In case you are disappointed with the comedy selection on T.V. tonight, the 2012 IRS budget request hearing is probably going to be replayed on C-Span tonight. Watching the blame game between the IRS Commissioner and the Congressmen and women is actually humorous if you are a bit twisted such as I am. Douglas Shulman, the IRS Commissioner, gave testimony today to justify his budget request and to answer questions. There were a few note-worthy moments with regard to the budget itself, the Affordable Care Act (Obama care) as well as the very structure of the way we pay taxes.
Let’s start with this; the 2012 IRS budget request was for 12 billion dollars. We pay 12 billion dollars to run the tax collection system. Mr. Shulman was quick to point out that the need for additional funds over and above the 12 billion in order to properly invest in technology. With all the debating over how to reduce the budget and deficit isn’t this an obvious place to find a contribution? Luckily, congress removed one of the most glaring examples of insanity within the Affordable Care Act requiring business to file a 1099 on almost every business with whom they deal in a years’ time. If memory serves me right, I believe a 1099 was required for any business relationship which procured a 600 dollar transaction record within a year. Over 20 million dollars was saved when the IRS canceled their plans to prepare for this ridiculous portion of the health care law. It is curious how the measure related to the issue of health care but I think it has become more and more evident over the last year and half that the bill really isn’t about health care anyway. Yet I digress. One recommendation to the Commissioner was to find a way to remove the hidden additional tax for the average American resulting from the need to pay someone to file their taxes for them. Mr. Shulman, however, was very resistant towards the IRS offering a free web site where taxpayers can file their tax return without paying Turbo Tax or someone similar. He admitted it was a political and philosophical discussion within the agency and that the creation of such a website would only require additional funds to build the database needed to support such a service. He also pointed out that the Congress is historically guilty of funding enforcement over customer service. Big surprise there! It is curious that the IRS would not support the web site idea, although if we consider the health of the bureaucracy and the jobs within it; it is no wonder that the IRS, indeed any agency, doesn’t support such programs. It is in the interest of the citizen to reduce costs within the IRS or fees paid to ensure compliance; it is certainly not in the interest of those working to keep both their job and their overly-complicated tax collection system.
The lack of real regard towards the citizen was evident in the testimony and questions during the meeting today. The percentage of phone calls answered when an actual human was requested fell 15% from 2004 from 89% to 74%. Although as Mr. Shulman pointed out, he contributes part of that differential to the effective system they put in place warning the citizen how long the wait is and suggesting they hang up and call back during a slower time. Oh, how helpful. Mr. Shulman refused to lend his support to a free system for the people to utilize when filing their taxes. Mr. Shulman considers the IRS a “financial serves company”. As a citizen I take offense that he believes his agency in any way serves me. It may help me stay out of jail by explaining their rules perhaps. Yet, this fails to pass my test for service. The IRS is an institution founded to do nothing but take our money and it does so in such a convoluted and complex way that 6 billion man hours are spent each year seeking to file within the rules. Over half of the country hires someone to file their taxes out of either the fear of doing it wrong or the justified ennui induced when considering tackling the task alone. If we take into account how many people don’t file, are on government support of one type or another or aren’t required to pay taxes, the estimated 60% of the population hiring a tax service seems even more remarkable. I must admit, Mr. Shulman seemed to genuinely desire offering the best customer service possible. He said all the right things, regretted all the right mistakes and certainly stated worthy goals of improvement. The case might be made that the system does not lend itself to simplicity. As one of the Congressional Representatives pointed out, although the tax code is written by Congress, the implementation, collections and interactions are up to the IRS to develop. Certainly the removal of a revenue tax would be ideal, yet in place of that somewhat utopian ideal perhaps we should settle for investing a few tens of millions of dollars into a system allowing citizens to pay their taxes safely and directly and at no cost to them. It is hard to believe that the issue is considered a political one by the commissioner. Certainly they could serve us better while costing us less. At least it would be a start towards some common sense in our government.
Without delving deep into the abyss of idiocy which I consider the Affordable Care Act to be, I would like to mention a couple of statements and questions with regard to the IRS and its involvement in enforcing and implementing the law. Already they are working on the collecting the taxes from additional revenue streams such as the new levy on tanning salons or the additional tax against our drug companies. Another task currently under way concerns the subsidies towards small businesses and the start-up of that “benefit”. (Any true solution would require neither subsidizing employers nor the numerous waivers which have already been granted.) Yet Mr. Shulman described the biggest concern and challenge as the implementation of the full law in 2014. Consider the task ahead of the IRS and the most glaring flaw of the law becomes readily apparent. The IRS is responsible for setting up the exchanges with the States and ensuring compliance. Both insurance companies and individuals will be part of a data base allowing both communication and financial transactions. This data base will offer information to the citizen on the status of their eligibility with regards to health insurance tax benefits. This same data base transfers money between all three parties in various ways; from health insurance credits, to payments, to expenditures relating to compliance on behalf of the insurance companies. Surely our streamlined, omnipotent and always benevolent government and IRS won’t screw this up at all. I’m quite sure I’ll never hear a testimony saying the task was too complex and that the IRS needs additional funds and resources to fix the implementation issues which are sure to come our way. I doubt we'll ever hear about the government either losing track of money or holding it without good cause, surely not the IRS! They perform so fabulously at present; this must surely be the time to tack on such an additional responsibility as the health care system of the nation. Never mind this massive amount of financial and health information being gathered into a central data base. Never mind the additional intrusion into your life by the IRS under the guise of improving the delivery of health care in our nation. What is the cost of this program of insanity? As I mentioned before, the removal of just the 1099 issue was going to cost us over 20 million in just 2012. Unfortunately, no one asked the Commissioner how much the rest was running up the tab.
I’ve been called crazy, nuts, stupid or worse when I speak about the need for less government with perhaps more zeal and passion than most people. Yet every day it seems the government makes my case for me. As my father told me many years ago, it is the nature of any bureaucracy to always grow in size in order to continually justify its existence and to offer advancement to those within it. This simple observation offers us a deep insight into why Washington spends and borrows so much money. Surely these issues of waste and agencies more concerned with survival than service are not a left or right issue but an American one.
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