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Tax Code as Swiss Army Scalpel

November 10, 2009

20090617-2.jpgThe tendency to use the tax code as the Swiss Army Knife of public policy reaches absurdity in the "health care" bill passed over the weekend in the House. It's so bad that even former IRS big shots are speaking out, Tax Analysts reports ($link):

The commissioners said they were not surprised that Congress would turn to the IRS to administer the program, the size of the task notwithstanding.

"For a Congress that loves to trash and bash the IRS, every time they need somebody to do something, that's the agency they turn to," [former IRS Commissioner Margaret] Richardson said.

While some former big shots say the IRS could handle it, given time and money (not likely), one pointed out the obvious:

However, Larry Langdon, former commissioner of the IRS's Large and Midsize Business Division, pointed to drawbacks in using the IRS to administer healthcare tax programs. "These kinds of programs require social welfare expertise," Langdon said. "IRS agents are not recruited or trained to do that well."

"The IRS record is mixed and sometimes abysmal with regard to effectively administering these kinds of programs," he added.

Langdon said a Treasury Inspector General for Tax Administration audit released earlier this year estimated the earned income tax credit to have a fraud rate of approximately 25 percent, with the IRS annually handing out erroneous payments totaling between $10 billion and $12 billion.

And just wait for the phones to start ringing:

The IRS is already overwhelmed with call volume, according to National Taxpayer Advocate Nina Olson. "I personally think that the IRS is teetering on the brink of really difficult times in not being able to manage the workload in terms of the phone calls and the paper that we are getting," Olson said October 27 at the American Institute of Certified Public Accountants' National Tax Conference in Washington.

It's hard enough for the IRS to just correctly determine and collect the tax. Pelosicare is one more step in the transfromation of the IRS from a tax collector to a super-agency that shoves aside the cabinet officers nominally in charge of public policy.

Flickr photo of "The ultimate Swiss Army Knife" by redjar

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