The IRS is not underfunded and does not need new powers. Don’t believe the lies.
I’ve been seeing a big push recently on Reddit in general and in this subreddit specifically for the idea that the IRS needs to be “fully funded” and “given power” to go after the “tax cheats”. Lets debunk these myths.
Myth #1: IRS Funding
The primary decline in budget funding and employment has been due to technology. Due to a steady decline in paper forms vs. e-filed forms the IRS has closed (or planned to close) many large centers that employed many thousands of workers who were tasked with processing paper tax returns.
Myth #2: IRS lacks the power to audit effectively.
IRS audits are a civil matter and thus use the standard of “preponderance of evidence” i.e. “did the event have more than a 50% likelihood of happening?” This means a couple things: (1) you can not plead the 5th during an audit; (2) there is no presumption of innocence and (3) the evidence the IRS can use can be very broad and general. If the IRS makes a tax assessment against you and you challenge it in court you, the court will assume the IRS is correct and you will forced to prove otherwise. The fact is the IRS has too much power and often abuses it. IRS employees are regularly being busted for fraud, bribery and accessing your personal information (outside their job duties). In fact things are so bad Congress mandated that the IRS have its own personal Inspector General Office (TIGTA) to oversee it. This is unusual because usually Inspector General Offices oversee entire departments not individual agencies (e.g. there is a separate Inspector General for the entire Treasury Department). You can visit the TIGTA (Inspector General for Tax Administration) page and browse their investigations and you’ll see plenty of employee malfeasance.
Myth #3: Tax cheats
The vast majority of taxpayers comply with the law without action taken by the IRS (they refer to this as voluntary compliance). The rate seems unmoved by IRS enforcement or budget. The voluntary rate hovers around 85%. Non compliance doesn’t necessarily mean fraud it could be missing a deadline, forgetting to file a particular form, incorrectly completing a form etc. Convictions for tax fraud have historically been very low compared to the total number of taxpayers.
For example, in 2010 when the IRS was “fully funded” there were only about 700 convictions. This is because even with resources it is difficult to prove tax fraud. Ironically this is because the tax code is so complex most juries have a hard time with complex cases. Thus, the IRS generally sticks to simple open and shut cases like Wesley Snipes (Snipes tried to claim he was exempt from tax – some sovereign citizen scheme).
Additionally, the rich are not generally cheating on taxes they’re generally practicing tax avoidance using the laws which Congress wrote. Congress then wrings its hands and asks: “why are the rich paying so little?” and blames the IRS. Here’s a good story: former Democratic representative Charles Rangel failed to properly pay his income taxes. The punchline? He was on the Ways & Means Committee, the very committee that writes the income tax law!
Article from r/Libertarian: For a Free Society