Some historical and global examples of tax resistance →
Britain / U.K. (see also: Ireland, Scotland, Wales) →
climate change activists/Extinction Rebellion, 2019–22
Some international tax resistance news of note:
The “Extinction Rebellion” movement’s London branch is launching a tax strike to protest the city’s funding of projects that exacerbate climate change. They intend to begin withholding 20% of their council tax once they have a critical mass of signers-on to their strike proposal. The withheld funds will be redirected to a project to create a new city plan with a focus on ecological sustainability. They have created a London Tax Rebellion Information Booklet to support the campaign. They were inspired by Extinction Rebellion activist Imogen May who refused to pay council tax as part of her protest.
The “Extinction Rebellion” group launched its council tax strike in London at its “summer uprising” .
The group is trying to get the government to stop spending money on transportation and infrastructure projects that exacerbate climate change, and are taking the lead by redirecting their taxes to greener projects in an act of civil disobedience.
Here is some coverage of the tax strike launch in Al Jazeera and from Financial Times.
During the Great Depression, property taxes went up even as people became increasingly unable to pay. A result was organized taxpayer leagues and property tax strikes. Stephen Mihm, at Bloomberg Opinion, wonders whether such tax revolts might return as businesses shutter and rent strikes bloom, reducing the ability to pay of property owners.
Attacks on traffic ticket robots continue in Europe, with recent attacks in France and Italy and yet more in France. The number of tickets and the revenue from them were both down about 25% last year in France.
I’ve noted before some tantalizing hints that the Extinction Rebellion (XR) movement in the U.K. is adding tax resistance to its arsenal of conscientious objection tactics.
However I’ve had some difficulty tracking down much information from XR itself on the subject.
I finally stumbled on a trove, and today I’ll share some of what I found.
My first stop was this video of a talk by Gail Bradbrook on the “XR Money Rebellion” as they’re calling it.
It starts off with a long discussion of the state of climate change and how the political and economic powers-that-be are not motivated to make the necessary changes to combat it.
Then Bradbrook introduces the Money Rebellion idea. Excerpts:
Well, we know that nothing’s going to change just because we want it to change.
What we’ve shown in Extinction Rebellion is that civil disobedience is a part of waking people up.
And so Money Rebellion is a next iteration of financial civil disobedience — a route to our liberation.
Money rebellions aren’t new.
We know that civil disobedience works.
You had… the suffragettes had a “No Vote? No Tax!” campaign as part of their work.
Gandhi led a tax campaign, a salt tax march across India.
We had people refusing to pay the Poll Tax in the U.K., speaking to our history of poll tax protest in the peasants’ revolt in .
Money Rebellion is… a financial disobedience to call out an economic system that’s destroying life on earth.
And it’s about mass participation, us joining in if and where we can, because we’ve seen that this can be an act of initiation, an act of inner transformation, as well as collective power.
It’s our way of saying we are not going to serve it any longer.
And it is OK to not pay debt and tax under certain conditions.
For example, we know that excessive debt and tax dodging — as I’ve shown in this talk — and lethal structural issues aren’t being tackled.
And that tax monies get used to worsen the climate and ecological crisis.
I talked about the funding of HS2, the bailouts of polluters, the subsidies given by our government to fossil fuel organizations, and the use of debt as well to worsen the climate and ecological crisis.
So the financing of the destruction of communities and nature to extract resources.
What we’re talking about is the breaking of the social contract, and we need to tell the truth about that.
To act responsibly, it’s not about passively sitting aside in the face of this and letting it happen on our watch.
We’ve got a responsibility to intervene, a responsibility to those suffering now, to our children, to other life, and to future generations.
Life on Earth is dying.
How it’s going to work?
Well, in gift economics, we’ll give the money to a mental health charity, for example, instead of perhaps paying part of the tax return, if that’s what you do.
Or you might give money to restore nature as a small business: instead of paying some of your small business taxes, give it to a company that’s working on the restoration of nature.
