On Wednesday Feb. 15 President Biden’s nominee to run the IRS — Daniel Werfel — will testify before the Senate Finance Committee.
Below are questions to which taxpayers would appreciate an answer:
IRS destroyed 30 million taxpayer documents
A Treasury Inspector General for Tax Administration audit found that in March 2021 the IRS unilaterally destroyed 30 million taxpayer-filed paper documents and then didn’t bother to tell anyone about it. The destroyed documents had been submitted by Americans attempting to resolve their taxes.
Will you allow IRS whistleblowers to come forward? After all, given the incredible volume of this destroyed material — 30 million paper documents stacked up would reach a height of two miles — no doubt several employees know the circumstances of destruction.
Can you help taxpayers find out what happened? Who made the decision? In what manner were the documents destroyed? Shredded? Incinerated? Put in a landfill? Has anyone been held accountable? If so, how?
What specific documents were in the pile? Were any attempts made to contact affected Americans? Many Americans submitted forms only to be told by the IRS that they never did so. How will you compensate them for their lost time?
Can you guarantee the IRS will not do such a thing under your watch?
Audits of those making less than $400,000:
On August 10, 2022, Secretary Janet Yellen issued a letter to IRS Commissioner Charles Rettig confirming that “audit rates will not rise relative to recent years for households making under $400,000 annually.”
Is that a credible statement given the $80 billion in new IRS funding? Can you define the parameters of “recent years?”
How can the IRS ensure audits won’t increase on individuals earning less than $400,000? Are you aware of any directive Secretary Yellen has issued to IRS employees to not increase audit rates for income levels below $400,000?
Is there any reason besides the political promises of President Biden and Secretary Yellen to not increase audits for households below 400,000? Is there a statute you can point to? Can a cabinet Secretary simply “promise” to use her department’s taxpayer resources to execute a political vision?
IRS bank account snooping
The Biden administration wants to give the IRS new power to automatically access bank account, Venmo, Paypal, and CashApp account inflows and outflows for all business and personal accounts with more than $600 in total yearly deposits and withdrawals for what it describes as a “comprehensive financial account information reporting regime.”
Not only are Americans creeped out by this concept, the nation’s most prominent progressive tax policy group says the plan won’t even work. The Tax Policy Center says the plan is “poorly conceived,” and will “bury the agency in a sea of unproductive information” and “won’t help” and “will fail.”
Do you support this policy? Do you have any privacy concerns about this policy? Is this a wise use of taxpayer dollars?
(This issue is not to be confused with the 1099-K paperwork issue detailed further down in this post.)
Biden’s personal tax gap
President Biden and the IRS have spoken of “closing the tax gap” but a review of President Biden’s 2017 and 2018 taxes show he underpaid by as much as $500,000.
Regarding the way Biden structured his taxes, independent analysts said, “There’s no reason for these to be in an S corp—none, other than to save on self-employment tax,” and even the left-leaning Tax Policy Center said Biden’s maneuver was “pretty aggressive.”
Should President Biden close his personal tax gap?
Theft of private IRS files published by progressive group
It has been 615 days since the public learned that a thief inside or outside the IRS had gained wholesale access to the IRS data kingdom of private, personal taxpayer information. In publishing the stolen personal information, the progressive group ProPublica described it as a “vast trove.” The ProPublica report was coincidentally published the same day congressional Democrats kicked off their push to raise taxes.
On that day, then-IRS chief Charles Rettig in sworn testimony told congress that he would get to the bottom of it immediately.
It is unclear if anyone at the IRS has even bothered to ask ProPublica for a copy of the stolen material.
In 2022 testimony Rettig said unauthorized employee access to sensitive data can be detected in a “fairly timely manner.”
Will you be aggressive and forthcoming unlike Rettig and Treasury Secretary Yellen? They have provided nothing but excuses as shown by this timeline.
How does this incident affect public trust in the agency?
Government-run tax prep
Democrats have continued to push the IRS to create a government-run tax preparation service including funding for a pilot program in the Inflation Reduction Act.
Even politically left-leaning organizations like the Progressive Policy Institute (PPI) have warned that a government-run “return-free” system could be a “tax trap” jeopardizing Americans qualifying for the earned income tax credit (EITC) because the IRS lacks the information it needs to prepare tax returns and would put tax credits disproportionately claimed by low-and-moderate income filers at risk.
Do you agree with this assessment? Does the IRS have the bandwidth to take on such a vast expansion of responsibilities when it’s already failing to meet its current responsibilities?
Do you believe government-run tax preparation would create a significant conflict of interest for the IRS? Should the IRS be responsible for both calculating a filer’s tax liability and for managing contested tax returns? Would this create an incentive for the IRS to overcharge taxpayers or withhold information from filers to maximize revenue?
Misuse of IRS cars:
A 2021 TIGTA audit found that the IRS does not ensure that its taxpayer-funded cars are used strictly for official business. The Inspector General found widespread “questionable and missing information reported by special agents for commutes and commuting miles.”
The agency is unable to provide documentation of proper vehicle use.
It also appears some agents are using IRS vehicles in non-approved ways.
