How you can resist funding the government → about the IRS and U.S. tax law/policy → IRS incompetence → enforcement effort/results → levies, liens, and seizures

In war tax resistance circles, there have been whispers of a recent increase in the speed and number of IRS enforcement actions such as liens and levies.

The IRS itself has recently been crowing about increased enforcement:

The bottom line for our enforcement efforts shows that dollars collected rose again last year. There’s a strong trend line going up. was a watershed year for us, with a number of big initiatives that helped push enforcement revenues up 10% to $47.3 billion. In , enforcement revenues — the monies we get from our collection, examination, and document matching activities — increased to a record $48.7 billion.

The press release breaks down the numbers a little more thoroughly. For instance, sure enough:

In our collection activities, levies and liens continue to top their levels. Levies increased by 36% to 3,742,276. Liens rose nearly 20% to 629,813.

These numbers are data but the IRS seems over-eager to jump from that to conclusions about the underlying situation. Are increased enforcement efforts leading to more enforcement revenue, or is there just more tax money in general lying around for audits to discover — either because improving financial markets have caused people and corporations to owe more than in recent years or because they are more likely to be trying to illegally evade their taxes? Hard to say.

I’m even more skeptical of the IRS’s own spin on the numbers when I learn how resistant the agency is to providing the raw data to groups like Transactional Records Access Clearinghouse so that they can do independent analyses. (TRAC characterizes it as “continuing intransigence and unwillingness to providing public access to detailed statistics about many agency activities, along with a closed-door policy on releasing any meaningful results from taxpayer-financed studies on how our tax system is functioning.”)

Today, for instance, TRAC released its own analysis of IRS audit numbers for big corporations (which “controlled 90% of all corporate assets and received 87% of all the corporate income”).

TRAC finds that “the annual audit rate for these corporations, all with assets of $250 million or more, while increasing in has now receded to about the level it was in and is much lower than levels that prevailed a decade or more ago.”

In addition, the number of hours that the IRS spends on each of these audits has declined. In , it spent 1,210 hours per audit of such corporations; in , it spent 958. But perhaps it is just being more efficient and effective and doesn’t need to spend as much time as it used to? TRAC’s opinion:

Some economists and tax experts believe that other explanations are possible, namely that a massive surge in non-compliance is believed to have swept through corporate America. Although government enforcement activities can be measured, accurately tracking the number individuals or corporations who secretly decide to break the law is extremely difficult. In recent years, however, [IRS] Commissioner Everson, his immediate predecessor and many others have argued that case-by-case evidence strongly suggests more and more corporations are skirting the law. The bottom line: a real increase in the number of non-compliant taxpayers may explain the increase in enforcement revenues.

Therefore, while it is true that enforcement dollars are up, particularly for recommended audit adjustments among the largest corporations, the reason remains unclear. In the face of lowered coverage and audit hours, this increase could be due to a more effective IRS audit program. However, if corporate noncompliance is up, it could be that the dollars require less effort to find.

Step right up folks — you won’t want to miss this exciting new attraction — direct to your computer screen from the wilds of deepest Washington, D.C. — it’s the Internal Revenue Service Data Book !

<frog class="kermit"> Yaaaaaaaay! </frog>

I’m going to try to find something interesting in its 84 pages of statistics. Here goes:

Each year, people like myself file their tax returns but don’t include enough payment to cover the assessed tax, penalties, and interest. Here’s how much overdue tax, penalties, and interest have been assessed in each of the past few years (this doesn’t include the interest and penalties that continue to accrue on past-due accounts):

yearamount
$46,738,194,000
$50,680,546,000
$57,594,901,000
$69,555,590,000

The IRS collected almost $41 billion (59%) of this (but this amount does include accrued interest and penalties, so there’s an apples and oranges aspect to this comparison) — $1.7 billion of this through their new program of outsourcing some cases to private debt collection agencies. Of the total that was collected, taxpayers sent in $15 billion (37%) in response to the first nastygram from the IRS, and another $13 billion (33%) in response to the second nastygram. The last $12 billion (30%) was recovered through “taxpayer delinquent accounts and additional actions.”

Liens, levies and seizures are all up over recent years:

yearliensleviesseizures
544,3161,680,844399
534,3922,029,613440
522,8872,743,577512
629,8133,742,276590

Oh, there’s more… but I’ve got my boredom threshold too.

The IRS has just released its audit figures for . Audits are up across-the-board. This in spite of not having significantly more enforcement personnel or budget.

In the past, a closer look at the numbers has shown that they’ve accomplished this miracle by emphasizing “correspondence” audits over “field” audits. It looks like this is again the case. While about three-quarters of the total audits the IRS conducts are correspondence audits, more than 90% of the increase in audits this year comes from correspondence audits.

The agency also seems to be backing off on audits of large corporations. These have the potential to be big-bucks items, but they also take a lot of time and a lot of personnel — both of which can be redeployed to increase the numbers elsewhere. Indeed, the larger the large corporation, the stronger the drop-off in enforcement in recent years. Corporations in the $50–100 million asset range have seen their likelihood of an audit drop from 16.4% to 11.4%; those in the $100–250 million range have gone from 17.5% to 12.1%; those above $250 million have dropped from 44.1% to 27.2%.

The strategy may be a wise one. “Overall, enforcement revenue reached $59.2 billion, up from $48.7 billion in and nearly $34.1 billion in .” On the other hand, this increase could reflect increased tax evasion rather than more effective enforcement — the same sized slice but of a larger pie.

