Originally published on Forbes.com.
Mortimer Caplin will be 100 years old next year. He has an impressive resume. The thing that impresses me the most is that while a lieutenant in the US Navy, he served as a beach master during the Normandy invasion, but this is a tax blog, so I won’t be getting into that. He was also the Commissioner of the Internal Revenue Service during the Kennedy Administration. Mr. Caplin has joined with six other former commissioners – Sheldon Cohen, Lawrence Gibbs, Fred Goldberg, Shirley Peterson, Margaret Richardson and Charles Rossotti – to take Congress to task over its gutting of the IRS with a letter addressed to the chairs and ranking members of the Senate and House Appropriations committees.
Here are some of the highlights:
We are all former Commissioners of the Internal Revenue Service. Over the last fifty years we served during the administrations of Presidents John F. Kennedy, Lyndon B. Johnson, Ronald Reagan, George H.W. Bush, William J. Clinton, and George W. Bush.
We are writing to express our great concern about the proposed reductions by the House and Senate in appropriations for the Internal Revenue Service for the current fiscal year that will end on September 30, 2016. We understand that the Appropriations Committees in the House and Senate have proposed to reduce the FY 2015 IRS appropriation of $10.9 billion by $838 million and $470 million, respectively, for the current fiscal year. ….
This loss of IRS knowledge and experience is alarming, particularly in light of the fact that, out of a present workforce of about 85,000 employees, the IRS has only about 3,400 employees under the age of 30 and only 384 employees under the age of 25 due to hiring freezes for budgetary reasons at the IRS since 2010 and periodically from 2005 to 2010. Over the last fifty years, none of us has ever witnessed anything like what has happened to the IRS appropriations over the last five years and the impact these appropriations reductions are having on our tax system. …
To place the impact on our tax system of the Congressional IRS appropriations reductions over the last five years in its proper context, Congress almost annually over the last 25 years has passed legislation that has imposed additional burdens on IRS tax collection and administration under our revenue laws. During this time, the Congress also repeatedly added more and more socio-economic incentives to the tax code and called upon the IRS to administer these new socio-economic programs, including healthcare, retirement, social welfare, education, energy, housing, and economic stimulus programs, none of which is related to the principal job of the IRS to collect revenue. ….
Equally serious are the cybersecurity threats illustrated by the problem that occurred earlier this year involving unauthorized attempts to access taxpayer information using the IRS’ Get Transcript online application. Separately, the IRS continues to experience about one million attempts each week to hack into its main information technology systems . Although the IRS has so far successfully thwarted these attacks and its main systems remain secure, all of this astonishes us and emphasizes to each of us that the IRS taxpayer assistance and IRS information technology resources are severely underfunded, especially when compared to the increasing cybersecurity budgets of private sector companies. …
Some have argued that the IRS can solve these problems by simply becoming more efficient. This argument ignores the reality that the IRS is already, by far, the most efficient tax collection agency among large countries in the world. The OECD recently released its bi-annual analysis of tax administration across the developed world and reported, based on 2013 statistics which don’t reflect the most recent IRS budget cuts, that the amount the IRS spends to collect a dollar in taxes is approximately half the average amount spent by all OECD countries. Germany, France, England, Canada and Australia all spend as much as two to three times the amount the IRS does to collect a dollar of revenue. ….
In light of the foregoing, we fail to understand how it makes any logical sense to continue to reduce, rather than increase, the IRS budget for FY 2016 in order to optimize the IRS’ ability to provide taxpayer service and to enforce the tax laws to increase revenue collections. To put it succinctly, we do not understand why anyone with present and projected debts and annual losses as large as those of the United States would refuse to pay for telephone assistance to people trying to fulfill their tax obligations, would turn their back on $8 billion annually in additional revenue, or would fail to make an investment that offers a return equal to at least four times the amount invested. For these reasons, we respectfully call upon each of you to support and work to accomplish the passage of an IRS appropriations request for FY 2016 that is substantially in excess of the appropriation for the IRS in FY 2015. …
I imagine John Koskinen is pleased. A lot of times when the old timers get together, they talk about how hard it was back in the day when they had to walk to school through drifts of snow with the hot sun beating down on their head – two miles – uphill both ways.
I picked this up from Paul Streckfus’s EO Tax Journal. Paul’s comment was
My comment: I’m delighted that the former IRS Commissioners have made their views known. Maybe I’ve missed it, but I’ve been disappointed in the Tax Division of the AICPA and the Tax Section of the ABA for not taking a similar stand. Let’s be honest, what the Republicans in the House and Senate are doing — choking the IRS to death — is sheer madness. They are destroying the agency that collects the revenue that keeps our government and country operating. While starving the IRS of funding always scores political points, doing so now to such an extreme degree is against the national interest and it seems to me almost treasonous.
I have a longtime friend who is a tax accountant to a number of wealthy individuals. He tells me that, as always, his clients are complaining about how much they pay in taxes. What’s frustrating to him is that he can’t give them his best advice, which is: “Cheat! The IRS isn’t going to catch you with their few current audit resources.” Why should honest taxpayers now be saps?
I have been pretty much feeling the same way. The AICPA standards of tax practice forbid CPAs from giving audit lottery advice, but it is getting to be more of a temptation.
Paul Caron (TaxProf Blog) comments:
The letter does not mention the IRS scandal involving the agency’s alleged targeting of conservative groups in the 2012 election season, which is the reason for shrinking the IRS’s budget given by many members of Congress.
Even if you accept that there was targeting, which is something of an article of faith in some circles, the targeting consisted of holding up exempt applications, which is a pretty obscure function and really does not have much to do with the core missions of the agency. How about taking that function away from the IRS and funding them to chase the dead beats.