While the federal government keeps overspending taxpayers’ money and driving all of us further into debt, politicians keep coming up with ways to demand that working families send more of their hard-earned money to Washington. A recent example is a plan to force taxpayers to have the Internal Revenue Service do your taxes for you.
Yes, politicians such as Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) are pushing to put the same federal government in charge of filing the tax forms for all taxpayers in the country. The foxes — politicians and unelected bureaucrats — want to be in charge of the henhouse: your money.
Everyday Americans’ distrust of the IRS is a longstanding constant. Recent data from Pew Research show that the IRS continues to be the least-liked federal agency among Americans, even among Democrats. A mere cursory review of IRS failures demonstrates why animosity toward the IRS is justified and goes beyond common tax-filing pitfalls and unpleasant interactions with the agency.
Less than a year ago, the Department of Treasury’s own independent Inspector General published a report that showed the IRS’s answer to dealing with a backlog of filed tax returns was to purposefully destroy taxpayer documents, including W-2 and 1099 forms. The report starkly summarized this practice: “This audit was initiated because the IRS’s continued inability to process backlogs of paper-filed tax returns contributed to management’s decision to destroy an estimated 30 million paper-filed information return documents in March 2021.”
For two years, Treasury Secretary Janet Yellen and other officials have steadfastly refused to provide Congress with information about the June 2021 theft and/or leak of confidential taxpayer documents that were published online. The security breach included information about taxpayers that the progressive group who published the data described as “a vast amount of information. It’s not just tax returns. It’s also things like records of stock trades, information that is sent to the IRS about financial activities.” Testifying before the U.S. Senate Appropriations Committee on March 22, Yellen claimed that she “know[s] no more about this than I did when the leak first occurred.”
It is difficult not to perceive these episodes as reflecting a pervasive culture when, for over 20 years, the IRS has failed to comply with legally required reports to Congress on ways to reduce tax complexity.
Despite this small sample of ongoing problems with the agency, last year Congress added $80 billion in new funding for the IRS — which is in addition to its $13.6 billion budget. Included in that amount is $15 million to “study” Sens. Sanders’ and Warren’s preferred government takeover of your tax preparation.
The tax filing experience would likely be much more painful under a system in which the IRS imposes more control. Everyday taxpayers no longer would have a voice on crucial details that affect the amount of tax they owe to the federal government. For American workers, especially those in certain industries who don’t file a simple W-2 form — e.g. delivery workers, bartenders, barbers and hair stylists, real-estate agents — the amount of intrusion into information required would be a serious privacy threat and only increase government harassment.
Indeed, despite the perpetual refrain from class-warrior politicians that the IRS will “go after the rich,” it is highly likely that lower- and middle-income working families would suffer most. Alarmingly, poor communities are more likely to be audited in general, and recipients of the Earned Income Tax Credit (EITC), one of the largest anti-poverty programs, are twice as likely to be audited as people making up to half a million dollars. Those same politicians could attempt to fix this current imbalance and/or join efforts to simplify our insanely long and complicated tax code. It is telling that they choose not to do so.
It would be much more productive for the IRS to focus on improving taxpayer services and badly needed technological upgrades.
The IRS’s own internal watchdog office, known as the Taxpayer Advocate Service (TAS), stressed as much in a recent report from the head of TAS, the National Taxpayer Advocate (NTA): “The additional funding provided by the IRA is disproportionately allocated for enforcement activities and should be reallocated to achieve a better balance with taxpayer service needs and IT modernization.”
Of that $80 billion in new IRS funding, over half of it is set to go toward tax enforcement and audits, while a mere $3.2 billion was allocated for Taxpayer Services and $4.8 billion for modernizing IRS technology.
The NTA report highlighted the crucial need for technological improvements. As Americans for Tax reform summarized, the IRS’s technological deficiencies “include the use of about 60 different case management systems that are not synchronized, the lack of a modernized filing system, and the lack of scanning technology for filing returns which requires IRS employees to input the information for each return manually.”
One key NTA conclusion is that improving services and processes with technology will actually help the IRS fulfill its actual role: “The most efficient way to improve compliance is by encouraging and helping taxpayers to do the right thing on the front end. That is much cheaper and more effective than trying to audit our way out of the tax gap one taxpayer at a time on the back end.”
Service improvement should include giving taxpayers the ability to contact the IRS without ridiculous delays or wait times, which would especially benefit low-income taxpayers and those from underserved communities who don’t have the luxury of hiring a tax professional.
What is most certainly not needed is worsening the current system by stripping hard-working American families of their voice in the process under a government run system. Forcing Americans to have the IRS be their tax preparer would twist incentives and harm real people, given that the interest of the government will always be for Americans to pay the highest amount possible. Blindly trusting the IRS with that much power is a recipe for disaster.
Mario H. Lopez is president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity and prosperity for all Americans. Follow him on Twitter @MarioHLopez.