Paul L. Caron

Monday, March 7, 2022

NY Times: Decades Of Neglect Leave IRS In Tax Season ‘Chaos’

New York Times, Decades of Neglect Leave I.R.S. in Tax Season ‘Chaos’:

IRS Logo 2At the Internal Revenue Service’s sprawling Kansas City, Mo., processing center, teams of clerks earning $15 per hour work through the night, trying to help the agency clear a backlog of more than 20 million tax returns that are a year overdue.

The conditions are subpar: Scanners sputter, forcing workers to enter data by hand, staplers are scarce and piles of tax documents overflow from carts.

“The general theme for the time I’ve been there has been chaos,” said Shawn Gunn, a clerk in the receipt and operations group at the I.R.S. who started working at the facility in Kansas City last June and is transitioning to become a tax examiner.

What’s happening in Kansas City provides a window into the problems plaguing the I.R.S., which is mired in a political and logistical mess that has frustrated taxpayers, angered lawmakers and put a key source of funding for President Biden’s economic agenda in jeopardy.

Officials have warned of another rocky tax filing season ahead, saying it could be a “very frustrating tax season for both tax payers and tax professionals.” Democrats have pointed to the tumult as evidence that the agency needs more funding. Mr. Biden has called for investing $80 billion in the agency over a decade to help crack down on tax cheats, estimating that would raise $400 billion in tax revenue.

But tax-averse Republicans, who have spent years cutting the agency’s budget, have seized on the I.R.S.’s problems as proof it should not be given more money or responsibility, with at least one lawmaker calling for the tax collector to be abolished.

Much of the agency’s current woes can be traced to those budget cuts, which have eroded the agency’s ability to function at a critical moment. Staffing shortages and antiquated technology have collided with a pandemic that kept much of the agency’s work force at home while the I.R.S. was turned into an economic relief spigot responsible for churning out checks and other stimulus payments to millions of Americans.

The agency’s work force of about 75,000 is the same size as it was in 1970. Its enforcement staff has fallen by over 30 percent since 2010, and audits of millionaires have declined by more than 70 percent. And its budget has declined by nearly 20 percent, when accounting for inflation, during the last decade.

At the same time, the tax code has become more byzantine, and the number of individuals filing tax returns has grown by about 7 percent, according to the Center on Budget and Policy Priorities, a left-leaning Washington research group. The federal government has had to wrestle with well-financed corporations using complex tax avoidance maneuvers and the rise of digital currencies, which have made transactions more opaque and harder to tax.

“It’s clearly been starved,” said John Koskinen, who was I.R.S. commissioner during the Obama and Trump administrations. “Now the chickens are coming home to roost.”

(Hat Tip: Steven Sholk)

IRS News, Tax, Tax News | Permalink