Levies, liens, and seizures are all up over last year’s numbers. After last year’s leap over the previous year from 2,743,577 levies to 3,742,276, this year’s increase is much more modest: to 3,757,190.

The IRS Data Book is out. It includes information on IRS enforcement activity. In the charts below I’ve combined the numbers from this Data Book with those from an earlier edition to give a longer-term picture (I wasn’t able to find earlier figures for non-filers).

The number of people who file but who don’t include a check for what they “owe” has been increasing:

And the IRS’s backlog of these delinquent accounts has been going up as well:

The number of people who fail to file their returns when they’re supposed to also seems to be going up:

The IRS is responding with increased enforcement activity, including levies…

…liens…

…and, much more rarely, seizures.

, I took a look at the IRS enforcement numbers over the last several years. TIGTA has now released its own analysis.

They note increased levies, liens, and seizures during the past several years, leading to an increase in the total revenue collected. But they also say that “the total dollar amount of uncollected liabilities increased to the 10‑year high of $290 billion. In addition, the gap between new delinquent account receipts and closures had widened by almost 63 percent by the end of .

[T]he number of taxpayers (866,777) and the amount owed ($34.9 billion) on accounts in the Queue were each at a 10‑year high. One reason for the increase in the Queue this year is a rise in the number of compliance assessments. While the Queue is a source of work for Collection function employees, a significant number of accounts in the Queue might never be worked. In addition, in , the IRS removed almost 7.6 million accounts with balance-due amounts totaling almost $31.2 billion from Collection function inventory. These accounts might never be worked.

Here are their numbers (which are mostly the same as the numbers I found, except that they go back a couple of years more):


Another choice quote:

More TDAs were received than closed, and the gap between TDA receipts and TDA closures had widened by almost 63 percent (to 1,914,508 accounts) as of . This is the largest year-end gap in the 10‑year period. … The Collection function is unable to work all of the existing accounts in the Queue with current staffing, and the number of TDA receipts is outpacing closures.

Some highlights from the just-released National Taxpayer Advocate’s Report to Congress that may be of interest to tax resisters:

IRS Policy Statement 5-34 provides that, “Collection enforced through seizure and sale of the assets occurs only after thorough consideration of all factors and of alternative collection methods” and that “the official responsible for making the decision to seize must be satisfied that other efforts have been made to collect the delinquent taxes without seizing.… Seizure action is usually the last option in the collection process.” Yet, TAS is now seeing in its cases an inclination toward seizure despite the existence of viable alternative collection methods. In addition, TAS is witnessing apparent failures on the part of the IRS to follow various provisions of the IRM regarding the collecting process. For example, TAS has seen the IRS seek extensions of collection statute expiration dates (CSEDs) in apparent contradiction to the terms of IRM §5.14.2.1 (). In several instances, TAS has also observed the imposition of a levy on assets in a taxpayer’s retirement account even though the requisite “flagrant conduct”* did not appear to be present.

* IRM § 5.11.6.2(5) () (stating that funds in retirement accounts are not to be levied if the taxpayer has not engaged in flagrant conduct and providing examples of flagrant conduct, including taxpayers who make frivolous arguments, are convicted of tax evasion, are assessed fraud penalties, and hide assets).

And…

The National Taxpayer Advocate is seeing cases in which delinquent tax accounts have sat for five to ten years without meaningful IRS intervention only to be aggressively pursued as the CSEDs draw near. Such prolonged periods of IRS inactivity significantly exacerbate taxpayers’ delinquency problems due to the accumulation of interest and penalties.

The IRM states that seizure should be considered for taxpayers who “won’t pay” and provides a number of examples of such taxpayers (including “taxpayers who have the ability to remain current and/or resolve their delinquent taxes through an alternative collection method but will not do so” and “taxpayers who will not cooperate with the Service, e.g., taxpayers that evade contact, will not provide financial information, etc.”). These examples focus on taxpayers’ present conduct, not their past noncompliance. Yet, TAS is seeing a tendency to use the noncompliance that lead [sic.] to taxpayers’ deficiencies and other past behavior, not the current level of cooperation and willingness to find a way to resolve the liabilities, to justify seizure.

The Government Accountability Office released a new report: Tax Debt Collection: IRS Has a Complex Process to Attempt to Collect Billions of Dollars in Unpaid Tax Debts.

Here’s a link to the New York Times summary.

Senators Max Baucus and Chuck Grassley, the top Democrat and Republican on the Senate Finance Committee, issued a press release to convey their outrage or what-have-you. Grassley summarized the new report this way:

For , while collections increased by $10 billion, unpaid debts increased by the same amount. During this same time, the IRS wrote off from 31 percent to 46 percent of unpaid debts because it essentially ran out of time to collect these debts. For , the IRS classified only $100 billion out of $290 billion of unpaid tax debts as collectible. Of the $100 billion potentially collectible debt, the IRS is actively pursuing only $25 billion with $2.5 billion being shelved because of a claimed lack of resources. The longer a debt is outstanding, the less likely it will be collected. Any business person can tell you that. Knowing that the IRS isn’t going to collect the debt also gives tax cheats additional incentives not to pay.

The senators conclude: “When all is said and done, over half of the tax debt inventory that the IRS resolves will come from writing off the tax or being prevented from collecting it under the 10 year statute of limitations.” The numbers in the report specify this a little more precisely: 20–28% of these tax debts were “abated… which may have been appropriate” and 31–46% were “written off due to statutory limits on how long IRS could pursue the debt.” Only between 34–41% of the tax debts that were “resolved” involved the IRS actually getting its hands on the money.