Or you might give money to indigenous resistance, instead of paying money — some of your bank debt — to a bank that is funding the destruction of that indigenous community.
Or you might offer to work for your local community instead of paying some of your council tax, especially if your council is doing things that are making the situation worse.
The tactics are these. We will start with so-called vanguard actions.
Those of us that are willing to start this thing off with demonstrator actions — and I’ll talk about a couple of those in a moment.
And then we’ll use what’s called “conditional commitment,” so “I’ll do it if others will join me”…
Tax resistance seems to be more difficult for individuals in the U.K. than the U.S.
Individuals typically have pay-as-you-earn taxes withheld from their wages, but there seems to be less leeway for interrupting this withholding process there than there is in the States.
There is also a value-added tax, but this is also difficult to resist.
The council tax can be refused outright, and there have been many examples of people doing this for various reasons, but it doesn’t always make for the most attractive symbolic target in the XR battle.
Perhaps for these reasons, XR seems to be giving debt-resistance the top billing.
The first broad-based action they’re doing is hitting the bank Barclays — “the largest U.K. financier of fossil fuels” according to a draft announcement.
They plan to use Barclays credit cards and loans to give money to worthy causes, and then default on that debt — thereby “making donations on behalf of Barclays Bank.”
Alongside that they’re encouraging small businesses to withhold a token amount of their taxes and put that amount in an escrow/redirection account.
Why is it necessary for rebels who can, to make acts of tax civil disobedience?
“Tax rebellion” captures the spirit of a defiant act, for people who also believe in the social value of taxation.
Tax strikes happened during Thatcher’s Poll Tax implementation attempts.
Here, the deliberate non-payment of tax by activists, combined with the protection of those striking against bailiffs, was a key part in resistance against government oppression using this regressive tax.
The government gets its power from taxation and a tax-strike strikes at the heart of the relationship between the government and the governed.
A tax strike is the perfect response to the Government’s abandonment of its fundamental responsibility to protect people and life and the consequent breakdown of the social contract.
They have what they call “rebel ringers” — volunteers who do one-on-one counseling with people who want to join the campaign and have questions about how to go about it.
And they’ve created a legal toolkit that explains the logistics.
They’ve done a little work studying the history of tax resistance as well, with a nod to my book We Won’t Pay! in their material.
They’re also working on the wording of their “conditional commitment” tax strike pledge, the idea being that if 10,000 people sign it, it goes into effect and the tax strike begins.
The climate change direct action group Extinction Rebellion is launching a set of economically-focused actions — including tax resistance — that they call Money Rebellion.
They have asked me to speak at their kick-off this week about “Building the Tactical Arsenal of a Successful Tax Resistance Campaign.”
I’ll be speaking at .
You can sign up to view the talk and participate in the questions-and-answers session that follows from the Facebook event page (I think there will be other ways of accessing the talk for those of you not in the book of faces, but I haven’t heard the details yet).
Here’s a video of the talk I gave a couple of days back to the Extinction Rebellion group in the U.K. for the launch of their “Money Rebellion” project:
My talk concerned the variety of tactics available to tax resistance campaigns, and how to wisely choose among them depending on the specific needs and circumstances of your campaign.
I think it had about 200 people watching live, and who knows how many viewing the video afterwards.
Judging from all the comments on the Facebook event video, the audience was very interested and engaged, so I’m very happy with how it went.
The IRS is still (improperly) threatening people with frivolous filing penalties if they send letters of protest along with their tax returns.
The new QR-codes that the IRS has started to include on past-due notices present a possible security issue for some tax resisters.
An appeals court affirmed that you cannot discharge federal tax debt in bankruptcy if you have willfully “attempted in any manner to evade or defeat” the tax.
The #MoneyRebellion campaign — part of the Extinction Rebellion environmentalist direct action movement in the U.K. — held a conference call today that covered some important legal information for campaigners there who are considering tax and debt resistance.
I listened in so that I could learn more about how tax resistance works in the U.K.
There is a lot of similarity between the legal situation for resisters there and in the U.S. but also some differences.
