The Biden administration is attempting a top to bottom remaking of the Internal Revenue Service (IRS), which will only spell more frustration and pain for American taxpayers. Media headlines have focused on the plan to increase the IRS six-fold, with 87,000 additional agents and $46 billion in new spending on enforcement and litigation. The House of Representatives has voted to eliminate most of that funding, but the threat remains. Though they may be hampered in enlarging the size of the IRS, this administration will continue to expand its scope.
Buried in the Inflation Reduction Act are vaguely worded sections on increasing “investigative technology,” “digital asset monitoring,” and a “return-free filing system.” Allow me to decode those terms for you.
Championed by Sen. Elizabeth Warren (D-Mass.), these policies would balloon the IRS’s scope in two incredibly intrusive ways. First, they want to monitor every aspect of our financial lives by requiring banks to provide detailed records of all transactions over $600 – a move that has rightly been characterized as a “massive search without a search warrant.”
Second, some in Congress are proposing a “return-free” tax filing system. This would require the IRS to collect even more financial data from you and so that a bureaucrat could determine what you owe the government.
Together, these two components would completely reshape the IRS at the expense of hardworking taxpayers. The IRS would assume the role of tax preparer in addition to their existing roles as tax collectors and auditors. This represents a fundamental conflict of interest and spells nothing but trouble for taxpayers.
Imagine receiving your tax return prepared by the IRS and discovering an error that results in a tax bill higher than it should be. That puts you in the position of having to appeal your taxes with an agency known for their poor customer service. Good luck with that.
Last year the IRS answered only one out of every 50 calls to their taxpayer help line and they currently face a massive backlog of millions of unprocessed tax returns from the last couple of years. This agency is notoriously opaque, painfully slow, and consistently unhelpful to taxpayers. Expanding their role to include tax preparation would be a nightmare for the average American.
A government run tax preparation system would also be a disaster for our data security. This proposal would require the IRS to warehouse a complete record of every American’s financial activity in one convenient repository. Hackers will be lined up around the block for a chance to crack into that treasure trove. Let’s not forget that the IRS has a terrible track record with digital security, with several high-profile data breaches in the last few years alone.
Don’t think for one second that all of this will only affect the wealthy and that average Americans will be protected. Congress’s official tax watchdog, the Joint Committee on Taxation, has reviewed this proposal and estimates that 78% to 90% of the plan would target taxpayers making less than $200,000 per year.
Congress needs to put the brakes on Sen. Warren’s reckless plan to expand the IRS. Instead of increasing the agency’s scope and responsibilities, Congress should reform the IRS to focus on improving their customer service and helping taxpayers navigate our byzantine tax code.
The vast majority of Americans file their taxes on time and pay their fair share. There are real problems that need to be fixed in our tax system, but taxpayers are not the source of those problems – the IRS is.
Cary Smith is a former legislator from Billings.
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