IRS – A Social Experiment?

It’s no secret that much of the Internal revenue Code has grown to become a bevy of provisions designed to achieve certain social goals.  And all of this “by design,” of course.

But it came as a bit of a stunner to us to find that the National Taxpayer Advocate, in her recent 2010 annual report to Congress, has actually expressed as the number two “most serious problem encountered by taxpayers” as the notion that the IRS mission statement does not reflect the agency’s increasing responsibilities for administering “social benefit programs.”

And you thought the agency existed just to collect taxes!

Not so, according to the Advocate, who noted that, “As the IRS prepares to administer large portions of the health care legislation, it will have to shift from being an enforcement agency that primarily says, in effect, ‘you owe us’ into an agency that places much greater emphasis on hiring and training caseworkers to help eligible taxpayers receive benefits.

Caseworkers.

And the Advocate goes on:  “Absent additional resources, administration of social programs reduces the IRS’s ability to perform its core enforcement and taxpayer service functions…..the IRS (should) revise its mission statement to reflect two distinct administrative roles of traditional tax collection and delivery of social benefits…..(and) create a program office and new deputy commissioner position to provide strategic direction for all social benefits programs.”

That’s what we need – another “deputy commissioner.”

So is it any surprise that Obama wants a 9% increase in the IRS’ budget for fiscal 2012 – to something like $13.3 billion (with a “B”)?  And isn’t it worth a big guffaw to examine a recent IRS press release on the budget issue, that the 2012 IRS funding request “reflects a continued commitment to balance taxpayer service with fair enforcement of the tax laws.  The IRS will also continue to invest in its service program, with particular emphasis on online services.”

So the next time you’re about 45 minutes into a telephone call to the Revenooers, listening to all of their slick and cuddly announcements while you wait for a human being to get on the line, remember their “commitment” to “service”.  Actually kind of makes you want to laugh out loud.

So aside from the telephone “service” which IRS touts, we can hardly wait to meet the first of the 1,054 new auditors they want to hire in fiscal 2012 to take care of the requisite oversight of the healthcare legislation.  At no small cost, we might add:  try $359 million, including $11.5 million for the 81 workers assigned to make sure tanning salons pay their new 10% excise tax!

“The ACA (Affordable Health Care Act) will require additional resources to build new IT systems; modify existing tax processing systems; provide taxpayer outreach and assistance services (Ed. – Puhleeze!)…..and case management systems to address and resolve taxpayer issues timely and accurately…..” says IRS.

Social welfare indeed.

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He is also a contributor to the recently published 14th edition of Tax Savvy for Small Business, published by Nolo.  He can be reached at 831-7288, and welcomes comments below.