For one thing, income tax is much more difficult for the typical wage-earner to resist there.
In the U.S., there is the federal income tax — for which there is paycheck withholding but where the employee has a lot of control over the withholding and ultimately files a tax return to determine how much is owed — and the payroll tax, which is withheld from each paycheck at a steady, inflexible rate, and for which there is little opportunity to interrupt or reverse that withholding as an employee.
In the U.K., there is only a pay-as-you-earn tax that works more like the U.S. payroll tax in this regard, and so it is difficult to resist.
As with the payroll tax, the pay-as-you-earn tax can be resisted if the resister is self-employed (for instance a “sole proprietor” in the U.S. / “sole trader” in the U.K.).
In such a case, the resister — not a third-party employer — is responsible for paycheck withholding, and so they can choose civil disobedience instead.
In the U.K. there is also the council tax (the remnants of the “poll tax” or “community charge” over which there was so much tax resistance back in the day).
This is a local tax, but is also a potential target of #MoneyRebellion resisters as a protest against local budgeting for e.g. fossil fuel transport infrastructure.
There’s also a value-added-tax, but it wasn’t covered in much detail on the call today, except that it was noted that the value-added-tax enforcement seems to be more swift and severe than that for other taxes.
In the case of income tax (pay-as-you-earn) resistance:
The government will attempt to “attach earnings,” or what in the U.S. would be called a levy.
However, if you can resist pay-as-you-earn, you probably can resist such a levy, too.
If the debt is less than £5,000 or so, the government will likely turn it over to a collection agency. There isn’t much of an opportunity for a day-in-court.
Because of the pandemic, it’s pretty easy these days to apply for and receive extra time to pay.
The government has more power to collect business tax debts than personal tax debts (for instance they can seize business property more easily than personal property). This doesn’t apply to “sole traders” but if you are organized as a limited-liability corporation, it could apply to you.
In the case of council tax resistance:
Households pay it as a unit, and have joint-and-several liability for it. So if you resist, you need to have buy-in from the other adults in your household.
Non-payment is not a criminal offense, but councils can apply for a three month “committal order” against resisters which is something like a judicial contempt imprisonment in the absence of criminal charges.
If you don’t pay your council tax, there will be a liability order hearing in magistrates’ court. This will cost you about £50.
You are required by the court to make a report of your finances.
You can choose whether or not to attend this hearing. If multiple people are resisting, showing up together at the hearing can be a publicity/press opportunity.
The council will select from various enforcement options (in part based on your financial report), which may include sending out a bailiff to look for seizable property (though they aren’t authorized to enter your property without permission), attaching your earnings, issuing a “charging order” (something like what we call a “lien” in the U.S.), beginning bankruptcy proceedings, or applying to put you behind bars for 30 days.
If they choose the latter (jail), you can pay your debt on day #1 to get out of jail. If you decide to stick it out, you’ll be released after 30 days, but that does not discharge your tax debt.
Recent links from hither and yon:
Tax resistance is heating up in Myanmar in the wake of the military coup there.
The national legislature passed a law suspending tax collection and ordered government departments to stop collecting taxes, though the head of the central tax agency downplayed this.
There are also campaigns afoot to boycott lottery tickets, stop using sales tax stamps, and stop paying government monopoly utility bills.
Consumer pressure forced one restaurant chain to make a public statement that customers were welcome to refuse to pay sales tax in its restaurants.
You can learn more about the Extinction Rebellion U.K. project #MoneyRebellion in its latest newsletter.
Among its projects is Earth Tax Strike — a coordinated tax resistance campaign designed to pressure the government to enact more sensible environmental policies.
Here is an example of a letter the resisters will be sending to the government to explain their refusal and their demands.
The IRS continues to exceed its authority by assessing “frivolous filing penalties” against people who write them letters that protest how their tax dollars are spent — even if those letters aren’t “filings” at all, or are accompanied by filings that are accurate and complete and that don’t assert any “frivolous” positions.
