Over the past two weeks, evidence has surfaced confirming what most Americans already know; the IRS is a great big mess.
Testimony on Capitol Hill as to why certain groups were targeted over their tax exempt status revealed not so much partisan leanings as a massive dysfunctional bureaucracy run amok.
While the Tea Party was prominent on the list of groups targeted, testimony and news reports revealed that the IRS had incompetently handled tax status applications for more than 400 groups, and that doesn’t include stacks of files that never got handled at all.
Unfortunately, the one agency every American deals with on a yearly basis is the Internal Revenue Service with their arcane forms, confusing directions, and incomprehensible communications all bound by a yearly deadline.
The problems behind the IRS are so vast and intricate, it’s hard to know what the overseers should do to clean up the mess.
But it is crucial that something be done to fix or replace this system.
Since the federal income tax came into being in February of 1913 with the ratification of the Sixteenth Amendment, the IRS has grown to collect over $2.4 trillion annually from approximately 234 million tax returns.
The rules governing how, when and in what amounts we pay taxes have grown consistently more complex and worse year after year, now amassed in a tax code of 4 million words.
It is exactly this byzantine system that led to the latest problem – not political ideology among tax collectors.
The latest federal snafu began with the Supreme Court ruling in a case now referred to as 2010 Citizens United, which allowed corporations and groups to spend money on political campaigns.
The ruling created a landscape where more money was pumped into politics, and it in turn created mass confusion for the division of the IRS that handles tax exempt status. This division had 200 employees but handled 70,0000 applications in the last year.
Former employees of that office who have spoken in the press have made two points: first, their division was considered a low rung on the IRS ladder and, second, many employees didn’t understand the new rulings and were not given guidance on how to handle applications. Allegedly they were supposed to wait on word from higher up tax attorneys, but that communication rarely occurred.
A story by NPR.org explained the determinations these employees were asked to make: “ In brief, there are three big categories of tax-exempt groups. Those under section 501(c)(3) are charities engaged in charitable work. They're allowed to do only minimal political activity. At the other end of the spectrum are Section 527 organizations. These are purely political and are required to disclose their donors. In between are 501(c)(4)s. They can do issue advertising and some campaign politics, but not too much.”
The categories, like the whole code, are too vague – requiring exactly the type of judgments we don’t want to see bureaucrats making. Tea Parties, for example, typically fall into the “social welfare” non-profit who can spend 49 percent of their revenue for politics. But the definition of politics is so nebulous that it requires a judgment call – thus requiring more information, thus allowing/requiring government employees to ask political groups to explain what they mean by “education on the Constitution.”
According to IRS employees’ testimony before congress, they weren’t interested in groups’ ideology when they sought additional information, but were trying to figure out which category they belonged in and if donations to them should be taxed. This is big business. In the last election cycle at least half a billion dollars was spent by these groups.
What needs to happen is, first, to clean up the mess in the short-term (get control over the agency and see that it’s fair and efficient). But more importantly is that our leaders finally listen to the calls for a completely new and simple tax system.
A tax system that the average American can understand and an average tax collector can process quickly is paramount of the needs of this country.