Image of a Scary IRS Agency

Buried in the misnamed Inflation Reduction Act passed by Democrats is a provision that hands the IRS $15 million in taxpayer funding to lay the groundwork for creating a government-run tax preparation system.

This would incentivize the IRS to overcharge taxpayers or withhold information from filers to maximize revenue. Private tax preparation companies, in contrast, have a financial incentive to minimize the taxes their clients owe.

Congress should resist any effort that would empower the IRS to simultaneously act as tax preparer, collector, and auditor.

Check out ATR President Grover Norquist’s latest episode of Leave Us Alone. 


Episode Transcript:

Grover Norquist (00:23):  

And welcome everyone, to the Leave Us Alone podcast. this week, we’re gonna be talking about a topic, the latest nightmare from the Internal Revenue Service, the IRS. And that is Government Run Tax Prep by George Soros, the effort to have the government do your taxes for you. And then they just send you the bill and you go, how’d you come to this? Right? And we’ll see how that does as it as it’s moving forward. The federal government’s putting money into it, they want to do this, and some of the hard left really wants to do this. We’ll be talking about that in just a moment. But please take a moment during the podcast to subscribe to the podcast. We’d love to have you join through Apple Podcasts and or Spotify. And if you’re watching the live stream, please be sure to subscribe to Americans for Tax Reform YouTube channel or like us on Facebook.  


Getting back to the podcast topic this time, the idea of the government doing your taxes right Now, we have in the United States, unlike many other countries, a voluntary tax system doesn’t mean it’s voluntary to pay your taxes. It means you do your own taxes. You look at your books, you look at your numbers, and you send the government what is owed. They check it, and then we’re all set. ther countries, the government knows already how much you got paid. They know all the, your financial data. They can look at all your bank accounts, they have all your information, and then they will write your tax return for you. And if you wanna argue with them, well, you can argue with City Hall not terribly successfully. But if you argue with the IRS, first of all, as of today, only 20% of their phone calls when you come in to ask, what was this all about?  


Why did you have this number? Only 20% of the phone calls get answered, and you can call and call again. You can write letters, and then, they disappear into the void. And you will have to pay the tax and then argue to get it back. Of course, you can hire a lawyer for several thousand dollars to dispute the fact that they took $500 more than they should have. But you honor, just give ’em the $500, or you wanna spend a couple thousand dollars arguing about the five, and maybe you never get through on the phone. Maybe you never get this solved at all. This is an incredible violation of your privacy right now, the government knows certain things about you, your w2, your 1099, how much money did you make? Those sorts of things. And banks tell the government, or your employer tells the government what your paycheck was so they can check it and see if you’re basically paying your income tax correctly.  


What the government asked for under Biden just recently, remember the 1099 explosion where they said, we want to have, if, if you get a, a Venmo notice that somebody sent you $600 to Venmo during the course of a year that’s gonna be reported to government’s income. Now you can go back and argue that it was you and your friends getting together to pay the rent, and that’s what those checks were. But you’re gonna have to go make that argument to the, to the government. We’re joined today by Mike Palicz, who is in charge of tax policy here at Americans for tax reform. And Mike has been keeping an eye on the IRS. I just started Mike into a little rant about some of the reasons we’re not I’m not terribly excited about the IRS doing my taxes or anybody else’s. Your thoughts, Mike, on government privacy, on your privacy vis-a-vis the government?  

Mike Palicz (04:12):  

Yeah, Grover, and thanks for having me. So yeah, quick deal here for people to know. One, in the Inflation Reduction Act the reconciliation bill, the spending and tax mess passed by Democrats last August included 15 million for the IRS to create a pilot program in the study to look at government-run tax prep, which they call direct file or return free filing. And this would essentially have the IRS become the tax preparer, the collector, and the auditor. So, there’s obviously an inherent conflict of interest here. We should not have the IRS being the same organization that’s gonna audit you is also the same person that creates your taxes. And really, one sense, it’s having almost a pre-audit while you’re doing your taxes because you’re handing all your information over to the same service who’s gonna come and tell you no, your taxes were actually filed improperly.  