This has understandably intimidated some people from petitioning their government for redress of grievances in this fashion.
Small loss though that may be, Ruth Benn urges us to not roll over too quickly: “if we want to make a statement about refusing to pay for war, hassles come with the territory and are actually the least of the risks that a resister could face.”
The U.S. government has been sending out stimulus payments as direct-deposits, as checks, or as debit cards.
It would do this even if the recipient was behind on their taxes and owed the goverment money: it did not deduct what you owed from the stimulus you received.
If the IRS couldn’t find you, though, or didn’t think you qualified for a payment, there was a backup option: you could apply for the stimulus on your tax return.
However if you did that, the IRS would treat it as any other deduction or credit, and offset it against the taxes you owed.
Which put people who had to use this backup at a disadvantage… or at least it did so until recently:
The IRS now says it will not offset such stimulus credits against federal tax debts.
The IRS, after insisting that it would stick with the April 15th tax filing deadline this year, finally threw in the towel and extended it to .
Part of what convinced them? They are still trying to finish up last year’s returns, and a growing backlog of taxpayer correspondence.
There were also some significant tax changes in the recently-signed stimulus bill (such as big changes to the child tax credit, and exemption of a large hunk of unemployment benefits from taxable income) that threw a wrench into things even as tax filing season was already officially underway.
Our movement has only scratched the surface of what non-violent civil disobedience can achieve.
While they deceive and seek to oppress us further, we can take a stand against their ecocidal leadership — by simply withholding council tax then telling the world why we’ve done it.
The campaign is asking local groups in the U.K. to demand that their local councils declare a climate emergency and suspend projects that are ecologically irresponsible.
Another detail of the Biden administration’s plan to beef up IRS tax enforcement has come out.
They hope to force banks to report information about everyone’s bank accounts: how much came into and out of each account over the year.
This would help them identify income sources that people and businesses fail to report on their tax returns.
But it would also put more bank accounts on the agency’s radar.
Currently, they only seem to be very aware of interest-earning bank accounts, via the reporting of this interest on annual 1099 filings.
This has allowed some tax resisters to have bank accounts that are relatively invisible to the IRS (and thereby less-vulnerable to seizure) by having non-interest-bearing accounts.
The proposed reporting changes might remove this protection.
Catalan separatists have amplified their tax resistance campaign.
For some time now the Catalan National Assembly has been promoting a campaign in which individuals, businesses, and (an increasing number of) municipalities would redirect their national taxes from Spain to the Catalan regional government.
That government would forward those taxes along to Spain, so the effect of this (and its risk) was minor, but in theory if the Catalan regional government decided to pull the trigger on political independence, this would establish the groundwork for fiscal independence as well.
But now, the separatist “Council for the Republic” is trying to push things further: asking resisters to redirect €300 of their taxes from the government to the Republican Fund for Solidarity Action.
That money will not be forwarded to Madrid, and so this is a more confrontational act of civil disobedience.
Attorney Peter Goldberger will discuss the prospects for people who might try to assert that people have a legal right of conscientious objection to military taxation in U.S. courts.
The discussion will be held online, on Zoom .
In South Kivu, the government is striking back at the three-month-old tax strike, announcing that it will call in police to enforce the tax law.
Strikers are protesting the lack of road maintenance in the region, and the spokesperson for the strike says it will continue until the main road is repaired.
Chrissy Kirchhoefer, over at NWTRCC’s blog, recaps some of the Tax Day actions war tax resisters have engaged in this extended tax season.
You may donate to that SBE [State Board of Equalization] member who will vote against you.
This may sound counterintuitive, but the idea is that both you and the SBE member must then disclose that contribution.
Any contribution of $250 or more must be disclosed.
Your contribution will disqualify that SBE member from considering your case.
The only exception is if the SBE member returns the contribution within 30 days from the time he or she knows, or has reason to know, of the contribution.
Often, though, a contribution will not be returned.
With a five-member board, if you identify two members who will vote against your client and make contributions to them, they will likely be disqualified.
Your board is now three members.
