Paul L. Caron
Dean




Tuesday, October 19, 2021

NY Times Op-Ed: Be Careful With IRS Reform

New York Times op-ed:  I’m the President of the National Taxpayers Union. Be Careful With I.R.S. Reform., by Pete Sepp (President, National Taxpayers Union):

Democratic lawmakers plan to boost the Internal Revenue Service’s enforcement authority to help pay for the spending package working through Congress. But while the I.R.S. needs more funding to fulfill its mission, the current version of the reform legislation would run roughshod over decades of taxpayer protections that were enshrined by huge bipartisan majorities. ...

Beyond the rollback of taxpayer rights, the retroactivity of these provisions could face legal trouble. Retroactive taxation is still widely practiced, and used to pressure taxpayers to settle with the I.R.S. While the Supreme Court has never definitively ruled on the practice, when it last considered the issue in 1994’s United States v. Carlton, it came close to deciding that anything beyond one year of retroactivity violates due process. Given a retroactive tax case again, the court may rein in the practice for good.

Ironically, the I.R.S.’s budget increase is unlikely to raise the revenue Congress anticipates.

Estimates of the tax gap are highly uncertain. The administration projects that its $80 billion enforcement and changes to reporting requirements would yield $700 billion in revenue, but this is far beyond what other nonpartisan estimates have suggested.

The I.R.S. (and taxpayers) could indeed benefit from more funding — properly spent. The I.R.S. faces an immense backlog of tax return processing every year, caused by antiquated information technology infrastructure and a customer service staffing shortage. ...

But so far Congress has not insisted that specific issues be addressed, instead using a mere two paragraphs of legislative text to provide a massive boost to I.R.S. funding. Congress should make tax compliance easier and more efficient, and would raise revenue and narrow the tax gap by doing so. Any increased funding plan should require the I.R.S. to meaningfully address taxpayer service shortcomings, and implement recommendations from G.A.O. and TIGTA. Taxpayer protections, ranging from formal citizen complaint reviews to more public-comment opportunities for rulemaking, should be instituted.

More resources for customer service, taxpayer rights safeguards, a functioning Oversight Board, actionable and regularly-updated research on the tax gap, and innovative approaches such as the recently proposed enforcement fellowship pilot program are all solutions that should unite Washington — just as concern over taxpayer rights has for over 30 years.

https://taxprof.typepad.com/taxprof_blog/2021/10/ny-times-op-ed-be-careful-with-irs-reform.html

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