Expect the next Congress to try to come up with some ways to squeeze a little more blood from that stone.

The report has some interesting background details on the IRS collection process, and a nice flowchart (see page 7 of the report) of how tax debts get routed around (and sometimes stall) in the process.

Here, for instance, is the initial phase of the process for people who do not file, spelled out nicely:

IRS first is to send a “30-day letter” that includes a proposed assessment of tax, penalty, and interest. The letter is to instruct the taxpayer on possible ways to respond, such as by accepting the proposed assessment; filing an original return; providing evidence that there is no filing requirement; or appealing the proposed assessment to IRS’s Office of Appeals. If no response is received to the 30-day letter within the allotted time, IRS is to send a 90-day statutory notice. The statutory notice is to contain information similar to the 30-day letter and information on the taxpayer’s right to petition the Tax Court. If IRS does not receive a response within the allotted time, the tax, penalty, and interest on the return are to be assessed. IRS’s practice is to send up to four balance-due notices at 5-week intervals for the amount owed. Six weeks after the fourth balance-due notice, IRS is to forward any unpaid accounts to IRS staff who are to try to collect the unpaid amounts through other phases of the collection process — the telephone or in-person contact phases.

There were also some nuggets of information about new IRS enforcement-related projects. A few caught my eye:

Electronic Lien — to process over a million liens each year
Streamline and expedite lien filing, reduce lost lien reports, and ensure prompt payment of lien filing fees by making process electronic.
Reduce costs for lost lien research and analysis by 15 percent in and 40 percent in . Similar savings in these 2 years in lien filing fees. Collect additional revenue by raising IRS’s priority against other creditors.
Bulk Electronic Levy
Automate the process for delivering levy notices to and processing responses and remittances from financial institutions and large employers, including the posting of levy payments to taxpayer accounts.
Reduce the cycle time for sending levies. Reduce mailing costs. Expedite posting of payments to taxpayers’ accounts.
Camera cell phones
Improve (1) productivity of revenue officers in determining asset valuation, (2) communication between IRS and taxpayers, and (3) employee safety on field visits.
Increased employee and taxpayer satisfaction.

I assume that last bit means that when the IRS comes a-callin’, they’ll be whipping out their phone cameras to snap a quick picture inside your doorway or outside your driveway so they can look at the photos later and see if anything is worth stealing.

I shared some charts that showed how IRS enforcement activity was changing over time and also some charts showing how “delinquent” taxpayer activity was changing over time.

The new IRS Data Book is out, so I can update the numbers. Breaking with recent trends, both seizures and levies were down , though there was another big jump in liens filed:




On the “delinquent” side, the number of people who didn’t pay their taxes when they were due held steady, and the number of people who didn’t file on time (or at all) dropped, but the IRS continued to to be overwhelmed by the backlog of delinquent cases and so the total unresolved delinquent accounts continued to rise:

The IRS wasted a lot of time and energy rolling out its private debt collection scheme, and now they’re going to have to waste a lot more time and energy unrolling it now that it’s been abolished. They lost enforcement manpower in the course of that experiment, too. They say they plan to beef up in that area, but this will take time and the rookies will need training, so I think we can expect them to continue to have problems with their enforcement backlog for a while.

Some links that have caught my eye recently:

Some items of note from the latest National Taxpayer Advocate’s Annual Report:

  • The IRS has something called the Federal Payment Levy Program, which is designed to intercept payments coming from the federal government to people who have tax debts. According to this report, “the bulk of FPLP levy payments have historically been related to Social Security benefits.” At one point there was a hardship income threshold under which the government would not seize social security benefits to reclaim taxes, but the government phased this out and finally eliminated it at the beginning of . The Taxpayer Advocate noted that this was further impoverishing some people on fixed-incomes who were already below the poverty line, and proposed a new filter. The IRS has agreed to implement a “low income filter” that “will exclude taxpayers from the FPLP if their estimated income (based on internal IRS data) is less than 250 percent of the poverty level.” This change is due to begin in . The “internal IRS data” the report speaks of here it tries to explain in a footnote:

    To compute the taxpayer’s income, where the taxpayer has filed a tax return for the most recent year or two, the IRS will use the greater of the total positive income from that return, or income based on payor documents filed with IRS for that year. Where no such return was filed, the IRS will use payor documents for the most recent tax year. To determine family size, which is a component of the federal poverty level computation, the IRS will use the family unit size claimed on the taxpayer’s most recent return filed for the last two years, or if no such return is filed, the IRS will assume a family unit size of one.