If you can garner two positive votes out of the three remaining, you have won.
Non-Californians may find this kind of playing field strange or even untoward.
It is certainly different, and not for the untutored, but until they change the rules, that is our system.
The Niskanen Center is a U.S. “state capacity libertarian” think-tank.
They are of the opinion that a strong, capable, competent, central government can be the bedrock foundation of a libertarianish political order.
Strikes me as far-fetched, but let a thousand flowers bloom and all that.
Anyway, as part of their investigation of where the current central government falls short, they’ve published
a useful overview of how the IRS got into its current sorry state.
The Biden Administration has released what it calls The American Families Plan Tax Compliance Agenda.
They hope to boost IRS enforcement funding, increase the amount of financial information that gets reported to the government, finally update the IRS’s comically-archaic computer systems, and crack down on professional tax preparers who help people evade taxes.
Senator Elizabeth Warren has decided to carry the ball for some of this, in a bill she has proposed to boost IRS funding and force banks to report how much money comes into and goes out of their customers’ bank accounts.
Republicans hope to capitalize on public suspicion about a bigger and more-empowered tax agency with ads targeting vulnerable Democratic representatives that tie them to these plans.
Tax resistance news in brief:
I don’t know that there’s much to be gained from watching this sausage get made, but here is a quick sketch:
The Biden administration is working on legislation billed as an “infrastructure package” that spends a bunch of money, and tries to raise that money without raising individual taxes on most Americans.
One way they hope to raise the money is by boosting spending on tax enforcement (e.g. audits, collections) at the IRS and increasing the agency’s ability to snoop on bank accounts under the theory that this would mean a lot more tax money collected that is currently being left on the table.
The legislation is moving forward on two fronts: an ostensibly “bipartisan” version, by which some Republicans would risk the wrath of their party to work with the Democrats in return for helping to shape the legislation, and a unipartisan version if that doesn’t work out, that would have to be rammed through via the Democrats’ razor-thin Congressional majority.
However, for reasons that are a mix of fact and fantasy, the Republican base doesn’t much care for the IRS and can pretty easily be riled up to snarl at talk of embiggening it.
At first, it looked like the more bipartisan-leaning Republicans would go along with it, but a conservative group has been trying to torpedo the bipartisan infrastructure deal by airing ads attacking those Republicans who looked to be going along with the IRS-boosting part of the plan.
And a number of Republicans have spoken out against that part of the plan specifically.
So now, that part of the plan seems to be off-the-table in the bipartisan version of the deal.
I don’t know how much that matters, as the Democrats may still try to shove something like that through on their own.
But they won’t have bipartisan cover to do so, so may be unable to keep their thin majority together.
Maverick, nay, fully gonzo entrepreneur John McAfee killed himself in a jail cell while awaiting extradition to the U.S. on charges of tax evasion.
He had declared his intention to refuse to pay taxes because of his objection to government policies.
The on-again/off-again tax strike in South Kivu over the government’s failure to maintain transportation infrastructure appears to be on again.
Some recent links of interest:
In recent years, something in the neighborhood of 40–45% of American households have not owed any federal income tax.
This is due to a combination of factors including progressive tax rates and tax deductions & credits that shield a certain amount of income from tax.
Although fabulously wealthy people who do not pay income tax are certainly a thing, most of this group of “lucky duckies” come from the bottom half of the income scale.
In , with its pandemic-related economic disruption and the stimulus payments that took the form of refundable tax credits, the numbers jumped: the Tax Policy Center estimates that 61% of U.S. households paid no federal income tax .
Under a newish law the U.S. government will be issuing advance “Child Tax Credits” to qualifying families with children as checks periodically throughout the year.
These checks take the place of the refundable tax credit that such families would have used to offset their federal taxes at annual tax filing time in past years.
Interestingly, the IRS has directed its enforcement personnel to avoid seizing money from bank accounts in which these Child Tax Credits have been direct-deposited and to refund any inadvertently seized Child Tax Credits.