, and one of the real concerns people, taxpayers should have here is the additional burden that would be placed upon tax filers, the additional information you would have to hand over to the IRS. We’ve even seen progressive groups like the Progressive Public Policy Institute raise concerns over this, where they’re essentially saying, well, you know, the IRS one doesn’t have the infrastructure or the ability, , to handle things such as the earned income tax credit of claimed by millions of Americans. , their concerns essentially, and what they’re, what progressive studies have even shown, um, is, is that you’d have less people taking tax credits they’re otherwise eligible for because of the information they have to hand over the IRS. Again, I think this another point of concern we should have here is taxpayer privacy, where we’ve seen a time, and again, a cultural problem at the IRS where they have a complete inability, lack of respect for taxpayers’ private information. And then they mishandled that information. So, we’re now more than  

Grover Norquist (06:02):  

Right. Can you tell people what happened 600 days ago which speaks to the issue of whether the IRS is capable of keeping anyone’s information private?  

Mike Palicz (06:12):  

Sure. So now, over more than 600 days ago taxpayer information was stolen from the IRS. It was a theft, and that information was then handed over to the progressive media outlet, ProPublica, which then pro, which then published all the private taxpayer information in the financial documents of, in, of, of certain individuals specifically targeting certain billionaires. This wasn’t a random hack of some site. This was someone who had the master keys to the IRS, , who went and selected certain individuals to find their, , information and handover to progressive media that then published it. , and this, you know, coincidentally just happened to be timed as Democrats started their major tax crusade with public messaging that they were gonna raise taxes on the wealthy and not you, which of course is not true, but a politically timed theft of taxpayer information from the IRS and then given to progressive media to publish just again, proves time and again, that the IRS is cannot be trusted to handle information. The idea that we would hand them more information to allow them to file your taxes for you is absurd.  

Grover Norquist (07:20):  

In that case of thousands and thousands of people’s tax returns and tax audits and information being handed to a left-wing group, not, not put on a website somewhere. If somebody thought they were exposing problems selectively begin to a left-wing group, they would only use it for left-wing purposes, not for any sort of general use. And they were claiming they were gonna find that rich people weren’t paying their taxes. Matter of fact, that’s not at all what showed up. And so they stole all that data, made it public, or much of it public. Some of it they probably used to blackmail people with to this day. But, they didn’t find any of the arguments that, that high income people weren’t paying taxes. These were audits or they’re not being audited. Many of the information that they had were audits that are supposed to never be happening.  


This, whoever did this, as you point out, had the keys to the kingdom, could go anywhere in the IRS. That means it’s one of the top people, or they’re so lax in their security that anybody can get a key to the kingdom, the master key and they don’t have the capacity to find out who, or they don’t darn well who it is. And they chose not to tell anybody because it wasn’t a theft. It was a smash-and-grab and hand off to somebody. But all of these things say you’d never give an organ, and nobody got fired. Nobody got fired. Why would you give these people anybody’s personal information?  

Mike Palicz (08:48):  

Yeah, that’s exactly right. We’ve had Secretary Janet Yellen promise before Congress, when this first happened back in 2020, in the summer of 2021, that the IRS would be held accountable, that they would get to the bottom of this. Now, here we are more than 600 days, , since the theft of, of taxpayer information from the IRS that a single person’s been fired, and the IRS can’t or won’t tell us what happened. , and this will be a continuing subject as secretary, , Yellen was in hearings in the house today and will be in the Senate next week. So, certainly a topic of interest.  

Grover Norquist (09:21):  

Now, the IRS asked for and got 80 billion in addition to everything they have now supposedly to hire 87,000 more staff. They admit that about three 80, I’m sorry, 87,000 staff with 80 billion, about 3.2 billion will be used to hire people to answer the phones and service questions. And about 44 plus billion for guys to go audit you. So when the IRS commissioner was up for nomination, and he said that he would equally view more service and more audits by a factor of 10, he wasn’t telling the truth about what they were doing without money. That money will not make it easier for you to pay your taxes, it’s to have more people out there auditing, more folks and hopeful. And, and remember, the president just recently said, oh, we’re gonna tax billionaires. And that was the headline.  