    Although people with low-incomes may be saved from having their social security seized via FPLP in this way, the IRS may still use other collection techniques. For instance, they may seize the bank account your social security payment is deposited into, thus saving you from a partial levy only to hit you with a 100% seizure. Or they may file a “paper levy” to attach 100% of future social security payments until the unpaid tax is collected. For low-income tax resisters, this will require vigilance. Still, the Advocate predicts that this change “will protect hundreds of thousands of taxpayers from economic damage and unnecessary interaction with the IRS.”
  • According to the Advocate, “many of the collection policies and practices in place today have little empirical justification even as they violate the spirit, if not the letter, of the IRS Restructuring and Reform Act of and result in unnecessary harm to taxpayers. For example, despite the fact that IRS levies and Notice of Federal Tax Lien filings increased by approximately 590 percent and 475 percent, respectively, [see The Picket Line, ], overall inflation-adjusted collection revenue declined by approximately 7.4 percent over the same period.” The IRS appears to be systematically exaggerating the effectiveness of its collection efforts by attributing any revenue collected during the collection process, even things like subsequent tax refunds being automatically intercepted before they’re sent, as being attributable to the activities of collections personnel. Also, “[t]here is an astonishing lack of transparency as to what is included in the revenue figures and how they are computed.”
  • The hardship standards that the IRS uses to determine whether a tax debt is collectible (that is, is there anything to seize, and will seizing it effectively throw the taxpayer onto government assistance, thus robbing Peter to pay Peter) don’t take into account things like credit card debt, school loans, and medical bills. In many cases, they’re trying to get blood from a stone.
  • The IRS tends to file official lien notices haphazardly, without much regard for whether they are effective. Their policy seems to be: when an account reaches a certain threshold of unpaid balance, file a a notice of federal tax lien. This even though very little collection revenue comes from liens and though a lien notice like this can make it more difficult for delinquent taxpayers to get back on their feet financially. (These notices make the “secret lien” filed against all delinquent taxpayers part of the public record, available to potential creditors and employers and landlords and such, and put the lien into effect so that the IRS can skim money, for instance if the taxpayer sells property or has accounts receivable.)
  • Taxpatriatism appears to be rife. According to the report, “[i]t is estimated that more than seven million American citizens reside abroad. Although U.S. citizens are required to file U.S. income tax returns regardless of their residency status, IRS data show that only 462,340 taxpayers (or 6.6 percent) filed returns from a foreign address in tax year 2007.”
  • The “offer in compromise” program — in which people with large tax debts they can’t pay off can enter into an agreement with the government to pay a portion of their debt, comply fully with the tax laws for five years, and have the remainder of their debt forgiven — has become useless for most people. Now, in order to use this program, you have to pay a fee and submit a substantial down-payment along with your application (which involves “more than 100 steps in a 44-page package”) — and then your application may still be declined.
  • Weirdly, the IRS processes our 1040 forms before it processes the W-2s and 1099s that substantiate the income we report. This makes it easy for fraudsters to understate their income and get refunds before the government knows anything is wrong.
  • “The IRS is experiencing high levels of new individual taxpayer payment delinquencies in categories that could produce high levels of subsequent noncompliance.” Music to my ears.

I shared some charts that showed how IRS enforcement activity was changing over time and also some charts showing how “delinquent” taxpayer activity was changing over time.

The new IRS Data Book is out, so I can update the numbers. The number of levies and seizures are down from their peaks, but the use of liens continue to rise:




On the “delinquent” side, the number of people who didn’t pay their taxes when they were due and the number of people who didn’t file on time (or at all) are both off from their peaks, but the IRS continued to to be overwhelmed by the backlog of delinquent cases and so the total unresolved delinquent accounts continued to rise:

A few more things of interest that passed through my RSS aggregator and email inbox while I was away:

The new issue of More Than a Paycheck, NWTRCC’s newsletter, is on-line. Among the news you’ll find there:

  • Talking Taxes and Taking Action Against Military Spending — how activists are using “penny polls” to start a conversation about government spending priorities
  • Counseling Notes — how tax resisters can avoid getting preyed upon by “settle with the IRS for pennies on the dollar” companies; more “frivolous filing” overreach from the IRS; and increased use of IRS enforcement tactics isn’t leading to increased tax revenue
  • Many Thanks — to the generous donors who keep NWTRCC in business
  • Criminal Cases and Fear — Karl Meyer writes from the standpoint of decades of experience with war tax resistance about what factors increase the likelihood of criminal prosecution for war tax resistance. Larry Dansinger and Ruth Benn add two cents apiece.
  • War Tax Resisters in History — Ed Hedemann reviews some of his research into the U.S. government’s use of property seizures and criminal cases as tools against war tax resisters in the post-World War Ⅱ era
  • War Tax Resistance Ideas & Actions — Evan Reeves tries a new way of paying-as-a-protest; a look at the Quaker “Movement of Conscience” project; a review of Muriel T. Stackley’s War is a God that Demands Human Sacrifice; honoring peacemakers Martha Graber and Fern Goering; upcoming events at which NWTRCC will have a presence; and a look at the new $10.40 For Peace project, another attempt to ease peace activists into war tax resistance.
  • Resources — notes on the Death & Taxes DVD, the new “Thoreau and His Heirs: The History and the Legacy of Thoreau’s Civil Disobedience” study kit, and the NWTRCC fundraising scarves
  • NWTRCC News — a note on the upcoming national conference in Boston next month
  • a Profile of war tax resister Heather Snow

Some bits and pieces from here and there:

  • The “National Taxpayer Advocate” (a sort of IRS ombudsman position) released her annual report on . As was the case in her report last year, she complained that the IRS is overusing its enforcement techniques of levies and liens in ways that are cruel and, even from the perspective of government revenue, counterproductive — , the number of liens the IRS has filed each year has increased by 550%, but the amount of revenue collected through such enforcement efforts has not increased at all. “By filing a lien against a taxpayer with no money and no assets, the IRS often collects nothing, yet it inflicts long-term harm on the taxpayer by making it harder for him to get back on his feet when he does get a job,” Taxpayer Advocate Nina Olson said. “Absent data that show liens make a meaningful contribution to revenue collection and especially in this economy, I find it unacceptable that the IRS continues to torment financially struggling taxpayers in this way.”
  • The government of Romania is threatening to tax the nation’s witches, astrologers, and fortune tellers. Curse them!

    A dozen witches will hurl the poisonous mandrake plant into the Danube to put a hex on government officials “so evil will befall them,” said a witch named Alisia. She identified herself with one name — customary among Romania’s witches.