“Council Tax Strike” is a subproject of the Extinction Rebellion movement in the U.K. They claim: “There are people all over the U.K. withholding their council tax and demanding action on the things that matter to them.”
The National Catholic Reporter looks back on the nuclear disarmament activism of Archbishop Raymond Hunthausen:
“ ‘I think the teaching of Jesus tells us to render to a nuclear-armed Caesar what that Caesar deserves — tax resistance.
And to begin to render to God alone that complete trust which we now give, through our tax dollars, to a demonic form of power,’ he said in his ‘Faith and Disarmament’ speech.
‘Some would call what I am urging “civil disobedience.”
I prefer to see it as obedience to God.’ ”
IRS Circumvents “Statute of Limitations” by Ruth Benn.
Normally, the IRS has ten years to collect unpaid taxes from you before they have to give up.
Also, normally, if you decide to voluntarily pay your taxes, you can also decide for which tax year you are paying them, and by IRS policy, they’ll respect that.
Ruth Benn’s tax resistance takes the form of refusing to pay her income tax, but voluntarily paying her self-employment tax.
As the ten year statute of limitations approached on one of her unpaid years of income tax, the IRS tried to pull a fast one and used some sleight-of-hand to apply the money Benn was paying for the current year’s self-employment tax to the expiring year’s income tax amount.
She is hoping to get the agency to change its mind and to respect its own policy, and promises to keep us up to date on how the red tape tangles.
Counseling Notes.
Including a reminder that Social Security levies can continue past the ten-year statute of limitations date because the levy is considered “continuous” when it is first applied (not reapplied with each new Social Security check).
Democrats are keen to force banks to report how much their customers have put into and taken out of their accounts each year.
They hope this will bring to the surface some of the money in the underground economy that the government has been frustrated when trying to tax.
This proposal has gotten a lot of pushback, and has been an on-again / off-again part of the budget package currently oozing through Congress.
The latest guesswork suggests that the Democrats may reactivate the proposal but restrict it to accounts with $10,000 or more in them.
There’s a nice website that’s been established by the caretakers of The Nelson Homestead — the modest home of war tax resisters Juanita & Wally Nelson in Deerfield, Massachusetts.
It has good recaps of the lives and activism of the Nelsons, including photos.
The Biafra Nations League, which is trying to establish a break-away nation more representative of the Igbo people, has issued an ultimatum to oil firms in the area, ordering them to stop paying taxes to Cameroon and Nigeria, which currently claim sovereignty over the region.
Argentina legalized abortion .
Now a group of Argentine legislators have proposed a law that would permit a sort of conscientious objection to taxpayer-involvement in abortion, of a similar sort to what is proposed in the “Religious Freedom Peace Tax Fund Act” in the U.S.
The human war on traffic ticket robots continues, with robots taken out of service by human rebels in the U.S., Italy, France, and Germany & France in recent weeks.
Some recent tax resistance news of note:
Jane Rogers & Alex Pension from Extinction Rebellion’s “Money Rebellion” tax resistance campaign in the U.K. and José “Cuti” Cutillas from Spain’s Antimilitarista Tortuga war tax resistance movement spoke at the recent NWTRCC national gathering about how tax resistance plays out in their work:
The “Build Back Better Act” as currently proposed includes among its many provisions $498 million for the Department of Justice specifically to prosecute tax evasion, and $80 billion for the IRS (both figures are spread out over ten years).
Both Democrats and Republicans have reason to exaggerate the practical effect of this.
Democrats will insist that this new funding will mean the government can finally pursue fat cat tax evaders, close the tax gap, and result in lots of new tax revenue that will pay for the rest of the spending in the bill.
Republicans will paint a picture of vast swarms of jack-booted thugs running rampant over innocent families and small businesses across the land.
The purportedly nonpartisan Congressional Budget Office analyzed the bill and said that according to their calculations, the new IRS funding would lead to less than a third of the increased revenue that the Democrats were trumpeting.
As a result, the bill as a whole will put the government yet further in the red.
