Underfunding the Internal Revenue Services may cause delays — sometimes years — in processing returns. (Photo illustration via Canva)
For most of my adult life, the taxman has been the bogeyman of American politics.
Large bipartisan majorities in Congress acted to rein in an IRS accused of overzealousness in the 1990s.
Then, when Republicans took over Congress during the Obama era, they began slashing its budget.
Between 2010 and 2019, the IRS budget shrunk by 20% in real terms.
The number of workers also plummeted.
Eventually, this made it almost impossible to reach the IRS by phone and much easier for rich tax cheats to get away it. Audit rates on the wealthy plummeted, and in 2021, the IRS commissioner said the gap in how much tax was owed — and how much was actually paid — was $1 trillion a year.
That’s real money. By any standard.
The years of being in the bullseye has taken its toll. A Pew poll earlier this year said a majority of Americans had an unfavorable view of the agency, worst among all federal departments.
Private companies capitalize on this.
A commercial selling tax debt assistance warns ominously that the IRS doesn’t joke around and will not stop its collection efforts.
I can’t help but imagine the Terminator, only in green eye shades and a three-piece suit.
So, it’s probably natural that I shuddered a bit when I got a letter recently from the IRS about our 2022 tax return.
My wife and I do our own taxes, and because of a job change last year, I was already nervous about whether we’d done it correctly.
Turns out, we didn’t.
The IRS said we paid too much tax, and the government owed us money.
Actually, this was the second time in recent years we’d heard from the IRS that we’d made a mistake.
The first time, the agency also said we’d paid too much. But back then the error wasn’t from that year’s – or even the previous year’s – return.
That error went back even further.
In other words, we learned in a very personal way just how far behind the IRS was in processing returns.
This year’s letter taught us how they seem to be catching up. We didn’t have to wait years to learn we’d made a mistake.
I can’t categorically claim this faster service was due to the additional $80 billion over 10 years that congressional Democrats and President Biden approved two years ago, but it seems likely. The IRS reports the additional funding has led to better customer service and significant progress on its backlog of returns.
It also says it is working to make sure high-income taxpayers pay what they owe.
Congressional Republicans have been trying to stop these gains, Iowa lawmakers included.
U.S. Sen. Joni Ernst has tried to undermine the agency by targeting IRS employees (many of whom simply work the phones), even as she turns a blind eye to some of the bigger tax cheats out there.
Unfortunately, congressional Republicans have had some success. They put our economy at risk so they could wring a debt ceiling deal out of Biden that did little to control future spending even though it would take back part of the IRS funding. (I should note Republicans didn’t insist on spending cuts in return for raising the debt limit for President Trump.)
I realize not everybody has had my experience with the IRS. And I’m not blind to its faults.
A Stanford study said Black taxpayers have been audited at higher rates than white taxpayers. And ProPublica has reported for years about how low-income people claiming the Earned Income Tax Credit are audited at higher rates than rich people, who have more complex tax structures and take more resources to examine.
I also don’t rule out the possibility I could get another letter from the IRS that might not bear such good news for me.
Still, I don’t want to go back to the days when 90% of customer phone calls aren’t answered and cafeterias have to be used to store a mountain of unprocessed returns.
I also don’t want the wealthy to escape the scrutiny that is put on others.
As I noted earlier, the IRS says it is pursuing high-income tax cheats — and that it won’t raise audit rates for small businesses and taxpayers who make less than $400,000.
It will probably take years to sort out whether the IRS makes good on its goals — and whether it keeps its promises.
For its own sake, it better. The agency has a lot of enemies in Congress. And rich people have lots of clout there.
What I can do today is offer my own testimony.
The IRS taught me two things this year:
One, I keep making mistakes on my taxes.
Two, the government is getting faster at fixing them.
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