    Queen witch Bratara Buzea, 63, who was imprisoned in for witchcraft under Ceausescu’s repressive regime, is furious about the new law.

    Sitting cross-legged in her villa in the lake resort of Mogosoaia, just north of Bucharest, she said she planned to cast a spell using a particularly effective concoction of cat excrement and a dead dog, along with a chorus of witches.

    “We do harm to those who harm us,” she said. “They want to take the country out of this crisis using us? They should get us out of the crisis because they brought us into it.”

Some bits and pieces from here and there:

For I’ve been posting some charts that show how IRS enforcement activity is changing over time and also some charts showing how “delinquent” taxpayer activity was changing over time.

The new IRS Data Book is out, so I can update the numbers. The number of levies and seizures are down from their peaks, but the use of liens continue to rise:




On the “delinquent” side, the number of people who didn’t pay their taxes when they were due reached a new recent-years high, though the number of people who didn’t file on time (or at all) is off from its recent peak. The IRS continued to to be overwhelmed by the backlog of delinquent cases and so the total unresolved delinquent accounts continued to rise:

For I’ve been posting some charts that show how IRS enforcement activity is changing over time and also some charts showing how “delinquent” taxpayer activity was changing over time.

The IRS has just put out some numbers on its enforcement activity for , so I can update the numbers. The number of levies and liens remain high, though off their peaks, while the number of seizures has risen to a recent high, though also much lower than in the bad old days:




The “delinquent” taxpayer activity charts will have to wait for their update until the IRS releases its “Data Book” later this year. Here is how they looked as of the numbers:

The new IRS Data Book is out, with information on IRS enforcement activities in , so it’s time to update my graphs:

Here are some items of note that have come to my attention in recent weeks:

  • I wondered if this might happen: One of the weirder aspects of Obamacare is that the individual health insurance mandate is to be enforced by adding a penalty to the income tax of any individual who fails to get health insurance — but for public relations reasons the IRS is forbidden to use its usual methods of liens, levies, seizures, and the like to chase down this penalty if the taxpayer refuses to pay it. So now, Obamacare foes are starting to whisper about this cheap-and-easy civil disobedience opportunity. Though “whisper” isn’t really the right word when you’re talking about Rush Limbaugh.
  • Are Cryptocurrencies [like Bitcoin] “Super” Tax Havens? asks Omri Y. Marian of the University of Florida. Marian concludes: “Significantly, cryptocurrencies possess all the traditional characteristics that tax havens do; Earnings are not subject to taxation, and taxpayers’ anonymity is maintained.… Thus, cryptocurrencies have the potential of defeating the recent successes of governments in battling offshore tax evasion.… while governments have paid some attention to this issue, they have so far failed to identify the acuteness of the potential problem.”
  • Among the things the so-called government “shutdown” brought us was a halt in almost all IRS levies and liens for the duration. The agency had plenty on its plate before the shutdown, and now it’s already behind in regearing for tax season.
  • Lonnie Valentine examines the war tax resistance of John Woolman at Earlham School of Religion’s Learning and Leading blog.
  • Lawrence Rosenwald looks at war tax resistance in a Jewish context at NWTRCC’s War Tax Talk blog.
  • France enacted a populist measure to throw a 75% marginal tax on incomes above €1 million. Professional soccer teams, whose players may earn large annual incomes but usually over a short viable career, have decided to protest by going on temporary strike, effectively eliminating a round of matches this year — the first time teams have done anything of this sort .

The National Taxpayer Advocate released its 2013 Annual Report to Congress today, in a flashier and more public-facing package than I remember it using in the past.

The report identifies how funding cuts, increased responsibility, and Congressional hostility to the agency have put the IRS in something of a crisis state:

Throughout the Most Serious Problems section of this report, we recount the ways in which chronic underfunding drives the agency to develop short-term solutions that merely patch over problems and impose unnecessary burden and even harm on taxpayers. These short-term solutions also create more work for the IRS in the end…

Agency budget woes are a theme that runs through the document, and this is highlighted as its own “Most Serious Problem” — “The IRS Desperately Needs More Funding to Serve [sic] Taxpayers and Increase Voluntary [sic] Compliance.”

That problem statement describes the funding crunch this way: “Since , the IRS budget has been cut by nearly eight percent. Over the same period, inflation has risen by about six percent, further eroding the IRS’s resources.” Meanwhile: “the workload of the IRS has increased significantly.”

This has led the agency to cut way back in what it calls taxpayer service (responding to phone calls and letters, providing walk-in consultation, answering questions about tax laws and regulations). It has reduced its staff by 8% in recent years (including 12% and 21% reductions in its number of Revenue Agents and Revenue Officers respectively), and slashed its training budget by 87%.

The Taxpayer Advocate notes that this is likely to lead to reduced tax collection, and that this will largely be not because a lack of enforcement personnel means that more tax evaders will get through the net, but because poor “customer service” and increasing IRS clumsiness will make the mass of compliant taxpayers more cynical about taxpaying and more likely to try to get away with something.

Some preliminary numbers on liens and levies are embedded in the report, so I can update my charts:

Some bits and pieces from here and there:

There’s a new IRS DataBook out, so I’ve updated my charts with numbers for :

There’s a new IRS DataBook out, so I’ve updated my charts with numbers for :

If the IRS is after you for back taxes and they haven’t been able to convince you to write them a check, the next thing they’ll do is to try to find easy-to-seize assets: bank accounts and things of that sort.

Social Security benefits are one easy-to-seize asset. After all, the government is writing the check in the first place.

