about the right answer (even to the detriment of the government), and laws in place to protect us. If you’re not familiar with tax procedure and if you have not actually fought (and won) countless disputes with the IRS, you wouldn’t know this. You wouldn’t know how much easier it is to achieve “justice” in a fight with the IRS than it is against a state tax, or other government, agency.
When the IRS can answer its phones, it helps taxpayers solve problems. When the IRS has resources to improve its technology and public outreach, it can inform and protect the public against scams. If the IRS is well-funded, it can reach the poor, the elderly, non-English speakers, and members of the military, before financial predators can.
Yes, the Commissioner’s speech was full of his same old stories. We heard ad nauseum about his love for his wife (a refugee from Vietnam, lest anyone forget), his support for the military (even—no, especially—when his son was deployed), and his admiration for his immigrant in-laws (who have notably thrived in this country, despite not speaking English). But these stories are only “old” if you’re sick of hearing about the “American Dream.” I’m not sick of it. I hope I never tire of hearing it. I love hearing that the American Dream is alive and well.
But it’s only alive and well because we have people like “Chuck” at the helm of the IRS. Because we can speak out against the IRS and it listens, and cares. (It really does). The American Dream is alive and well because the IRS Commissioner is (justifiably) so confident in the IRS that he can call out a room full of private tax attorneys and criticize them for their silence when the IRS was under attack.
His rebuke was well-placed.
As an IRS employee I appreciate Chucks comments and Ms.Lapekas words of support for the IRS mission. Is our agency without it’s problem employees? No, but is any company in private industry staffed with 100% perfect people? I will tell you I work with a lot of great people who are concerned about tax administration, want to make sure taxpayers are following the rules and to treat taxpayers respectfully. The IRS has done phenomenal work writing Regulations for the COVID related laws, putting FAQs out, pushing billions in payments out to hundreds hundreds of thousands of Americans during the COVID crisis – all while being understaffed!!! I agree with Ms. Lapekas this was all done with little to no acknowledgement from the attorneys and CPAs.
I have gone on Facebook rants about the misinformation on the $80M in additional funding. The information being screamed over the airways so entirely FALSE. I’ve seen TikTock and Instagram postings from CPAs warning people about armed IRS agents and I just want to pull my hair out. The IRS is not the bad guy here. We are reaching a critical point in this agency where 54% of our workforce could walk out the door. I read it all the time in FedSmith about the number of retirement applications being at an all time high. We need to hire people and we need to do it like yesterday. There are a number of great paying jobs out there just go on USAJobs.gov.
Thank you very much for this overview of the successes behind the scenes and the importance of supporting the IRS.
Like you, I make my living fighting against the IRS and teaching tax professionals how to do tax representation.
But also, like you, I am a realist. When the IRS has inadequate funding, and even tax pros cannot reach key people at the IRS (without having managerial contacts), that makes it impossible for taxpayers to get back into compliance and to pay their bills – and start over with a clean slate.
And yes, I have been speaking out an pointing out that the IRS was never designed to send money out to people with all these programs that Congress dropped on their shoulders. Yet, they plodded along and managed to get funds into the hands of millions of people – many of whom (when asked by their tax pros) insisted they never got the money – even though, upon wasting time investigating, we find their did have the money all along.
The IRS is, by no means, perfect.
But WOW! During Chuck’s tenure, he has tackled some of the toughest problems and obstacles I can ever remember a Commissioner having to face.
Yes, his term ends in November (as he keeps reminding us).
He has left a very competent team of deputies and managers in place.
I dearly hope that President Biden can appoint someone equally familiar with the tax community, tax problems and the needs of both taxpayers and tax professionals.
Thank you.
Thank you Ms. Lapekas for your well-written article about the IRS and recent controversies over the increased funding provided by the Inflation Reduction Act of 2022. As you noted, the IRS is an agency that is easy to hate (no one prefers to pay taxes) but one that is vitally important to security of our country, and the well-being of its citizens.
In an opinion piece in the Press Enterprise (01/01/2013), the St. Louis Dispatch noted that Harvard historian Jill Lepore, in a short history of the income tax published in the The New Yorker (Nov 2012) wrote, “The tax was intended to answer populist rage at the growing divide between the rich and the poor.” The article goes on to say that a panic that followed the San Francisco earthquake of 1906 had created a deep recession. People thrown out of work were outraged that the richest 1 percent of households held more than a third of the nation’s wealth. Imagine that: 1 percent of the nation’s wealth – land, stocks, bonds, art, savings accounts, jewels, cars, boats, the whole kaboodle. In 2013, the date the St. Louis Dispatch published this article, the richest 1 percent owned 43% of the nations wealth and the next richest 4 percent held another 29%. That’s 5% of households controlling 72% of the nations wealth. It’s now 2022, and unfortunately, the gap between the rich and poor has only increased further. What many may not realize, is the income tax serves to equalize (or more accurately minimize) this increasing wealth inequality by ensuring that the rich pay taxes which are then used in part, to provide assistance and support to a large majority of low-income and middle class taxpayers. This assistance comes directly from the IRS in the form of the Earned Income Tax Credit, Child Tax Credit, Opportunity Tax Credit and the Advanced Premium Tax Credit. It also comes indirectly through organizations such as Medicare, the Supplemental Nutrition Assistance Program (SNAP) and others. Roughly 65% of American do not pay any income tax at all as a result of this redistribution of wealth made possible by the income tax. Resultingly, as the title of the St. Louis Dispatch notes, DON’T SLAM INCOME TAX – CELEBRATE IT.
Excellent take Karen! The IRS has occasionally made some serious mistakes but, starving it financially is not the answer and will only serve to guarantee a continued inadequate level of service. For some, it is political calculus, slash the budget to punish IRS for real and perceived mistakes and then rail against IRS for poor service. IRS needs both funding and strong oversight. Until, they receive both, the taxpayers will continue to suffer
Thank you for a well written article. I also believe tax practitioners should speak out and educate the public about this issue. I have done so both publicly and privately and will continue to do so.
I appreciate the effort that Commissioner Rettig put into a thankless job. If the IRS is underfunded, we tax practitioners are pushed by Congress and the IRS into picking up administrative and policing activities that belong to the government. (Think of the hours we all spent on hold, only to get a “courtesy” disconnect.) some candidates in the mid terms are promising to repeal the $80B in IRA. That would hurt the government, taxpayers and the tax prep community.