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Let's give the IRS more to do! Oh, wait...

December 23, 2009

20090617-2.jpgThe TaxProf reports on the predictable consequences of using the IRS as the Swiss Army Knife of public policy:

IRS Cannot Verify Taxpayer Eligibility for 2/3 of $325 Billion of Stimulus Tax Benefits

The Treasury Inspector General for Tax Administration today publicly released its review of the IRS’s ability to verify taxpayer eligibility for tax benefits and credits provided by the American Recovery and Reinvestment Act of 2009.

The Recovery Act contains 56 tax provisions with a potential cost of more than $325 billion that are intended to provide tax relief for individuals and businesses. These include 20 provisions for individuals that provide tax relief to working or retired Americans and their families. Thirty-six additional provisions provide tax relief and incentives for businesses, including provisions that encourage investment in sources of renewable energy and promote the hiring of unemployed veterans. They also allow for the sale of bonds to provide for construction, financing, environmental and manufacturing improvements.

TIGTA found that the IRS is unable to verify taxpayer eligibility for the majority of Recovery Act tax benefits and credits at the time a tax return is processed. This includes 13 of the 20 benefits and credits for individual taxpayers and 26 of the tax provisions benefiting businesses.

It's hard enough for the IRS just to determine the correct taxable income and collect the tax of millions of individuals and businesses. When you ask the IRS to also to run economic stimulus, coordinate national energy policy, function as the national directory of industrial research, act as national low-income welfare administration, and now act as national health care administration, it's not going to work out well.

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

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