7 former IRS commissioners chastise Congress for slashing the tax agency's budget, urge full funding
Saturday, November 14, 2015
Take a look at the signatures on a letter sent last week to Representatives and Senators who set funding levels for government agencies.
They are the John Hancocks of seven former Internal Revenue Service commissioners. The dates following each name represent the years each person served. The individuals themselves represent a wealth of tax expertise.
The seven former IRS commissioners -- Mortimer M. Caplin, Sheldon S. Cohen, Lawrence B. Gibbs, Fred T. Goldberg Jr., Shirley D. Peterson, Margaret M. Richardson and Charles O. Rossotti -- on Nov. 9 wrote to the chairs and ranking members of the House and Senate Appropriations committees.
Continual and costly budget cuts: The four-page document takes Congress to task for its continual slashing of the IRS' annual fiscal year budget and urges a restoration of the money the agency needs to do its job.
The former IRS commissioners point to Congressional Budget Office's Long-Term Budget Outlook issued in June, which examined the country's impending funding challenges. To deal with those financial issues, the former commissioners say, the IRS must be equipped to fulfill its taxpayer service mandate, as well as follow through on tax collection enforcement.
And that takes money.
Proposed fiscal year 2016 IRS budget cuts of $838 million in the House and $470 million in the Senate would mark the sixth consecutive year the tax agency has received less money, according to the letter. Over the last five years, IRS budget cuts have totaled $1.2 billion. That's a reduction of more than 17 percent since 2010.
"None of us ever experienced, nor are we aware of, any IRS appropriations reductions of this magnitude over such a prolonged period of time," write the former commissioners.
Questioning Congressional budget strategy: The literal bottom line, according to the men and women who have faced the task of running Uncle Sam's tax system, is that the U.S. tax system must work and work well. It cannot do that when the agency is facing more responsibilities each year and given less money to meet them.
"[T]he IRS must be able to assist taxpayers who are trying to comply with their tax obligations, and at the same time be able to enforce the tax laws against those taxpayers who have not complied with their tax obligations," wrote the former IRS chiefs.
The former IRS commissioners also question the goals of those lawmakers who wish to use the power of the purse-string to punish the IRS and/or force it into finding alternate ways to operate. They write:
"Some have argued that the IRS can solve these problems by simply becoming more efficient. This argument ignores the reality that the IRS is already, by far, the most efficient tax collection agency among large countries in the world. The OECD recently released its bi-annual analysis of tax administration across the developed world and reported, based on 2013 statistics which don't reflect the most recent IRS budget cuts, that the amount the IRS spends to collect a dollar in taxes is approximately half the average amount spent by all OECD countries. Germany, France, England, Canada and Australia all spend as much as two to three times the amount the IRS does to collect a dollar of revenue.
In light of the foregoing, we fail to understand how it makes any logical sense to continue to reduce, rather than increase, the IRS budget for FY 2016 in order to optimize the IRS' ability to provide taxpayer service and to enforce the tax laws to increase revenue collections.
To put it succinctly, we do not understand why anyone with present and projected debts and annual losses as large as those of the United States would refuse to pay for telephone assistance to people trying to fulfill their tax obligations, would turn their back on $8 billion annually in additional revenue, or would fail to make an investment that offers a return equal to at least four times the amount invested."
For those and other reasons, the seven men and women with almost 22 years of combined service leading the IRS are asking that the Congressional Appropriations committees put together and shepherd through both chambers "an IRS appropriations request for FY 2016 that is substantially in excess of the appropriation for the IRS in FY 2015."
Politics trumping fiscal expediency? Lawrence B. Gibbs, who was appointed to head the IRS in 1986 by President Ronald Reagan and served until 1989 (he's now with the Washington D.C. law office of Miller & Chevalier), acknowledged that he and the other letter signers answered a call for help from the current commissioner John Koskinen.
But, Gibbs told Tax Notes, the letter "speaks for itself. It's not a political document in any way."
That's more than can be said about the Congressional budget cuts.
I get it. The IRS has screwed up royally in many ways. And very few of us like paying taxes. Plus, we're already in the midst of the 2016 presidential election campaigns. This all makes the IRS a more tantalizing political target than ever.
But we need those hated tax dollars to run the country. Further politicizing the agency, which is what those who want to "do away with the IRS," a rousing political soundbite but unrealistic proposal, doesn't help matters.
I'm not saying reward the IRS by throwing money at it. But do give it enough money to do its job and then keep a constant watch on how that's done. That's the smart thing to do.
Continually cutting the money the agency needs to do what we require of it, however, is far from smart.
My brush with IRS greatness: The former commissioners' amazement at this devastating funding pattern is no surprise. The five men and two women who wrote the letter are accomplished professionals, before and after their terms as IRS commissioner.
That's why the seven of them earn this week's honor as the By the Numbers figure.
And not to make this about me, but I was working on Capitol Hill for a Representative who served on the Ways and Means Committee when Lawrence Gibbs was named IRS Commissioner by President Ronald Reagan. Charles Rossotti, tapped to lead the IRS by President Bill Clinton, was about halfway through his term as chief of the IRS when we moved out of the area.
In those Washington, D.C., years bookended by Gibbs and Rossotti, I was able to meet several IRS commissioners thanks to my jobs with a member of Congress, the Ways and Means Committee and as a staffer with the government relations offices of two Fortune 100 companies.
Plus, one of my tax-focused colleagues, who also is still a good friend and a key source of current D.C. gossip news, is personal friends with a couple of these IRS leaders and yes, I rode those coattails when I was living and working there!
My point is that from even my limited contact with IRS officials, I still believe that most of the people who run America's most detested federal agency do so because they believe in its importance in keeping our country on the proper track.
If these seven former IRS commissioners say the agency, troubled as it is now, needs more money, then I say give it more money.
You also might find these items of interest:
You can follow this conversation by subscribing to the comment feed for this post.