Does It Matter If The IRS Exists?

Last November I went on reddit on a couple of Saturdays to engage others in a conversation about the IRS. As a result of those two Saturday iterations it is estimated that with 7,500 thumbs up and some other analytic measures by those that know a lot more about this than I, that we had on the order of 1,000,000 hits. I was sharing insights into the IRS based on my 28 years at the IRS and working at all levels of the IRS.

Today I have my own consulting firm, but as a veteran that cares about having served their country, I care about what happens to our country and our government.

My book, "The Wheels Are Falling Off the Wagon at the IRS" discussed the state of the IRS with projected funding for FY 2015 (FY ends September 30th in government accounting) and the ramifications of not funding the IRS properly. This has been the case since 2011. Congress continues to under fund the IRS each year since. It has become the norm. The IRS is now really hurting and poised to hurt even more. Does it matter? There were those that came on line on reddit that cheered the collapse of the IRS and the collapse of the federal government. Yea, no more federal taxes. There were those that stated, wait a minute, collapsing the IRS with no back up plan would be a catastrophe. There were those that that stated it is simple, replace the current system with a flat tax or national sales tax. It was a good discussion on line and in the follow up commentary.

Having worked at the IRS and headed up a research unit with PhD economist and PHD statistician team members and others we evaluated all of these and other alternatives when Newt Gingrich was Speaker of the House. We provided unbiased analytical information with the pros and cons of various alternatives. In a nutshell the drawbacks to each and others left the current system in place. Like a democracy, it is a poor system, but the best system we have. The lesson learned was to be be sure and explore the ramifications of alternatives before jumping to a simple solution. Understand the consequences. I am not an advocate for the current system, just commenting before jumping off the cliff, take a look.

Even though the IRS is really hurting now and only answers the phone half the time Congress is recommending another 8% cut to the IRS budget. The IRS is dying a death of 1,000 cuts. Actually not a 1,000, cuts but since 2011 the proposal now is for over 2,400,000,000 in cuts. The IRS has gone from 120,000 employees to less than 80,000 employees. The IRS is not properly funding software updates.

You may have read that the Office of Personal Management was hacked and 4 million federal employees information was stolen. I heard from an IRS source that fortunately IRS employee information was not stolen since they have not automated their systems and still process information by hand. That is the state of things at the IRS. Congress simply does not fund the IRS properly, and this case that worked out well for federal employees.

I don't when the system will collapse, but if the IRS is neither helping taxpayers with their returns (they are not funded any longer to help fill out returns for the elderly, poor or disabled), educating the American public, or enforcing the tax laws, what will that mean? We saw what happened in Greece. In fact the Commissioner commented on that in a recent article from Bloomberg.

Now in a current article in Bloomberg the current proposal is to further negatively impact the IRS. This not only negatively impacts the IRS this negatively impacts the American people and in a big way. The question is do we care enough to take action? I have contacted my U.S representatives and given them my book. Congressman Keith Ellison Ellison from Minneapolis, Minnesota (who is not my representative) read my book and wrote a letter to his other 434 contemporaries in the House asking for full funding of the IRS.

If the IRS remains a political football for kicking around on the one hand that is fine. However, if the IRS is not funded properly and the system collapses, I don't want to find out what that means. I am concerned and that is why I am posting this for your consideration today. Is it time for you and others to contact your representative and let them know what you think. Perhaps we don't need the part of government that collects over 90% of the revenue for the federal government any more. Perhaps we don't need a federal government. The American people need to decide, but also understand the consequences.