The “National Taxpayer Advocate” released its Annual Report to Congress .
It tells of “a devastating erosion of taxpayer service,” and a “lack of effective administrative and congressional oversight” combined with “the failure to pass Taxpayer Rights legislation,” that “is reshaping U.S. tax administration in ways that are not positive for future tax compliance or for public trust in the fairness of the tax system,” and furthermore “we need fundamental tax reform, sooner rather than later, so the entire system does not implode.” In other words: mostly good news this year.
The report is charmingly earnest, and imagines that it is addressing a Congress that has a genuine interest in improving the functioning of the U.S. government and the lives of its subjects, but has somehow lost its way.
As an example of this naïveté, one of the Taxpayer Advocate’s recent success stories, by its standards anyway, was when it convinced the IRS to issue a “Taxpayer Bill of Rights” — one which didn’t actually give taxpayers any rights, but just tried to list the ones it thought taxpayers ought to believe they have. Since then, the actual experience of taxpayers has declined for just about every item in the Bill.
One thing the new report emphasizes is that the IRS’s inability to do its job is a problem that compounds with time — “the tax system goes into a downward spiral” as the report puts it. When the agency is late responding to letters, or can’t be reached on the phone (the IRS projects it will answer fewer than half of incoming calls this year, and those only after on-hold waits exceeding half an hour, and even then it will refuse to answer any but the most basic questions), or doesn’t staff its walk-in sites, citizens get frustrated and either don’t bother to pay or file, or they make up their own answers to the questions they have — often incorrect or conveniently taxpayer-favorable ones. Both scenarios create more work for the IRS and add to their backlog. Furthermore:
The erosion of taxpayer trust is an even more serious matter than the erosion of taxpayer service, because with the provision of adequate funding, declines in taxpayer service can be reversed. Not so with declines in trust — once lost, trust takes a very long time to be regained. For a taxpayer whose trust has been shaken, each IRS failure to meet basic expectations (e.g., answer the phone…) confirms the belief that the IRS is not to be trusted.