In a piece about the college admissions scandal, Adam Looney of the Brookings Institution noted that the scam should have been discovered by federal officials long ago, before one of the minor players in the crime tipped off authorities.
Specifically, the IRS should have known the sham charity was violating tax laws, as it charged wealthy families enormous sums to help get their children into the colleges of their choice. Some parents had their children fake disabilities. Some paid to cheat on their college entrance exams. Some bribed coaches to get spots on college sports teams.
Looney noted that the IRS never examined the charity, Key Worldwide, despite “a surprising amount of suspicious activity.”
He goes on to note that in 2017, the IRS reviewed the filings of 6,101 tax-exempt organizations. That was out of about a million public charities and 1.4 million more tax-exempt organizations.
In an unrelated piece on the radio, an NPR program noted that funding for the Internal Revenue Service has declined 25 percent, adjusted for inflation, since 2010. Staffing for enforcement has been slashed even more.
We have crippled the IRS to the point that it can no longer do its job.
A lot of people applaud this news, even if they don’t cheat on their taxes. Hating the IRS is almost a requirement of being American.
But even the Trump administration understands the damage that has been done. President Donald Trump’s budget proposal calls for more money for the IRS. That’s after the president last year proposed further reductions at the agency.
Taxpayers who think our government should be fair and competent should support an IRS that is sufficiently staffed and able to enforce the laws equitably.
Part of the agency’s problems are self-inflicted. During the Obama administration, the IRS drew the anger of the GOP for delaying and flagging tax-exempt paperwork from Republican-aligned tea party groups.
The GOP was right to draw attention to the claim that groups were being treated differently, depending on their political affiliation.
But Republicans and Democrats were wrong in their conclusion. While any IRS officials whose work is tainted by politics should be reprimanded or fired, the bigger issue is why political groups should be considered charities.
Regardless of their party affiliation, such groups should not be exempt from taxes. The laws were written to support charities involved in education, religion and social services. They were never intended to advance the fortunes of political machines with non-stop, massive fundraising operations.
The president and Congress should propose and pass legislation that would tighten the rules that award tax-exempt status to charities and other tax-exempt entities. Instead, many in Washington are working to further undermine the tax system by creating more loopholes for their political allies.
Responsible government requires that we care whether tax policy treats people equitably. It also requires that we raise revenues sufficient to pay the nation’s bills.
Today, neither test is met. And while many Americans still voluntarily pay what they owe, an unknown number of cheaters – companies, individuals, foreign entities and nonprofits – are undermining the integrity of the system and the fiscal stability of the nation.
Research by ProPublica found that the rate of audits conducted by the IRS dropped more than 40 percent over the last decade. The article published in December also found that the audit rate for wealthy Americans dropped much more than that for any other group.
No one should wish for a tax agency that is excessive in its size or demands. But it’s time Congress recognized that the punishment inflicted on the IRS is counterproductive. Eviscerating the IRS doesn’t help law-abiding Americans, only criminals and cheaters.
The fixes would be relatively simple. Restoring funding for enforcement and IRS support services are initiatives that would pay for themselves.
Congress also needs to tighten the rules for groups that claim to be tax-exempt charities. Again, it would be relatively simple. Politicians and the thousands of outfits that have been created over the last two decades to abuse the system could still be as politically active as they want to be. But like the rest of us, they would need to pay their taxes.
A Plains View 