Taxable Talk

The Treasury Inspector General for Tax Administration (TIGTA) released this morning an analysis of the 2015 filing season. There is both good news and bad news in the report.

First, some good news. The IRS has improved the detection of fraudulent tax returns and identity theft returns. In 2012, the IRS processed 9.11% of fraudulent returns (311,717 of 3,422,505); in 2014, it only processed 5.24% (114,219 of 2,180,613). (Note that this is based on the processing year, so this statistic relates to 2011 returns processed in 2012 and 2013 returns processed in 2014.) The IRS has also made strides in detecting identity theft returns. There were 382,398 such returns processed in 2013, but that number decreased to 236,313 in 2014 and 141,214 in 2015. That’s still too many, but stopping two-thirds of such returns is a significant step forward.

Of course, for every step forward there’s usually a step backwards. And for the IRS that’s been in customer service on the phone. In the 2013 fiscal year, the IRS answered 15,609,615 calls with a 69.8% “Level of Service” and an average speed of answer of 14.1 minutes. In the 2015 fiscal year, the IRS answered 8,277,064 calls with a 37.6% “Level of Service” and an average speed of answers of 23.5 minutes. (“Level of Service” is defined as, “The primary measure of service to taxpayers. It is the relative success rate of taxpayers who call for live assistance on the IRS toll‑free telephone lines.”)

So let’s translate this into reality. In the 2013 fiscal year, 22,363,345 phone calls were attempted to various IRS toll-free lines; 15,609,615 were answered (69.8%). In the 2015 fiscal year, 22,013,468 phone calls were attempted to various IRS toll-free lines; 8,277,064 were answered (37.6%). As for the time on hold allegedly decreasing to 23.5 minutes, perhaps that’s after excluding all the time some of the 7 million people who called but whose calls were dropped or who hung up spent on the phone. I’d love to see an average time of 23.5 minutes when I call the IRS Practitioner Priority Service.

Unfortunately, the volume of IRS notices hasn’t changed from year-to-year, but the “Service” part of the name Internal Revenue Service is falling away. This has negative consequences; it is likely that Americans’ compliance with tax laws will decrease because they’re guessing on what to do rather than being able to talk to the IRS.

Back in the 1960s there was a television show called Hogan’s Heroes. The comedy was set in a prisoner-of-war camp in Germany during World War II. One of the characters on the show was Sergeant Schultz. Here’s an excerpt via YouTube:

Schultz’s famous line was, “I know nothing, I see nothing,….” That’s what it feels like when we deal with answers from the IRS and the Obama Administration. Federal judges have come to that conclusion, too. Here are two court rulings from this past week.

The first case isn’t related to taxes, but relates to the EPA. As reported by Kimberly Strassel in the Wall Street Journal, there’s a case relating to Pebble Partnership developing a mine in Alaska. An employee of the EPA, Phillip North, apparently didn’t like the idea. He’s alleged to have used private email to coordinate his activities as an EPA employee with anti-mine activists (which would definitely be a problem). On Thursday, a federal judge issued a subpoena for Mr. North over the EPA’s objection. Ms. Stassel concludes her piece,

…U.S. District Judge H. Russel Holland strongly disagreed—noting that Mr. North “appears to be at the center of Pebble’s claims that EPA impermissibly” worked with outside groups, and that he is the “originator of documents likely related to the claims” held on “private computer equipment.” He issued the subpoena, dryly noting: “Mr. North’s personal appearance is necessary. Indeed, the court would be surprised if the EPA were not as anxious as Pebble to obtain testimony and access to documents controlled by Mr. North.”

Judge Holland, consider yourself surprised. The EPA isn’t anxious for Mr. North to appear, any more than the State Department is anxious for the FBI to scour Hillary Clinton’s server. Those agencies know exactly why their employees use private email. And they know the release of it means nothing but trouble.

Meanwhile, the organization Cause of Action won a round in federal court. Cause of Action was curious on whether the IRS sent confidential taxpayer information to the White House. This stemmed from Austin Goolsbee, the former White House Economic Advisor, making remarks on the tax status of Koch Industries. (Since Koch Industries is a private company, their tax status is known by Koch and the IRS.) Cause of Action took their curiosity one step further: They filed a Freedom of Information Act request with the IRS on any requests from the White House for confidential information.

The IRS refused to release anything, stating that Section 6103 of the Internal Revenue Code prohibits the IRS from even divulging such requests. Cause of Action then filed a lawsuit demanding the information, and Judge Amy Jackson agreed with Cause of Action that Section 6103 can’t be used to refuse to divulge the requests.

“This court questions whether section 6103 should or would shield records that indicate confidential taxpayer information was misused, or that government officials made an improper attempt to access that information,” the judge wrote in denying the IRS’s request to close out the case.

Now, I expect the Obama Administration to appeal this ruling, but sooner or later the truth will come out. There’s a pattern in this administration, and it’s one of secrecy, denials, and cover-up. Maybe it’s all innocent, but to me it’s failing the smell test. I try hard to avoid pushing one political view over another in this blog, but there is one thing that is clear to all but the most partisan Obama Administration supporters: The administration that promised to be the most transparent in history is likely the most opaque in history. Even Sergeant Schultz could have done better.

Addendum: Here is a link to Judge Jackson’s ruling.