There are two ways the government goes about seizing Social Security benefits: via the Federal Payment Levy Program (FPLP) and by Field Collection.

FPLP is more automated, but also more limited. Through this program, the IRS can seize no more than 15% of your Social Security benefits continuously until your back taxes are paid off. However, by policy, the agency will not levy your Social Security benefits by means of the FPLP if your estimated income is below 250% of the poverty line.

Field Collection is less-limited. If your case is turned over to Field Collection, the agent assigned to your case may seize however much they think is appropriate — as much as 100%. However, Field Collection is also less-automated: It requires a revenue officer to examine your case and your circumstances and make a judgment call.

The IRS’s budget has been reduced in recent years, which has affected the number of cases it can work. In an press article, an IRS manager stated that, due to resource constraints, revenue officers are only assigned very high-dollar balance due accounts. While the IRS later clarified that its collection actions are not limited to high dollar accounts because it has a variety of collection tools available, it did not clarify that revenue officers continue to work a full range of balance due cases.

That quote comes from a new TIGTA report on Social Security levies. The Washington Post article it refers to quoted an IRS Field Collection supervisor as saying that only if a person’s back taxes exceeded $1 million would a revenue officer be assigned to the case. It also quoted the IRS’s non-denial denial of this. (In TIGTA’s own investigation of a random sample of 136 cases where Social Security benefits were levied by Field Collection, however, it found the median balance due to be $83,226, with a back taxes range from hundreds to millions of dollars.)

Anecdotal reports from within the American war tax resistance community suggest that Social Security levies are done inconsistently and haphazardly, and the TIGTA report bears that out, noting that different Field Collection group managers had very different policies, and different ideas of what the goals of Social Security benefits seizures were. Some indicated that they had set policies that, on further inspection, were not actually being carried out by the revenue officers in their groups.

Field Collection agents were sometimes assigned cases that were already being collected via FPLP, and in most of these cases, they canceled the FPLP and issued a manual levy for a higher amount. Sometimes they did this even though they had reason to believe that this would cause economic hardship. They also felt no reason to respect the 250%-of-poverty-line cut-off that the FPLP program uses.

Although Field Collection agents can decide they want to take as much as 100% of your Social Security benefits to pay back taxes, you have the right to a partial exemption, based on your age, filing status, number of dependents, and other sources of income, so that they leave you enough to live on. In practice, the audit found, the IRS was frequently failing to give people these exemptions they were entitled to, or to let them know they were entitled to them.

My take-away from this is that if you find that your Social Security benefits are being seized for back taxes, it may well be worth your while to research the laws and policies the IRS is supposed to be following in such cases and then to raise a fuss if they are screwing up. If you have a low income, mostly from Social Security, you can likely get most of it exempted from the levy, but the agent on your case may not know this or may be hoping you don’t figure it out.

There’s a new IRS DataBook out, so I’ve updated my charts of IRS enforcement activity with numbers for :

There’s also a new IRS Data Book out, so I can update these numbers on enforcement activity:

In other news:

  • One of the tools the IRS uses against tax scofflaws like myself is to file a federal tax lien in the local court system of the scofflaw. This puts creditors and the local legal system on notice that the IRS intends to step in and assert its rights to seize money. This can make it difficult to get credit, and also makes it easier for the feds to seize anything awarded by the courts in lawsuits, probate resolution, etc. However (and this is where it gets interesting and newsworthy), filing a lien costs money. And the IRS thinks several California counties are charging them too much, and so they have started to refuse to pay. In response, some counties are refusing to process the IRS liens. Alas, this filing fee, and the standoff between the bureaucracies, also applies to paperwork to release a previously-filed lien. So this doesn’t always work in the scofflaw’s favor. Here’s some news coverage:
  • War tax resister Larry Bassett was interviewed on the Parallax Views podcast. Bassett is the subject of the recent documentary film The Pacifist and is responsible for the largest known individual act of war tax resistance, in terms of the amount of dollars resisted at once.
  • Another Treasury Inspector General for Tax Administration report points out that reduced IRS resources means collapsing tax enforcement capability. “As more taxpayers experience little to no consequences for non-filing, the long-term impacts may include potential erosion of the voluntary compliance rate.”
  • Via a review by Ariel Jurow Kleiman of Marjorie E. Kornhauser’s American Voices in a Changing Democracy: Women, Lobbying, and Tax 1924–1936, I learned of a “Meat Strike” meant to protest New Deal-era taxes on meat processing by boycotting meat purchases. The offensive tax was eventually thrown out as unconstitutional.
  • The IRS issued an update to its estimate of the “tax gap” (the difference between how much tax people are supposed to pay and how much they do pay). The upshot is that they think little has changed: people pay about 84% of what the agency believes they owe. However, the last time I looked at the details of one of these “tax gap” reports, I noticed a lot of hand-waving, guesswork, and extrapolation, and only a little empirical data collection, so I would recommend taking these numbers with a grain of salt.
  • More attacks on traffic ticket issuing radar cameras — in France & Italy; Mexico, Germany, and France; and France again. Revenue from the cameras is only half of what the government had hoped for and budgeted for in France this year, and the government has had to divert some of that money to installing more heavily-fortified cameras.
  • The simple home of war tax resistance legends Juanita & Wally Nelson in Deerfield, Massachusetts has been restored as a “living memorial” to the inspirational couple.
  • The 15th International Conference on War Tax Resistance and Peace Tax Campaigns will be held in Edinburgh. The last such conference was held in in Bogotá, Colombia.

