Obama Cuts Tax Man

16 May

You Saved Us From the IRS!Steven Miller, the acting commissioner of the Internal Revenue Service, took one for the team.

The president said that the Treasury secretary, Jack Lew, had asked the acting commissioner of the IRS, Steven Miller, to resign in the light of a critical report from the inspector general. “Americans are right to be angry about it. I am angry about it. I will not tolerate this in any agency, especially in the IRS,” Obama said.

The inspector general’s report found that ineffective management at the IRS had allowed agents in the Cincinnati office to target conservative groups inappropriately for more than 18 months. Officials had picked out groups with the words Tea Party or Patriots in their titles and subjected their requests for tax-exempt status to extra scrutiny.

BTW, why did the Obama only have an ACTING commissioner? Because the last commissioner resigned in November, 2012. And, he wasn’t controversial, either.

Shulman hit first on offshore tax evasion. Those of us who have practiced during Shulman’s five year tenure understand that this has been a major priority in his administration. Shulman is clearly particularly proud of victories associated with UBS and other Swiss financial institutions; I once referred to the changes in banking secrecy laws under his watch as “The Biggest Story in Banking, Thanks to IRS.” He also highlighted the nearly 38,000 voluntary disclosures under offshore account related amnesty programs, resulting in more than $5.5 billion in collections so far.

With respect to domestic compliance efforts, Shulman made a nod towards increased cooperation (a characterization of which I’m sure many of my colleagues will disagree). And he’ll probably get quoted out of context for the rest of eternity for giving a nod to our “system of voluntary compliance.” Tax evaders love this kind of stuff because they take it to mean, literally, that you only pay if you want. Instead, it is, as Shulman pointed out, a system where taxpayers are responsible for completing their own records, are expected to do so honestly and rather than review every return for accuracy (as is the system in many countries), the IRS makes “judgments about issues to pursue, and returns to audit.”

Technology, fraud and processing were also key issues under a Shulman administration. He noted that it was “enormously gratifying that the IRS successfully migrated from a weekly processing cycle to daily processing this year” – something that had been in the pipeline for nearly 30 years. He almost sounded like the CEO of a private sector company for a bit during his speech, touting “real-time analytics and compliance” as well as “the importance of continuing to invest in the technology infrastructure supporting the IRS.” Using data analysis and technology has, he said, resulting in stopping approximately $19 billion in fraudulent payments this year, compared to $12.5 billion over the same period last year and a measly $2.4 billion in 2009.

Shulman also talked about the advances in regulating tax preparers. I can’t imagine how well that went over at AICPA (feedback from anyone who was there?) as this has been a controversial topic in the tax world. He did mention that the IRS is planning to launch a public database so taxpayers can ensure that they are using a registered tax return preparer. Interesting.

With respect to customer service, Shulman crowed about the recent results of the American Customer Satisfaction Index which measures customer satisfaction across various industries and government agencies. In 1998, IRS bottomed out with a 32% approval rating. In 2011, the IRS received a 73% approval rating, their highest score ever. I guess it was his Sally Field moment to taxpayers: You like us, You really like us.

Shulman wrapped up by asking Congress to “keep a keen eye on tax legislation that adds to complexity and is difficult for taxpayers to comprehend and for us to administer.” In layman’s terms: knock it off with the politicking already. We need consistency.

And with that, Shulman delivered his last public speech as IRS Commissioner.

Nothing to see there, move on!

Now, here’s the thing the IRS appears to have done unequivocally wrong, that we all agree was absolutely inexcusable: they reacted to all of this by targeting one part of the ideological spectrum in looking at whether this flood of new applicants passed the smell test. But being skeptical about a new wave of wolves in sheeps’ clothing, invading the social welfare nonprofit game was entirely appropriate.

And the question Monday is how is this scandal going to unfold? Are we gonna spend the next few months beating-up-on the IRS and the Bush-appointed former head of the IRS who was in charge when all of this happened? Or are we also gonna take the opportunity to try to figure out what exactly we should be doing to sort out this completely intractable mess in tax law created by Citizens United?

Nah. What else will the media do, but impale non-political administrators when it can no longer report on national security?

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One Response to “Obama Cuts Tax Man”

  1. liberaleb 16 May 2013 at 10:02 am #

    Yeah, This was definitely the epitome of falling on the sword! http://liberaleb.wordpress.com/2013/05/15/the-aps-phone-records-and-why-progs-should-be-concerned/

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