The alternative minimum tax, though not the IRS's fault, is driving taxpayers nuts.
Not long ago, when the economy was booming and the government was running a big budget surplus, critics succeeded in labeling the IRS a bunch of jackbooted thugs who were unfairly subjecting innocent taxpayers to harassment and abuse. Little was heard about any "gap" between the amount of tax owed and what was paid.
IRS Commissioner Mark W. Everson, left, argues that "service plus enforcement equals compliance."
(Robert A. Reeder -- The Washington Post)
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The IRS was restructured and much more of its money and manpower devoted to assisting taxpayers -- whom it started referring to as "customers" -- rather than chasing cheaters.
The chances of being audited dropped as low as 1 in 200.
Now, the IRS estimates, the tax gap is $312 billion to $353 billion -- or $257 billion to $298 billion after belated payments and collections -- and the government is swimming in red ink.
So the focus has shifted to improving collections.
Everson has noted that audit rates are rising, and he argues that "service plus enforcement equals compliance." He noted recently that the Bush administration has asked for a budget increase for the IRS at a time when most non-homeland-security agencies are taking cuts. But the projected need for enforcement is larger than the agency's overall increase, meaning that some of the enforcement money will have to come out of the agency's service activity.
And, IRS National Taxpayer Advocate Nina E. Olson said yesterday, Everson's equation "doesn't tell us what's the optimal mix" of service and enforcement. "If we erode service to increase enforcement, I suspect we will end up with a country full of unhappy taxpayers" and possibly "less compliance overall."
Colleen M. Kelley, president of the National Treasury Employees Union, said this week, "We are seeing the pendulum swing, just in the past few weeks, far away from customer service."
Kelley said the agency is planning to close a number of walk-in service centers where taxpayers can go for assistance figuring out their returns. The agency "is cutting back on the very programs that help taxpayers be compliant," she said.