Some links from here and there:

  • The National War Tax Resistance Coordinating Committee is holding a national conference and committee meeting in Oregon. This meeting will include a special focus on cooperation between the war tax resistance movement and climate/environmental activism.
  • Nathan Goodman spoke on his research into how U.S. military spending makes Americans poorer and less free.

    He put in a kind word for war tax resisters: “If a cellphone, burger, or cup of coffee isn’t worth the price to me, I can choose not to buy it. Were you ever given an ‘unsubscribe’ option from American Empire? If I want to stop paying to subsidize the brutal Saudi war in Yemen for instance I have very few options. There is of course a noble tradition of war tax resistance in the United States, with Henry David Thoreau refusing to pay poll taxes that he believed funded the Mexican-American War and Noam Chomsky and others resisting taxes during the Vietnam War, but tax resisters face repression, they risk incarceration, they risk garnishing of their wages, they risk having their property seized, and even moving out of the United States isn’t enough to avoid paying for American Empire: When you criticize U.S. foreign policy you might get told ‘hey if you don’t like it you can leave’ — well even if you leave you still are seen as owing taxes to the U.S. government unless you go through a costly process of renouncing your citizenship. And that’s ignoring that there are also funds gained through inflation, through the printing of money, that’s a tax on everyone who holds U.S. dollars…”
  • I noticed a campaign calling itself “Tax Resistance” suddenly appear on-line. It has appropriated photos from the U.S. war tax resistance movement, but it seems to be directed at potential war tax resisters in the U.K. Its Twitter account was suspended before I could even take a look at it. Its Facebook page is spare and generic. There’s no indication who’s behind it. I’ve got a suspicious eyebrow raised, but will keep my eyes on it.
  • Attacks by motorists on traffic ticket machines continue worldwide. Some recent examples:
  • If the IRS files a formal tax lien against you, expect a lot of deceptive junkmail from outfits hoping to capitalize on your plight.
  • Remember Ed & Elaine Brown? The “show me the law”-style tax protesters who became causes célèbres in constitutionalist/sovereign-citizen circles? They were arrested after a long siege of their New Hampshire home about a decade ago and given lengthy — essentially life — prison terms. But one of the major charges against them was based on a law that was declared to be unconstitutionally vague in an unrelated Supreme Court case, and so now the Browns will be resentenced and may soon be released as a result.
  • The government of Ontario is protesting the Canadian federal government’s carbon taxes by mandating that gas stations put stickers on the pumps that point out how carbon taxes are rising and contributing to the price of gasoline. Ontario is also spending millions of dollars on legal battles opposing the tax.

There’s a new IRS Data Book out, so I can update these numbers on enforcement activity:

ProPublica looks at the numbers this year — including $6.7 billion in tax debt that the IRS let the ten-year statute of limitations expire on without collecting — and asks “Has the IRS Hit Rock Bottom?” I’m guessing not. I’m really looking forward to seeing next year’s numbers.

Some recent links of note:

  • The IRS has announced that not only will it issue stimulus payments and Paycheck Protection Program loans to people and businesses even if those people or businesses are behind on their taxes, but also that the agency will not levy bank accounts into which those payments are deposited — for 24 weeks in the case of PPP loans, or 8 weeks in the case of stimulus payments.

    Current IRS policy says that agents should contact taxpayers before issuing a levy to ask whether the account in question recently received such a payment. If so, they are supposed to refrain from levying until the proper number of weeks have passed.

    If the IRS tries to levy a bank account in which you have recently deposited such a check, you can protest this and the IRS is supposed to release the levy.

    In either case, this should give you plenty of time to empty out the account so that a future levy attempt will fail.

  • Tax blogger Peter J. Reilly concludes that IRS Collections Appears To Be Broken. Excerpt:

    I fear that waiting out the ten year statute of limitations on collections is becoming a reasonable strategy and that many “taxpayers” have caught on and that the IRS, when it comes to collection, is to a significant degree bluffing.

    My overall takeaway from the [recent Treasury Inspector General for Tax Administration] report is that the IRS has a lot of outstanding receivables that it does nothing about. That made me want to look more closely at the numbers.

    Working with the spreadsheets is a little frustrating. They don’t answer all the questions I would like answered, but it does give a pretty clear idea that the IRS is something of a shadow of its former self.

    At , the balance of assessed tax, penalties and interest (ATPI) was $114.2 billion spread among 10.4 million accounts. In that year IRS filed 1,096,376 notices of federal tax lien and requested 3,606,818 levies on third party. IRS wrote off $14.6 billion that had expired due to the ten year statute.

    At ATPI was $125.8 billion spread among 11.2 million accounts. There were 543,604 liens and 782,735 levies. $34.2 billion expired due to the ten year statute.

    It is important to remember that when we are talking about collections, we are talking about tax that has already been assessed. This has nothing to do with people who have not filed or who underreported income and have not gotten caught. That is an entirely different kettle of fish.

    Through my decades of tax practice, the notion of flat out not paying assessed tax was not something that was in my bag of tricks. It has slowly dawned on me that this is a thing.

