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Total Tax Obedience February 28th, 2007
In “There’s Gold in Them Thar Hills,” I likened Members of Congress and IRS bureaucrats to crazed gold miners lusting after an inextricable vein of gold in their relentless quest for Tax-Gap revenue—they seem prepared to wreak all manner of economic damage and constitutional havoc on society in an effort to extract the unpaid 14 percent of revenues they think they’re due.  It turns out, I was too generous to IRS functionaries; they are more like religious fanatics than fever-possessed gold miners when it comes to wielding the Internal Revenue Code like a holy book and scourging the American public for not paying all the taxes that sacred writ demands of them.
 
The Internal Revenue Service defines the Tax Gap as the difference between the amount of income-tax revenue the federal government is owed and the actual amount paid by taxpayers on a timely basis.  The IRS labels it “noncompliance.”  As one IRS functionary makes clear below with his own words, it is this perceived taxpayer defiance and noncompliance more than lost revenue that seems to drive the IRS like the demented Inspector Javert along its relentless quest for Total Tax Obedience no matter the injustice it may cause.
 
Even before the new Democratic Congress was elected, while Republican lawmakers were still in control, Bush IRS deputy commissioner for services and enforcement, Mark Matthews, told the American Bar Association he was taken aback by the congressional obsession with the Tax Gap.  “I sort of call it Tax-Gap fever,” he said.  He sounded so reasonable, like a new brand of IRS bureaucrat, as he warned his fellow tax lawyers of the dangers Congress viewing the IRS’s revenue-collection budget through a Tax-Gap lens:  
 
“We’re the first to say a large part of that Tax Gap may be from innocent error, confusion.  We frequently criticize the complexity of the code.”

But then Mr. Matthews candidly revealed the true IRS mentality.  It’s not about the revenue; it’s about Total Tax Obedience.  Following on his temperate, reasoned remarks urging the Congress to recognize the limitations and inefficiency of trying to collect every single penny of income-tax revenue theoretically owed the federal government, the deputy commissioner began to sound genuinely scary as he described the IRS’s real motivation in mining the Tax Gap:  obedience, not revenue.
 
According to an October 24  taxanalysts®  report on Matthews’s comments, he warned against congressional appropriators directing IRS spending solely with the purpose of getting the most bang for its buck in reducing the Tax Gap.  He argued the IRS must redouble its efforts in areas that bring in no direct revenue and have no nominal effect on the Tax Gap.

“He said it is important that the IRS continue to enforce criminal violations and crack down on the tax-exempt sector, even though neither of those areas generate enforcement revenue.”
 
“I don’t think we’ve done it [enforcement activity] a way that was just focused on the money,” Matthews told the group.  “We’ve done the hard cases.  We’ve moved on the high net worth area.  We’ve moved up corporations [one of the most complex areas of the tax code that accounts for 13.5 percent of total revenues but only 9 percent of the Tax Gap].  We’ve taken on shelters.”

In other words, much of the IRS’s digging into the Tax Gap has nothing whatsoever to do with extracting revenue; it’s all about enforcement, rooting out “noncompliance” and achieving Total Tax Obedience—and all the president’s functionaries said, “Amen.”
 
These are the words of an IRS functionary on a moral jihad, not a simple tax collector in search of revenue.  These are the words of a political appointee who understands fully that most of the Tax-Gap revenue can never be recovered but who, nevertheless, is enflamed with a burning righteousness that demands Total Tax Obedience.
 
It’s bad enough when Tax-Gap fever erupts from lawmakers’ avarice and their unbridled lust for revenue.  It verges on the fanatical, however, when the obsession to plumb the depths of the Tax Gap springs from an ideological and moral fixation by bureaucrats and political functionaries who see their role not as tax collectors but as tax clergy, on fire with righteousness indignation that someone, somewhere is not paying every last penny in taxes the blessed Code demands.  That’s called despotism.
 
Thanks to Mr. Matthews for letting down his hair before fellow tax lawyers and giving us a glimpse of the true nature of the IRS—a pocket of totalitarianism in an otherwise free society.