I have seen no signs that the IRS bank-account-monitoring proposal will sneak its way back into the bill, despite some Democrats’ hopes.
NWTRCC’s recent national conference featured a talk from attorney Peter Goldberger on the changing legal landscape for conscientious objectors to military taxation.
Goldberger says that the current Supreme Court’s increasing deference to religious scruples on First Amendment grounds provides a long-shot opening that war tax resisters might be able to leverage:
The “Build Back Better” infrastructure bill that recently passed in the U.S. House of Representatives does not include dreaded provisions that would force banks to report to the IRS more details about more of their customers’ accounts.
The Senate still has to weigh in, but it looks like this expanded reporting proposal is dead for now.
Some residents of the “Electronic City” tech zone in Bangalore, India, have been refusing to pay property taxes for three years now to protest the government’s broken promises regarding infrastructure and trash disposal.
Some links of interest:
The council tax resistance campaign that is part of the opposition to the Edmonton Incinerator has so far attracted eleven tax resisters.
As previously reported, the version of the “Build Back Better Act” passed by the House did not include a feared provision that would require banks to report to the IRS about more of their customers’s accounts and transactions.
There was a long-shot chance that those provisions would reappear in the bill as passed by the Senate, but thusfar no such provisions have appeared in the Senate’s version of the bill.
There is still some chance that the bill will be amended in the Senate to include such provisions, and I believe it’s not unheard of for provisions to get tacked on during the reconciliation process even if they weren’t in the versions of the bill that passed in either of the houses.
So we won’t know for sure until the bill hits Biden’s desk.
But I wouldn’t lose sleep.
One of the bill’s provisions would remove the requirement that IRS agents get written approval from their supervisors before assessing penalties against a taxpayer.
My gut feeling is that this isn’t a big deal (contra the Titanic alarm in the linked-to article about it).
It might make it marginally easier for the agency to apply penalties, or somewhat more likely that those penalties will be applied in inconsistent and haphazard ways.
But I suspect it mostly amounts to the trashing of a red-tape, rubber-stamp provision that didn’t have much practical effect.
Democrats in Congress are having more trouble than expected getting everyone in and out of the clown car.
The upshot is that the painstakingly-negotiated “Build Back Better Act” is in jeopardy — along with the $80 billion in new IRS funding that was part of the bill.
was surely the most challenging year taxpayers and tax professionals have ever experienced — long processing and refund delays, difficulty reaching the IRS by phone, correspondence that went unprocessed for many months, collection notices issued while taxpayer correspondence was awaiting processing, limited or no information on the Where’s My Refund? tool for delayed returns, and — for full disclosure — difficulty obtaining timely assistance from TAS.
, examination coverage has decreased, enforcement efforts have been negatively impacted, and the Level of Service has continued to drop as the IRS’s workforce and budget have declined.
On the resources side, the IRS’s baseline budget has been reduced by about 20 percent on an inflation-adjusted basis , and its workforce has shrunk by about 17 percent.
There is no way to sugarcoat in tax administration: From the perspective of tens of millions of taxpayers, it was horrendous.
[T]he number of individual income tax returns the IRS receives — a reasonable approximation of its workload — has increased by 19 percent , while its baseline appropriation on an inflation-adjusted basis has decreased by nearly 20 percent.
This imbalance has left the IRS without enough resources to meet taxpayer needs, let alone to invest in additional personnel and technology.
The IRS has not finished processing millions of original and amended returns from , even though returns will soon arrive for processing.
According to the Department of the Treasury, the gross tax gap — the difference between taxes paid and taxes owed — is estimated to have totaled about $580 billion in , up from an estimated amount of nearly $440 billion in , and is expected to rise to about $7 trillion by if left unaddressed.
Processing a paper-filed return is significantly more expensive for the IRS than processing an e-filed return due to the costs associated with training, recruiting, and staffing for manual data transcription.
In fact, the cost to process a paper-filed Form 1040 in was $15.21, which is substantially higher than the $0.36 cost to process an e-filed return.
