According to a recently released report produced by the Treasury Inspector General for Tax Administration (TIGTA), reductions in the IRS’s budget have impaired the agency’s ability to collect taxes and assist taxpayers. In reality, the agency’s poor performance is not because of its funding level, but due to its inability to complete even the most basic tasks, as has been detailed on numerous occasions.
Detailed reports have shown the agency cannot justify its spending decisions, has repeatedly failed to produce complexity reports, has failed to strengthen data protections, and has continually spent its finite resources in inappropriate ways.
Unable to Justify Spending Decisions
“The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”
As the report noted, the agency’s decision making has been questioned by watchdog groups on numerous occasions. The IRS’s response has not been satisfactory:
“the IRS has come under scrutiny by external oversight organizations who have questioned the IRS’s rationale for its budget decisions. They have not been satisfied with the IRS’s response to their inquiries.”
Failure to Produce Legally Required Tax Complexity Reports
The agency has also repeatedly failed to compile legally required tax complexity reports. These reports are supposed to contain the IRS’s specific recommendations on how to make the tax code easier to comply with. Since 1998, the IRS has done so just twice – in 2000 and 2002. When the agency completed these reports, the recommendations helped Congress make improvements to the tax code, which in turn made the IRS’s job easier.
When questioned about the costs behind compiling these reports, the IRS said it would take “about two full time employees working for about a year.” But as the NTA points out, any costs associated with compiling these reports “pale in comparison to the costs of complexity.”
The IRS continues to use decades old technology to serve taxpayers, including some applications over 50 years old. As Commissioner Koskinen recently admitted:
“In regard to software, we still have applications that were running when John F. Kennedy was President.”
In addition, the IRS still uses COBOL, a programming language, that Koskinen characterizes as being “outdated back when I served as Chairman of the President’s Council on Year 2000 Conversion.”
It is difficult to believe that the IRS has willingly ignored updating these applications given that Koskinen has stated that tax-filing season “is a tremendously risky operation to run with outdated equipment and applications.”
Inability to Adopt Watchdog Recommendations
Following the recent hack in which the personal information of 100,000 households was compromised, IRS Commissioner John Koskinen admitted that the hack was not due to reduced budgets. Instead, a possible reason for the hack is the failure of the agency to implement 44 recommendations that would strengthen data protections.
Countless Wasteful Spending Habits
Other reports have detailed the countless wasteful spending habits of the agency. A recent report found the IRS spends over 500,000 hours per year on “union activities” which could instead be used to answer 2.3 million additional phone calls. Last month, it was revealed that the IRS was spending $1,000 an hour hiring a litigation-only white shoe law firm for an investigation, despite having over 40,000 employees dedicated to enforcement efforts. In the past, the agency has been caught red-handed wasting taxpayer dollars on Nerf footballs, the world’s largest crossword puzzle, and extravagant $100 dollar lunches.
While the IRS continues to blame poor service on budget reductions, countless reports point to the real problem – the inability of the agency to competently complete basic tasks and spend taxpayer dollars in a responsible way.