In this article from the Accounting Web the IRS Commissioner, John Koskinen, is letting Congress and us as taxpayers know that the IRS is going to fail and when it does, all he will be able to do is say that I told you so. That is not a good place to be. Members of Congress has have tried to impeach him. The IRS continues to be seriously underfunded. All of the warning signs are there. This is not a warm cuddly issues that the taxpaying public looks at and says, yes we must look into this. Rather I would hope that the practitioning community would provide feedback to elected officials before we have a true melt down at the IRS.
The practitioning community recently stood up regarding proposed Treasury Regulations on Code Section 2704 and offered 9,802 comments in 90 days. Well done practitioners. I hope practitioners are prepared to contact their representatives about changes at the IRS in the near future as well.
The disaster is coming. An executive of the IRS from the Large Business and International division (audits taxpayers with assets over $10 million) quoted in Tax Notes today in an article written by Amanda Athanasiou on November 9, 2016 , said that over 2/3 of her employees will be retirement eligible by the end of 2017. Think about that. Think about 2/3 of your employees potentially walking off the job. The Heritage Foundation is proposing a number of sweeping changes to the President Elect to encourage federal employees to leave.
As an analogy a civil engineer once told me that all dams are designed to fail. It is just a matter of when. Think about that for a second. With that in mind what do we do about dam safety? We have them inspected. Yes there is actually maintenance required on dams. If the dam becomes unsafe steps are taken to remove the dam, shore up the dam, or take other actions for public safety. What about the IRS? The oversight of the IRS comes from Congress. They are the inspectors. Their approach to inspection is to take continued steps to make the job of the IRS tougher by cutting funding, accusing the commissioner of wrong doing and taking other actions to actually undermine the agency. Is that good oversight?
Perhaps we should just let the IRS fail. That is one of the options. Conservative House Republicans have called for the elimination of the IRS. A House bill has 73 co-sponsors to do just that. Hold on to your hats. We are in for an interesting time. The IRS collected $3,100,000,000,000 in 2014 and processed 240 million returns at a cost of $.0077 per return considering their entire budget with taxpayer service, examination, collection, processing etc. Think of the cost and think of the results. Before throwing out the baby with the bathwater, I certainly hope that leaders in Congress and our President Elect think twice and do their homework with a fine pencil as they consider alternatives. We live in interesting times.
The Commissioner serves at the discretion of the President. The President elect has indicated he has been under continuous audit for 15 years and that he has indicated it is good business on his part to minimize taxes. Everyone would say that anyone should make use of all of the benefits of the tax code to minimize taxes. On the other hand taxes are what we pay for a civilized society according to Supreme Court Justice Oliver Wendell Holmes. Someone has to pay for the services we demand. Who will pay and how we will pay remains the question.
The Commissioner of the IRS serves for a five year term. He was sworn in December 23, 2013. This means his term should run through December 22, 2018. It will be interesting to see what the President elect does after he is sworn in as the President won't it. It will also be interesting to see what will happen to the IRS Commissioner, the IRS and IRS funding with the new Congress and President.
For those in the field of working with the IRS and on taxes, it is an important time to watch what is happening and it will be an important time to be ready to let your representatives know your concerns in the coming months. Please stay tuned this issue
About the author
Mike Gregory is a professional speaker, an author, and a mediator. You may contact Mike directly at email@example.com and at (651) 633-5311. Mike has written 12 books (and co-authored two others) including his latest book, The Collaboration Effect: Overcoming Your Conflicts, and The Servant Manager, Business Valuations and the IRS, and Peaceful Resolutions that you may find helpful. [Michael Gregory, ASA, CVA, MBA, Qualified Mediator with the Minnesota Supreme Court]