Posted in  Tax  || 0 Comments »
Author: Lawrence A. Hunter || Location: Washington, DC, USA

 

  
 
February 28th, 2007

Total Tax Obedience

Posted in  Tax 
Author: Lawrence A. Hunter || Location: Washington, DC, USA

In “There’s Gold in Them Thar Hills,” I likened Members of Congress and IRS bureaucrats to crazed gold miners lusting after an inextricable vein of gold in their relentless quest for Tax-Gap revenue—they seem prepared to wreak all manner of economic damage and constitutional havoc on society in an effort to extract the unpaid 14 percent of revenues they think they’re due.  It turns out, I was too generous to IRS functionaries; they are more like religious fanatics than fever-possessed gold miners when it comes to wielding the Internal Revenue Code like a holy book and scourging the American public for not paying all the taxes that sacred writ demands of them.
 
The Internal Revenue Service defines the Tax Gap as the difference between the amount of income-tax revenue the federal government is owed and the actual amount paid by taxpayers on a timely basis.  The IRS labels it “noncompliance.”  As one IRS functionary makes clear below with his own words, it is this perceived taxpayer defiance and noncompliance more than lost revenue that seems to drive the IRS like the demented Inspector Javert along its relentless quest for Total Tax Obedience no matter the injustice it may cause.
 
Even before the new Democratic Congress was elected, while Republican lawmakers were still in control, Bush IRS deputy commissioner for services and enforcement, Mark Matthews, told the American Bar Association he was taken aback by the congressional obsession with the Tax Gap.  “I sort of call it Tax-Gap fever,” he said.  He sounded so reasonable, like a new brand of IRS bureaucrat, as he warned his fellow tax lawyers of the dangers Congress viewing the IRS’s revenue-collection budget through a Tax-Gap lens:  
 
“We’re the first to say a large part of that Tax Gap may be from innocent error, confusion.  We frequently criticize the complexity of the code.”

But then Mr. Matthews candidly revealed the true IRS mentality.  It’s not about the revenue; it’s about Total Tax Obedience.  Following on his temperate, reasoned remarks urging the Congress to recognize the limitations and inefficiency of trying to collect every single penny of income-tax revenue theoretically owed the federal government, the deputy commissioner began to sound genuinely scary as he described the IRS’s real motivation in mining the Tax Gap:  obedience, not revenue.
 
According to an October 24  taxanalysts®  report on Matthews’s comments, he warned against congressional appropriators directing IRS spending solely with the purpose of getting the most bang for its buck in reducing the Tax Gap.  He argued the IRS must redouble its efforts in areas that bring in no direct revenue and have no nominal effect on the Tax Gap.

“He said it is important that the IRS continue to enforce criminal violations and crack down on the tax-exempt sector, even though neither of those areas generate enforcement revenue.”
 
“I don’t think we’ve done it [enforcement activity] a way that was just focused on the money,” Matthews told the group.  “We’ve done the hard cases.  We’ve moved on the high net worth area.  We’ve moved up corporations [one of the most complex areas of the tax code that accounts for 13.5 percent of total revenues but only 9 percent of the Tax Gap].  We’ve taken on shelters.”

In other words, much of the IRS’s digging into the Tax Gap has nothing whatsoever to do with extracting revenue; it’s all about enforcement, rooting out “noncompliance” and achieving Total Tax Obedience—and all the president’s functionaries said, “Amen.”
 
These are the words of an IRS functionary on a moral jihad, not a simple tax collector in search of revenue.  These are the words of a political appointee who understands fully that most of the Tax-Gap revenue can never be recovered but who, nevertheless, is enflamed with a burning righteousness that demands Total Tax Obedience.
 
It’s bad enough when Tax-Gap fever erupts from lawmakers’ avarice and their unbridled lust for revenue.  It verges on the fanatical, however, when the obsession to plumb the depths of the Tax Gap springs from an ideological and moral fixation by bureaucrats and political functionaries who see their role not as tax collectors but as tax clergy, on fire with righteousness indignation that someone, somewhere is not paying every last penny in taxes the blessed Code demands.  That’s called despotism.
 
Thanks to Mr. Matthews for letting down his hair before fellow tax lawyers and giving us a glimpse of the true nature of the IRS—a pocket of totalitarianism in an otherwise free society.