As noted by TIGTA, the three-year audit “found questionable data reported for individually assigned vehicle use. Specifically, we identified three special agents who reported between 95,000 and 242,000 total mission miles in a 12-month period. The mileage reported is significantly greater than the 7,200 mile utilization criteria used by the IRS’s Facilities Management and Securities Services Division.”
And this audit covered just a sample of the overall fleet. Can you find out what the agents were doing to rack up mileage of 95,000 and 242,000 in one year? Moonlighting as rideshare drivers?
The IRS’s own books are a mess. But a small business owner undergoing an audit from the IRS would get scrutinized and penalized if they were found keeping tax-deductible vehicle use records in such a manner as the IRS.
Can you see how that presents a credibility problem?
How would you ensure the cars are used properly? Will you fire agents who misuse vehicles?
Union organizing on the taxpayer dime
IRS union members are allowed to use taxpayer-funded copiers, printers, and meeting rooms for union activities during the day while on the job.
In fact, 353,820 hours of such labor union “official time” were taken in the year 2019. The compensation costs for this time were $17.27 million.
What do you think of this practice? Shouldn’t IRS employees be answering taxpayer questions while on the job instead of doing questionable activities for a progressive labor union?
(Nearly 100% of the IRS union’s political spending goes to Democrats.)
Rettig told congress last year that 53% of IRS employees never come into an office. They are full-time work from home.
What percent of the IRS workforce is now full-time work from home? What can be done to ensure they are actually working?
What percent work full time in an office?
If only half the employees are coming into an office, can the IRS find savings by downsizing some office locations?
IRS fails to complete congressionally mandated complexity report
The IRS is required by law to compile and submit to congress each year “an analysis of the sources of complexity in administration of the Federal tax laws.”
But the IRS hasn’t bothered to do such a report since 2002.
Will you follow the law and publish this analysis each year?
1099-K paperwork nightmare
As part of the “American Rescue Plan” congressional Democrats and President Biden imposed a significant IRS paperwork burden on American households and businesses.
Previously, the thresholds to require issuance of a 1099-K form were $20,000 AND 200 transactions. The new Democrat-imposed requirement is simply $600 and no minimum number of transactions. This requirement puts a burden on working households and will result in more complicated tax preparation, fishing-expedition audits, and even the payment of taxes not legally owed.
If your child has outgrown their bicycle and other toys and you sell the items totaling $600 or more, you will have to deal with a 1099-K form. The IRS will know that you’ve received a payment but will not know you sold the items at a loss. Unless you can produce years-old receipts for each item. Otherwise the IRS will be on your case.
Rather than battle the IRS, many households will simply give up and send a payment to the IRS for “taxes” they do not legally owe.
The IRS issued a “GET READY” notice on December 6, 2022. The agency put the public on notice to get ready to deal with 1099-K forms.
But just 17 days later on Dec. 23, the IRS said never mind, 2023 is a “transition year” and declared people did not need to comply with the law passed by congress for 2023.
Mr. Werfel, what do you make of the IRS’s complete 180 in the span of just 17 days?
House and Senate Democrats were on the verge of passing a fix to the problem they created, as part of the 2022 end-of-year omnibus bill. But suddenly the legislative fix vanished and the issue went completely unaddressed by congress.
Even though the IRS had just issued this GET READY notice days prior, the agency suddenly said it would not enforce the 1099-K law in 2023, conveniently giving political cover to Democrats and unethically removing the pressure on congress to act.
Can you commit to finding out if anyone at Treasury or the IRS communicated to Democrats that if congress failed to solve the issue by statute, the IRS would simply wave a wand and solve the problem?
Can you release any communications on this matter between the IRS/Treasury and the White House and congressional Democrats?
Do you think the IRS has the power to sidestep laws passed by congress?
Can you commit to not doing the “transition year” trick again?
Because the IRS’s legally dubious action took the pressure off of congress to fix the problem in early 2023, households and businesses of all sizes are now left in the lurch the entire year while the threat of the 1099-K law hangs over their heads.
Can you provide a regular update as to how many firearms the IRS owns? A 2020 report found the agency had 4,600 guns and five million rounds of ammunition.
How many guns do you want to see the IRS purchase with the $80 billion in new funding?
TIGTA audits show the IRS has a poor record of firearms management. In a three-year audit, agents were found to have fired their weapons accidentally more often than they fired them on purpose.
TIGTA found that in at least three instances, the accidental gunfire “may have resulted in property damage or personal injury.” But the details of these incidents are redacted.
Can you commit to providing details of any future misfire incidents?
TIGTA has found that the IRS has repeatedly failed to ensure that procedures relating to firearms are properly followed.
“there is no national-level review of firearms training records to ensure that all special agents meet the qualification requirements.”
Special agents are required to surrender their weapons when they fail to participate in this training, however this often does not happen.
As noted by TIGTA:
“However, there is currently little consequence for special agents who fail to meet the training requirements listed on the checklist.”
What reforms will you institute to ensure the IRS manages its weapons properly?
Failure to upgrade IRS technology despite funding surges
For the past 40 years, the IRS has received several large infusions of money for the purpose of upgrading its famously outdated computer systems. But these efforts have failed every time as shown by this timeline.
As the IRS embarks on yet another attempt to fix the problem, why do you think the previous efforts failed? What would you do differently this time?