Today’s post by guest blogger Karen Lapekas is a thoughtful reflection on Commissioner Rettig’s remarks given at the ABA Tax Section meeting last week. I was not at the meeting – I had just returned from international travel and was hunkering down to make sure I did not have COVID – so I am relying on this description, which notes that the Commissioner “called out” tax attorneys for not defending the IRS when politicians and commentators fear-monger about the $80 billion funding in the Inflation Reduction Act. Now, I find this a very strange reaction. The Tax Section has written and testified before the House and Senate Appropriations Committees in support of increased IRS funding for as long as I can remember. Historically and definitely during the recent funding debate, members of the Section have written letters individually, spoken to the media, and spoken to members of Congress and their staff, explaining what happens to taxpayers when the IRS doesn’t get sufficient funding. And here at PT Les, in The Fear Over IRS Funding, called out politicians using inflamed rhetoric to describe the Inflation Reduction Act.
Since 2006, I have been calling for additional funding for the IRS and consistently testified before the Appropriations and tax-writing committees of Congress about this issue. (See page 442-457 of my 2006 Annual Report to Congress here; it’s also worth reading my 2013 Most Serious Problem on IRS lack of funding.) Unlike the enforcement-driven debate today, the case I made to Congress was that funding the IRS is a constituent service. The IRS will do whatever job it is given; even with inadequate funding it will still plow forward – but in that plowing forward, with inadequate funding core services such as answering the phones and core taxpayer rights such as providing prompt appeals hearings and correct, clear, informative notices go by the wayside. Looked at from that perspective, adequate funding of the IRS – whether for service or compliance activities or information technology – is something every elected official should desire.
So why is this not the case? First, the IRS collects taxes and has awesome powers to do so. As a matter of strategy (overrated and even misguided, I think) it believes that the more people fear being audited or face enforced collection, the more they will comply with the law. So it’s not surprising that people react with fear when they hear the IRS will get more funding. Second, people tend to remember negative things rather than positive things. Thus, although the IRS pulled off a near-miracle during COVID distributing Economic Impact Payments, the Advance Child Tax Credit, and other pandemic relief provisions, when asked to think about the IRS, taxpayers are more likely to remember the Tea Party 501(c)(4) debacle of a few years ago or their own negative interaction with the IRS. Third, in the last three decades the geographic presence of IRS employees in most of the United States has all but vanished. Taxpayers no longer know IRS employees who are members of their religious organizations or PTAs or gyms. This makes it easier to see IRS employees as nameless and faceless automatons.
These three tendencies make the IRS an easy target. How to combat this? Well, “combat” is not the right approach – that just brings on more yelling. Being defensive doesn’t help; complaining that people aren’t appreciative enough of all the IRS’s good work isn’t going to win converts either. I personally agree with Ms. Lapekas that we tax lawyers need to speak up, but we should speak as taxpayers, not tax lawyers. We should take every opportunity we can to talk to our neighbors, our friends, our colleagues about why taxes matter, why tax compliance matters, and then, and only then, why we need a tax agency that functions well. Let’s not make the conversation about the IRS – that just triggers negative reactions. Instead, let’s make the funding conversation about achieving a fair and just tax system, something no one will say they don’t want. — Nina
Chills ran down my spine when IRS Commissioner, Charles Rettig, said these words about the IRS to a room crowded with hundreds of tax attorneys.
They weren’t chills because I feared an overgrown IRS, but because I hadn’t before truly appreciated how important its work was, how thankful I am for it. Its work is important not only for the collection of 96% of the funds that support this country, but for the work it does in protecting and serving the individuals that call it home.
Yes, the IRS protects and serves. It fights fraud, terrorism, money-laundering, child exploitation, and human trafficking (to name just a few things). It’s in everyone’s best interest to support it, fund it, and work to improve it. And before you dismiss me as a brainwashed civil servant, know that I make a living fighting against the IRS. My career is finding the IRS’s faults and mistakes and exposing them. I pay my bills by fighting the IRS’s wrongs. Am I proud of my work? Hell yes. But what makes me even more proud? Living in a country where it’s possible.