And then it turned out that the IRS and the Justice Department of folks have been secretly organizing a plan to follow everybody who’s paid in tips, waiters, waitresses, taxi cab drivers, people who do fingernails. That’s their target, not billionaires, people who get tips. They’re putting all this time and effort into making sure that people who make a living with tips as a major part of it are paying taxes on that. , Mr. Biden, when you promised you’d never hit anybody who raise taxes on anyone who earned less than $400,000, please name two or three people who work for tips and make more than $400,000 a year. This is a war on average Americans. Yeah,  

Mike Palicz (11:08):  

That’s exactly right. And, and in Danny Warhol, the who will be the new IRS commissioner in this hearing, he gave away the game for Democrats and kind of blew up their messaging that really what this is about is improving taxpayer sentence. The, the services. His statement in the hearing two senators was that it would, it would be a co-equal priority of improving taxpayer services and ramping up audits on people. Which we, we know it’s, it won’t be, there’s nothing co-equal about it. The, the mandate he has is to go raise 200 billion by increasing audits on people so that Democrats can spend that money. So we know that’ll be the priority of the IRS. And he all would confirm that and again, we have the, the topic now of the IRS. They cannot meet those existing taxpayer service requirements that they’re obligated by Congress hit, and they’re seeking to expand their power.  


So part of what they’ve been doing now with this study, um, to, to try and start grabbing the reins of doing tax preparation as well as to being auditors is who they’ve selected to run their study, their pilot program. They’ve selected a progressive group, the New America Foundation, an organization that’s been on record for years in support of, of creating da, , government run tax prep. Um, so this, this is, this is a fully already baked in with the results study, , that we know the progressive group is gonna come in and say, yeah, we think you should do government run tax prep, because that’s what we’ve been advocating you to do for years. The IRS knows that. And then you have this added problem to it too, because of the specific work this organization, new America Foundation has done, done so far, they’d even be a potential vendor for a new program, excuse me, while the lights turned off.  

Grover Norquist (12:47):  

Okay. So we’ve got a situation where the federal government gave 15 million to a left-wing lobby in order to tell the government back they should do what the left-wing lo lobby wanted. And then they’ll say they checked with experts.  

Mike Palicz (13:03):  

Yeah. And this is supposed to be an impartial study. That’s the way it’s written by the law. We’ll see in hearings. I think it should absolutely be a topic for Republicans in the House and Senate to investigate of just how, how this process was done, how New America Foundation was selected as the group to prepare this study. Was there an open bid process for this, or did they just go out and hire the first group that they knew would give them the results they won? I think it should be deeply troubling. We’ve seen reporting from the Daily caller on this, calling them out of having such a left wing, clearly an impartial not an impartial organization selected to run this study. Again, it gives the way the game of what the IRS is here is they want to expand into the role of, of having your taxes from start to finish, from the moment you’re filing them to the moment they’re gonna audit you and it’s something they certainly, a role they’re not prepared to take on, not equipped to, , and would have a conflict of interest for them to do so.  

Grover Norquist (13:54):  

So what will the IRS do with their 80 billion? Have they explained that? Has Congress written it down? Is it, is it online somewhere?  

Mike Palicz (14:03):  

So, , Janet Yellen secretary Janet Yellen, had promised when the inflation Reduction Act passed, that within six months, they would’ve a detailed spending program outlining exactly how they planned to use the 80 billion of taxpayer money they were being handed. , surprise, surprise, the IRS blew past that deadline. , no plan has been offered, , in Danny Warhol’s hearings for commissioner of IRS, , he was asked whether or not he’d be able to commit to providing that plan this year. , he wasn’t able to do so. He said, well, let me go talk with the bureaucrats at the IRS to see if they think it’s doable. Not whether or not they’re legally required to do it, or that the, the Secretary Yellen promised that they would have it already. No, they haven’t. No, they’ve outlined no plan of how they actually plan to spend that money. What we do know from previous, , treasury Inspector General reports, , is outlining one that they do plan to hire 87,000 new agents. , and what we do know from just the allocation of the money, , is that they certainly plan to come to ramp up enforcement and increase audits on Americans, um, which is what the majority of the money in the bill is used for.  

