The More Things Change

Dealing with bureaucracy is rarely easy and never fun. Back in the 1980s, future NBA Hall of Famer Karl Malone earned the nickname “the Mailman” because he delivered. Today, that would be a cruel joke. But nobody in government is as hard to deal with as the IRS. Erin Collins, the National Taxpayer Advocate, reports that for all of 2021, the IRS logged 272 million incoming phone calls, with just 11% of them reaching the bullseye of a living, breathing human being.

Last year, Washington passed an “Inflation Reduction Act” that included $80 billion in new spending for the chronically underfunded IRS. The desperately needed funding didn’t play well with a group of anti-tax politicians who are accustomed to using the IRS as a punching bag. One Senator took to Twitter to shriek that the act would “double the number of IRS agents – practically giving every American a personalized tax auditor.” Another tweeted threats of “a shadow army of 87,000 new IRS agents to hunt you down and take your money!” Across the Capitol in the House, a third asserted a “new army of 87,000 IRS agents will be coming for you – with 710,000 new audits for Americans who earn less than $75k.”

As is usually the case with Twitter’s outrage du jour, the truth is somewhat less dramatic.  Last May, the Treasury estimated that an extra $80 billion would help the Service hire 86,582 new full-time equivalents by the end of 2031. Now, if those hires were going on top of the 80,411 already working for the Service at the end of 2021, that would be something! But 50,000 of those current employees are expected to retire in the next five years. So most of the new spending will go towards keeping current staffing stable.

But wait . . . there’s more. Last August, when the IRA passed, we pointed out there was no guarantee the IRS would even get the money. The Act authorized it. But it’s up to future Congresses to actually appropriate those dollars – usually one of those predictably desperate 11th-hour bids to avoid a government shutdown. As we said here in August, “We can be sure that future congresses and presidents will want their own say on IRS spending.”

Less than ten months later, that day has come. Last week, in a predictably desperate 11th-hour bid to avoid a government shutdown, Washington passed the “Fiscal Responsibility Act” suspending the federal debt limit through January 2025. That act claws back $1.4 billion of this year’s new funding. (IRS officials can cut it from anywhere in their budget except the $8 billion allocated to taxpayer service and systems modernization.) It also includes a “handshake agreement” to repurpose $20 billion of the additional 2030 and 2031 appropriations for “other non-defense priorities.”

The bottom line here is that opponents of IRS funding got themselves a symbolic scalp. However, the Biden administration says it won’t torpedo near-term plans to boost audits and compliance. As for the “out years” 2030 and 2031, the earth could get hit by a comet before those cuts ever materialize. (Some people are actually rooting for it.)

Here’s the moral of this week’s story. Uncle Sam needs money to operate. Reasonable people can certainly disagree on how much he needs and where he should find it. But once legislators make those decisions, somebody has to go out and actually collect it for him. And saddling taxpayers with our current creaky IRS infrastructure adds insult to injury and wastes even more money in the process. (Also, if you ever get trapped in that sticky red tape yourself, you’ll be glad you’ve got us on your side!)