The report also included some totals for levies, liens, and seizures, so I can update these graphs:
More excitement from the human war on traffic ticket robot cameras, as fire, spray paint, and other sorts of sabotage knocked cameras out of commission in France, Germany, and Italy in recent weeks.
Just when I think I’ve heard it all about the troubles at the IRS, everything turns out to be worse than I heard:
Remember when I told you about how the IRS was rolling out a new way for people to sign on to their on-line systems, and that it was a bit invasive, difficult, and buggy?
And then remember when I told you how the rollout was going poorly and generating a lot of push-back?
Well, the awful just continues to pile up and now the IRS is scrapping the new sign-on process and going back to the drawing board.
Meanwhile, some seven million people may have tried to use the new process to log in, a process that included sending in “selfies” for biometric testing, which attracted the ire of privacy advocates.
The contractor who designed and operated the identification verification service says these people can request to have these selfies deleted.
Reading between the lines, I think this contractor is going to try to force everybody to use the back-up plan that was already in place for if the automatic selfie-check didn’t work: to have a video chat with an employee who would “eyeball” the chatter to see if their identity matches up with what’s on their paperwork.
This isn’t really any less invasive than the selfie method, but maybe it triggers people’s “big brother” alarms less.
It’ll certainly be less automated and therefore more expensive and time-consuming.
But the IRS is no stranger to doing things the more expensive and time-consuming way.
For example, their mail-sorting and -opening machines have been broken for a long time, and IRS employees now have to do the work by hand.
This means that if you send them a check, it takes them longer than it should for them to get that check out of the envelope and into the U.S. Treasury.
This delay also means the government loses out on interest they could be earning on that money.
How much interest? About $165 million a year.
It would only cost $650,000 to buy completely new machines, or $365,000 to repair the broken ones.
And remember how I told you how the IRS had stopped sending out some enforcement notices to taxpayers?
Taxpayers were getting frightening notices suggesting that the IRS didn’t think they’d filed their taxes, when in fact their tax returns were sitting in an enormous pile of tax returns the agency hadn’t gotten around to processing yet.
So the IRS said it would stop sending out a few types of notice until it got all that sorted out — but said that it couldn’t stop sending out a bunch of others because it might mean they’d lose their chance to go after genuine tax scofflaws.
Well, now they’ve thrown in the towel and said they’ll stop sending out a dozen more types of notices including the balance due, balance due second notice, notice of intent to levy, and withholding compliance letters that are standard issue to tax resisters like myself.
And remember how I told you that the IRS had a backlog of some 14 million unprocessed tax returns and other taxpayer correspondence?
Turns out it’s more like 24 million.
Meanwhile: “The agency sought to fill 5,000 positions for several campuses across the country in time for this tax season but was able to hire fewer than 200.”
In other news, the IRS is eager to reduce the size of the underground economy by demanding more reports on gig workers and others who get irregular payments through platforms like Paypal, Venmo, Etsy, and Zelle.
But this isn’t going smoothly either.
It seems to be raising more resentment than tax money, at least so far. And it’s easy to bypass.
If you pay someone using one of these platforms and explicitly say you’re paying for goods or services, maybe it’ll eventually get reported as income.
But if you don’t say this, as far as the platform is concerned maybe you’re just sending a gift or reimbursing someone for part of a meal you shared where they picked up the tab.
Is today’s IRS going to send auditors out to make sure nothing falls through the cracks this way?
Yeah sure.
In other news:
The tax strike against the Edmonton Incinerator continues to attract more strikers as the early adopters prepare for their first day in court.
Turkish opposition politician Kemal Kılıçdaroğlu announced that he plans to refuse to pay his utility bills until president Erdoğan withdraws 50% price hikes instituted at the beginning of the year. Some Alevist cemevis have also stopped paying.
The ragtag human guerrilla war against the traffic ticket robots continues, with robots succumbing to human attacks or being frustrated by human ingenuity in the U.K., Australia, Brazil, Italy, and France in recent weeks.
