Terrifying taxpayers for fun and profit

Years ago, an all-but-forgotten TV comedian had favorite joke about a meal his wife frequently prepared with baking soda that both caused, then cured heartburn. People laughed but those were simpler times and we were more easily pleased.

Try telling that today!

So, fast forward to now — the official taxpaying season kicks off today. Major companies in the debt business, either as collectors or consolidators, love it and are in full swing. Your financial misery is their joy. TV shows are getting more and more paid ads from companies anxious to settle your tax debt, or consolidate it, or give you a loan. They point out that the IRS is more powerful than ever, chock full of agents, auditors and collectors who have or soon will have you, John Q. Helpless, in their sights.

Bigger and badder than ever, and happily slapping steep penalties and fines on your back tax bliss.  They’re anxious to attach your wages, maybe seize your house. Scary stuff! Or not.

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While there is a lot of action on the tax front, and plenty of people behind the IRS 8 Ball, if your job is solving problems it helps of convince people there is a problem. Or, like the hapless housewife in the ancient joke, create the problem then show up with a solution.

Two facts: Uncle Sam owes a lot of money to a lot of creditors. The National Debt is way, way up there yet taxes, for some, have been cut — with more, maybe, on the way.

Some suspicious people believe that over the years, politicians have created a revenue-raising problem by cutting key IRS operations, then hiring outside debt collectors using IRS information and leads to collect money the IRS didn’t because it couldn’t. The debt collectors got a piece of whatever they collected because the IRS didn’t, because it couldn’t, even though study after study has shown it is more economical to use the feds to collect back taxes.

In three recent efforts to privatize tax collections congressional hearings were held to deal with alleged abuses and strong arm tactics that the IRS, in its worst day, wouldn’t consider.

Say, where is this chomping-at-the-bit IRS today? According to the National Treasury Employees Union it has been consistently weakened over the past decade. NTEU says it represents 70,000 front-line IRS workers. They collect 94% of all the revenue used to service government programs from school lunches to moon launches.

NTEU President Tony Reardon said most employees are eager and anxious to do their jobs, which includes helping taxpayers in distress, but that it gets tougher each year. Contrary to the scary ads about an empowered IRS staff, Reardon says politicians are starving the agency that collects the money to feed Uncle Sam. The Taxpayer Advocate Service’s 2019 report to Congress said the agency budget has fallen 20.4% (adjusted for inflation) and there are 20% fewer employees than in 1999.

But there is a lot more demand for government services, due to revenue problems caused by trade wars and taxpayers who need help figuring out how to pay their taxes. Or get out of a financial hole, with IRS help, to pay their taxes. The IRS taxpayer assistance programs over the years have won a lot of praise from its in-house operations which help taxpayers get the best deal out of the IRS.

Last year, Reardon says, slightly less than one in three taxpayer calls to the IRS went unanswered because the IRS didn’t have the bodies. That’s down from 35% the year before, which isn’t all that good. Callers trying to arrange installment payback deals with the IRS got through only 26% of the time. What private sector company would tolerate those numbers?

The NTEU says that in the last nine years more than 10% of taxpayer assistance centers have been closed, meaning taxpayers looking for free help and advice have a 40% chance of not getting it — ever.

The severity of the problem and the reasons for it are subject to debate, up to a point. But the fact is there is an in-your-face problem when the agency that collects $94 of every $100 Uncle Sam makes is dealing with more complex laws, with more loopholes, covering many, many more people while playing catchup with an ever-shrinking team which, some would say, has been set up for failure.

Nearly Useless Factoid

By Amelia Brust

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Source: Improbable Research