Chuck (the name he goes by, he reminded us) reminded us that the IRS has tracked and helped seize Russian oligarch’s yachts around the world, took control of Al Qaeda and Hamas websites and diverted donations from those sites to victims of terrorism, and took down the largest child pornography website in the world. The child porn website takedown resulted in the arrest of 337 users within the United States alone.
When Chuck concluded his speech (which went over-time, as usual), I tried to talk to other attorneys about it. Two of them said they didn’t attend the speech because they’d heard him speak many times before and thus (said with a roll of their eyes), had heard his same stories at least twice that many. Another attorney who did attend mentioned that the Commissioner was a great orator, but dismissed the speech as a rah-rah campaign for the IRS. (No, Mr. Rettig is not eligible for re-appointment and by his account is looking forward to returning to his humble public-school, immigrant-raised, military supporting, beginnings in Los Angeles).
Something was different about this speech though. The Commissioner called us out. He criticized us tax practitioners. Repeatedly. Why? Because as the media has excoriated the IRS’s recent $80 billion funding boost and spread fake news about 87,000 new gun-toting agents, we said nothing. Worse, some practitioners rode the media frenzy for personal gain from the hype to spew false information and feed the fire. Doing so has literally caused increased death threats against IRS employees and put them in harm’s way. It has certainly eroded the country’s confidence in the second-most important government agency in the United States (the first being the military, Chuck reminded us).
When public confidence in the IRS wanes (even further), voluntary tax compliance wanes. And that hurts all of us.
Why would the Commissioner of the IRS express disappointment in a room full of tax attorneys? Why would he call on private practitioners to speak out IN SUPPORT OF the IRS? We make a living fighting it, after all.
He didn’t say. But I think I know why.
Because we know the truth.
When everyone was seemingly inflamed by the $80 billion infusion into the IRS, there was a group that largely wasn’t. It was tax attorneys. From the most Trump-supporting, die-hard Republicans to the snow-flakiest Democrats; we supported it. All the tax attorneys I know said the same thing about the increased IRS budget. They agreed, “It’s about damn time.”
We didn’t say this publicly, of course. Because if we speak out in support of the IRS our clients would think we wouldn’t put up a bull-dog fight against it. Our clients would be wrong if they thought this. But we fear losing them, nonetheless.
We support increased funding to the IRS because fighting the IRS works. It works because, when the IRS operates properly, taxpayers can win. Yes, tax administration can (and should) be improved. But there are checks and balances in place, opportunities for appeals, IRS employees who care about the right answer (even to the detriment of the government), and laws in place to protect us. If you’re not familiar with tax procedure and if you have not actually fought (and won) countless disputes with the IRS, you wouldn’t know this. You wouldn’t know how much easier it is to achieve “justice” in a fight with the IRS than it is against a state tax, or other government, agency.
When the IRS can answer its phones, it helps taxpayers solve problems. When the IRS has resources to improve its technology and public outreach, it can inform and protect the public against scams. If the IRS is well-funded, it can reach the poor, the elderly, non-English speakers, and members of the military, before financial predators can.
Yes, the Commissioner’s speech was full of his same old stories. We heard ad nauseum about his love for his wife (a refugee from Vietnam, lest anyone forget), his support for the military (even—no, especially—when his son was deployed), and his admiration for his immigrant in-laws (who have notably thrived in this country, despite not speaking English). But these stories are only “old” if you’re sick of hearing about the “American Dream.” I’m not sick of it. I hope I never tire of hearing it. I love hearing that the American Dream is alive and well.
But it’s only alive and well because we have people like “Chuck” at the helm of the IRS. Because we can speak out against the IRS and it listens, and cares. (It really does). The American Dream is alive and well because the IRS Commissioner is (justifiably) so confident in the IRS that he can call out a room full of private tax attorneys and criticize them for their silence when the IRS was under attack.
His rebuke was well-placed.