Ways and Means oversight of the IRS is badly needed.
Ways and Means oversight of the IRS is badly needed.
T he House Ways and Means Committee this week released its oversight plan for the remainder of the 118th Congress. Conservatives looking for robust investigations into the Biden administration and its IRS will find a lot to like.
Near the top of the list is to conduct strict oversight concerning the $80 billion the previous Congress directed toward the IRS for increased audits and (secondarily) improved customer service. It’s a priority of the new Republican House to claw back as much of this $80 billion as possible (at least on the audit side), but in the meantime, it’s entirely appropriate for the Ways and Means Committee to see exactly what the IRS is doing with the money.
The IRS is being smart with the public relations on its $80 billion windfall. It realizes it is susceptible to being accused of using the money to hire 87,000 new agents to open fishing-expedition audits against Main Street small businesses. So, the agency has released a series of reports detailing how it’s using the resources to improve customer service. Supposedly, the impossibility of calling the 800-number has been much improved with the hiring of 5,000 new phone operators (as an Enrolled Agent, I’m looking forward to the possibility of being able to call the IRS on behalf of my clients for the first time since Covid hit). The agency created a new document-upload tool to help answer nasty-gram letters from the IRS online. Amended returns can now not only be filed electronically, but refund claims on them can be received via direct deposit. Taxpayer Assistance Centers will have 700 more people on staff and expanded hours during tax season. There’s also a new portal for uploading information returns such as 1099-NEC.
But the committee would do well to question other IRS initiatives that are not so taxpayer-friendly. A good example is its proposed new pilot program for tip-reporting compliance at restaurants and bars (owners will essentially have to turn over their books to the IRS every year in a kind of preemptive audit). There was also the botched “Is my state tax-refund taxable or not” crisis earlier in tax season, which should have been caught in December. No doubt others will come up.
The committee singled out a couple of items in particular that I was happy to see.
The top IRS issue this year, and arguably the top tax issue this year, is what is going to happen with the 1099-K form. This tax form tracks credit-card and smartphone finance-app transactions, with the goal of making sure businesses report that income. Unfortunately, the previous Congress lowered the threshold from $20,000 and 200 transactions per card or app to $600 and one transaction per card or app. As a result, purely personal (selling old baby clothes on eBay, splitting a vacation on Venmo with another couple, etc.) or micro-sized business transactions are due to get caught in the 1099-K web. Representative Carol Miller (R., W.Va.) has introduced H.R. 190, the “Saving Gig Economy Taxpayers Act,” which enjoys the co-sponsorship of all the committee rank-and-file GOP members. Her bill would restore the $20,000 and 200 transaction thresholds on a permanent basis.
The other very interesting area of stated committee-oversight interest is to “examine the IRS plan to develop a new IRS-administered free tax return e-filing system, including their selection of a third party or parties to prepare a report on such plan.” It has long been the goal of the Left to make the tax collector (the IRS) double up as the tax preparer/estimator. The obvious conflict of interest inherent in this seems to avoid its analysis, and until the $80 billion windfall, it was far from clear whether the IRS had the resources to do this.
The IRS in February announced a plan to partner with a George Soros–funded group, the New America foundation, to help develop a way for the IRS to prepare most Americans’ taxes. The Daily Caller’s Bronson Winslow reports that “New America draws funding from a litany of left-leaning philanthropic organizations, including the Bill and Melinda Gates Foundation, Rockefeller Foundation, Ford Foundation, Bloomberg Philanthropies, Melinda Gates’ Pivotal Ventures LLC and the Soros-backed Open Society Foundations, according to New America’s funding disclosure.”
It just so happens that New America has already developed the outline of an IRS tax-preparer plan. The foundation’s affiliated entity, “Code for America,” has screenshots of the IRS app that the agency has proposed. The return preparation starts with simple vanilla cases (singles with just a W-2, for example), but the clear intent is to bring in more and more tax information over time so that eventually, almost all Americans can use this tool.
One of the final screenshots shows what’s really going on here: Taxpayers, having completed their IRS-prepared tax return, are then asked if they want to apply for food stamps or register to vote. Could Obamacare enrollment or unemployment benefits be far behind? Maybe student-loan forgiveness? It’s pretty obvious that the Left wants to use IRS tax-return preparation as a camel’s nose under the tent to the broader welfare state.
The IRS will never be an impartial arbiter of your tax return. When there is any question — basis in a stock sale, feasibility of a business or rental expense, whether a charitable contribution counts, etc. — the IRS and the leftist consultants it works with will design software that disadvantages the taxpayer at the expense of the IRS collection target. If the IRS wants to challenge a deduction claimed by a taxpayer, it is free to do so — after the fact, and with a burden of proof. It doesn’t get to decide your tax liability up front.
All these areas of oversight, and more, will be critical to the success of Chairman Jason Smith (R., Mo.) and his new Ways and Means Committee majority. Happy hunting.