The IRS Is at a Tipping Point: Under Attack, Distrusted, and Underfunded

Boston Globe, IRS is America’s Feared and Failing Agency: As Demands Set to Rise, Flaws Evident:

Week after week, Republicans on Capitol Hill have ratcheted up their drumbeat of discontent with the Internal Revenue Service, alleging that it targeted conservative groups and can’t be trusted. Six investigations are underway, ensuring the matter will drag on for months or years.

But there is a bigger question about America’s least-loved federal agency that barely gets asked: Is the IRS, which collects 90 percent of the nation’s revenue, up to the basics of its job? The surprising answer is that it often is not.

A Globe review of dozens of government reports and audits, as well as interviews with key officials, found a series of fundamental problems:

• The IRS makes billions of dollars in potentially fraudulent payments because it lacks the ability to check whether many returns are accurate before refunds are mailed.
• The IRS relies on tax preparers to file accurate returns on behalf of taxpayers. But many preparers are not required to receive training and can be declared a tax professional by paying a $64.25 fee to the IRS. A federal court on Tuesday rejected the agency’s effort to license such preparers.
• The IRS is increasingly impenetrable to taxpayers with questions and complaints. The agency is so short-staffed it cannot answer nearly 40 percent of phone calls, and it has failed to meet its own 45-day deadline to respond to millions of letters per year from taxpayers. The same dismal rate is likely to be repeated this year, according to the agency.
• The decision by Congress to cut the agency’s budget over the past four years by more than $1 billion, designed to save money, has had the reverse effect. The loss of about 10,000 employees, more than 9 percent of the workforce, has shrunk collections by $8 billion. In other words, the budget cut increased the deficit.

All of this helps explain why, in a strikingly harsh but little-noticed assessment of the IRS’s own office of the national taxpayer advocate, the agency was declared last June to be “an institution in crisis.” That was followed by the office’s January report to Congress that upped the sense of urgency, warning that unless changes are made soon, the IRS will “fail at its mission.”

Yet that mission is about to become even more complicated. Starting in the next tax year, the agency will be responsible for implementing key parts of the new health care law, requiring the biggest changes to the tax code in decades. ...

The story of the IRS today is one of a powerful entity at a tipping point — under attack, distrusted, and underfunded, yet crucial to the nation’s survival and prosperity.