Gavel to Gavel: Taxing the system
The Journal Record
I pay my fair share of taxes. I assume you do as well. We know, however, that not all do. Who is supposed to ensure that everyone pays a fair share? Our so-called friends at the Internal Revenue Service, of course! Unfortunately, a steady decline in the IRS budget over the past several years despite an increase in the number of returns filed may tempt those who pay their fair shares to think twice about doing so.
Have you tried dealing with the IRS within the past few years? It has become more and more difficult. The IRS has an antiquated computer system and is woefully understaffed. Those 45-minute classical music-filled delays to speak with someone at the IRS are now running in excess of an hour.
Why? Because Congress keeps slashing the agency’s budget.
Last year, the IRS audited fewer tax returns than at any time in the past decade. The audit rate for individual returns was less than 1 percent. This includes both in-person audits and correspondence audits that are conducted entirely by mail (and were developed because of previous budget cuts). The IRS budget has been reduced $1.2 billion and enforcement efforts are down 20 percent since 2010.
Employee levels are the lowest they have been since the early 1980s. Budget cuts have forced the IRS to eliminate 13,000 positions since 2010. Congress continues to make the tax code more complex, adding new responsibilities on the IRS such as the Affordable Care Act.
Congress recently proposed additional IRS budget cuts. This caused the IRS to initially warn that it might need to shut down for a few days for lack of funds. Instead, the IRS announced plans to delay hiring new employees, a temporary fix that pushes the problem into the next fiscal year.
Like most, I don’t relish paying taxes. It’s a necessary evil. If the perception grows that others are not paying their fair shares due to reduced audit risk, some may find it unbearable and be tempted to join the ranks of tax cheats. The best way to ensure that people are paying a fair share is to fund the IRS to an appropriate level. Or, better yet, enact a much simpler tax system.
William H. Whitehill, a shareholder with Fellers Snider, focuses on business and tax matters.
This article originally appeared in the April 8, 2015 issue of The Journal Record. It is reproduced with permission from the publisher.© The Journal Record Publishing Co.