Grover Norquist (15:10):  

December, a few months ago, there was a lot of unhappiness in the country over the Biden administration and, and the Democrats. And Congress voted a law that Venmo and PayPal and Etsy and eBay, were going to have to report any money you received through their platform as if it was income, and send that to the IRS. Um, could you walk through where we are on that? Because I know one of the things that seemed to bother people is there’s only $600. So it’s if a bunch of friends are rooming together and they all Venmo the money to, to the one guy, he’s now got income of all of that stuff. It was just to pass through. It was just collecting the money to buy the pizza or, or rent the house. Um, and if you haven’t kept receipts, you owe the federal government taxes on all that stuff that Venmo had to tell the federal government about. Um, it sounded like a disaster in the making. There was a fair amount of noise. What’s the status of, did, did that get repealed,  

Mike Palicz (16:16):  

, quickly for, so for people who were not familiar, , prior to Democrats passing the, you know, misnamed America rescue plan, the, , the first covid bill, the Biden administration passed one of the only provisions in there that actually raised revenue for, for the government, the increased taxes, , was lowering the reporting threshold for 1099 K on, on apps like Venmo and PayPal. So it used to be you had to have $20,000 worth of transactions in 200 total transactions, both of those requirements, $220,000 before you had to report a 1099 K to the IRS. Well, the Biden administration lowered the number to $600 and zero transactions, um, roping in millions of more people. The estimate that was gonna be between 20 and 30 million 1099 Ks were gonna go out to people. Democrats realized the, political blowback they were gonna receive, and it was supposed to kick in this January while the IRS came in behaving politically with really no clear authority to do so.  


But despite more than two years of preparation, decided at the end of the year that they would not require it for this year and kick the can down the road for another year. Um, so it will require a legislative fix. You’ve had Republicans in both the House and the Senate, um, propose legislation to restore the old thresholds, um, which obviously should, should we, we, is something we should return to. This was a problem Democrats manufactured. There was no issue with reporting from Venmo and PayPal before. This is just another attempt for the IRS to get more of your information and, and for Democrats to raise revenue from. And to your point, Grover, again, this is something the burden is placed on the taxpayer. It’s if you sold tickets to a sporting event you couldn’t make, and you sold those tickets at a loss, or if you had old child’s clothes or toys that you sold at a garage sale at a loss for what you bought them, the IRS wants to treat that as income that they can come and tax you on, and the burden’s on you to go find the receipts that actually, no, you didn’t make money on this.  


You lost money.  

Grover Norquist (18:14):  

Okay, well, we have an IRS that can’t maintain your privacy, but wants more of your personal information. An IRS that says they care about taking phone calls and, and making sure they help you out in service your questions, but actually they’re putting their money into more audits and almost nothing into, , getting phones answered and getting information out to people. , we have an IRS we, we didn’t even go through, , today. The in Ogden Utah, they destroyed 30 million documents, IRS documents, like a W two or a 1099 statement. Um, and they didn’t tell anybody about it. It got discovered by one of the investigators whose job it is to make sure things don’t go too crazy over there. Um, and it was 30 million documents. If you stacked them up, one on top of the other, there’d be two miles high. And when the Republicans, the Democrats weren’t interested, but when the Republicans asked about it they said, did you did you burn them?  


Did you bury them? Did you shred them? How did you get rid of 30 million documents, two miles high? Um, and they said they wouldn’t say they did discover that there was a memo to the point as to why they did destroy the 30 million documents. And, um, not, maybe not why they kept it a secret, but why did they destroy them? And when could asked if they could see that article and the, the memo saying why they did it, they said, no, it would reflect poorly on the IRS. So, they were gonna show it to anybody, even Congress, which has every right to look at that and demand that operation. This plus the fact that, um, the IRS, a hundred percent of their campaign contributions go to Democrats. They fund the modern Democratic Party. They fund democratic candidates. They have a one party structure at the union over there, um, which donates about 350,000 hours.  


People you’re paying, I’m paying taxes we pay that are donated to the unions, which then go work for the modern Democratic party. They’re running a political machine that violated the law in terms of, of people’s privacy and their reward by the Democrats and the House Senate and the President is to give them $80 billion unaccountable. They haven’t even written a plan for how they’re going to spend it. They could all go to Mardi Gras with it, and they would, you know, well, we didn’t tell you anything different. They didn’t make any promises about what they were going to spend it on. They haven’t even put in what they’re going to spend it on. And it’s 80 billion. So those are my final thoughts on this. It is probably a bad idea to give this cast of characters the power to have all of your financial data, everything they could imagine.  


And then they write your tax bill for you, your, and send it to you. And then if you don’t send your money and they start finding you, and then you can call them on the phone and they can laugh at you, , and you can try and fix the problem, and they can laugh at you, and you can hire a lawyer to spend more money than the government was willing to take. Or you could just pay Uncle Sam and give up for the year. Take care. Thanks for joining us.