  • There’s a new NWTRCC newsletter out, with content including:
  • Poland’s government has put a new tax on media advertising in non-governmental media. It claims the tax is simply a revenue measure designed to shore up the public health system. The news media claim that this is an attempt to use the taxation power to bankrupt and destroy the free press. In protest, media outlets including television, radio, and newspapers across the country suspended news coverage for 24 hours, displaying protest messages on a stark black background instead.
  • A tax strike by restaurants and bars in Italy has begun. The strike is being organized by Movimento Imprese Ospitalità, which is a project of the tourist industry branch of the General Confederation of Italian Industry. It is protesting continued tax collection at a time of collapsing business during the Covid pandemic.
  • I’ve seen a few more articles that give some additional details about the latest tax strike in South Kivu: The campaigns have been organized and led by what are vaguely referred to as “la société civile” (civil society). This refers to some sort of preexisting groups, but I don’t really understand what they are. They seem to be non-governmental organizations that sometimes behave as parallel governments or service providers, other times as sorts of citizens’ unions or chambers of commerce.
  • Guillermo Incer Medina, in Confidencial, evaluates the tactics used by the protesters in Nicaragua who have been struggling with the Ortega regime. He concludes that the best high-impact, low-risk action would be tax resistance from a small number of large-scale taxpayers. Excerpt:

    In Nicaragua, 94% of the total tax collection comes from large taxpayers (a large taxpayer is a company that has large volumes of transactions and, therefore, that collects taxes such as VAT, IR — and others– in large amounts. Examples of these could be supermarket chains, large importers, large commercial establishments, or large agro-industrial consortia).

    In our country, the sectors with the largest taxpayers are industry, commerce, finance, transportation, and services. In these sectors, large taxpayers collect more than 90% of the total taxes of their respective sector (which is to say that of every 100 córdobas that is collected from taxes in each sector, 90 córdobas are contributed by large taxpayers and only 10 córdobas by mid-sized and small ones). Furthermore, in areas such as liquors, beers, soft drinks, and fuel, the large taxpayers collect 100% of the total taxes.

    Why is this important? Because the dictatorship needs taxes to maintain its repressive apparatus and its patronage politics. If you take the oxygen out of their horror machine and purchase of consciences, you take away their room for maneuver.

    “Let’s do a consumer strike!” said COSEP and AMCHAM representatives every time we demanded a national strike. This is a mistake for two reasons: 1) for a consumer strike to have a real and not symbolic effect, requires that millions of unorganized Nicaraguans, including pro-government people, decide to deprive themselves of consuming goods that are difficult for them to obtain due to the precarious living conditions in which we live, 2) it is useless for us to stop consuming (not paying VAT) if companies still pay the State taxes such as IR and others (one must keep in mind that those who directly “deliver” taxes to the State are not we the consumers, but they are the collectors — the companies).

    What can one do then? The action that could have the greatest impact at the lowest cost and in the shortest term is tax resistance from the large taxpayers, which is nothing more than the large companies stopping payment of taxes to the dictatorship for a period long enough to oblige them to make concessions for his departure.

    “They are going to close us down!”, the big businesses say immediately. But it is not likely that the government will close large companies due to how this would look to foreign investment, and due to the political cost of sending thousands of people into the streets. Furthermore, if they close large companies, this would in practice have the same effect as tax resistance, since they would stop receiving their taxes. “We are exposing thousands to unemployment!”, they also say… more jobs are being jeopardized by letting this political and humanitarian crisis drag on and by the coming interruption of CAFTA and ADA, if the dictatorship continues to do what it wants and stays five more years. “It’s too risky!” It is more risky to put your body on the line in a march or a roadblock, or to go on a hunger strike in a church and get shot, cut off your services, and imprison those who want to help you. There is no large, medium, or small company that is worth more than a human life.

    Tax resistance is more feasible than other actions of high-risk and low-impact (such as a chain of express pickets or coordinated sit-ins) because it does not require the coordination of thousands of unorganized people. To promote tax resistance, it is enough that a few of the largest companies, which are already organized in chambers, agree, stand firm, and coordinate among themselves.

  • Gig workers in Serbia used to be more or less income-tax free, apparently. Not any more. A new law not only makes them liable for income tax, but requires them to cough up taxes for the last five years. Marchers in Belgrade protested the new tax law.
  • Here’s another example of a a false-alarm “suspicious package” gumming up the works at an IRS processing center.

The IRS just released its latest Data Book, which gives us some statistics about another tax season. This means I can update my charts of how IRS enforcement activity — specifically liens, levies, and property seizures — has been changing over the years. In short, all three are at twenty-year lows:

the number of levies, liens, and property seizures dropped in 2020

Some of this is no doubt due to the temporary suspension of tax enforcement during the epidemic. Much is also due to the ongoing degradation of the IRS workforce and budget. (Plans to reverse that are currently creeping their way through Congress.)

Some recent links of interest:

Some recent tax resistance links of interest:

Tax resistance notes from hither and yon:

  • Activists who oppose North London Waste Authority’s plans to build a new, bigger incinerator in Edmonton have been promoting a council tax strike. Last I looked, two dozen strikers were holding back a portion of their tax. The group has composed a North London Incinerator Council Tax Strike Handbook which, I’m delighted to report, is clearly inspired by the work I did for 99 Tactics of Successful Tax Resistance Campaigns. For example:
    Primary goal: We have started a Council Tax Strike against the N.L.W.A. plans to rebuild the North London / Edmonton Incinerator as an act of civil disobedience. Our intention is to force our participating local authorities to notice our protest. We are showing that we feel so strongly that we are willing to break the law and suffer the consequences. Secondary goals: (a) We are asserting a legal right. We are tax resisters because we believe the law authorises or even obligates people to refuse to participate in environmental racism and ecocide. (b) We hope to force our local authorities to withdraw from the incinerator rebuild plan by nonviolent conflict. We hope to deprive our local authorities of the most resources possible by encouraging mass participation in this action and associated actions.
  • 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.
  • The Taxpayer Advocate released her annual report. Some excerpts:

    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:
    Liens, Levies, and Seizures, 1987–2021
  • 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.