Who’ll pay for bigger IRS?

Hang on to your wallets! A tax briefing recently issued by CCH indicates the President’s budget proposal includes almost $1 billion for IRS operations.

Families with incomes over $66,000 currently pay two-thirds of all taxes and are in the top 25 percent. Guess who will be targeted to facilitate income redistribution if Congress supports the President’s proposed 8-percent increase for the IRS? Make sure your tax documentation for recent tax year filings and this year are in order or risk the wrath of IRS’s penalties and interest.

If the IRS gets additional funding, let’s hope they use it wisely. There certainly have been some blemishes on their performance. For example, the Treasury Inspector General for Tax Administration reported last quarter that unauthorized workers claimed $4.2 billion in Additional Child Tax Credits in 2010. Legislation passed in the Clinton administration barred those taxpayers from claiming the Earned Income Tax Credit and many federal benefits. But the ACTC was implemented after that measure passed Congress, and the IRS does not believe it has the standing to ban unauthorized workers from claiming it.

Here is another example for you. The IRS wrongly demanded from 80,000 taxpayers repayment of first-time homebuyer tax credits, according to another report last quarter from the Inspector General.

Need more? Earlier last year, the Inspector General reported 20 percent of federal tax credits claimed for alternative and plug-in electric vehicles during the first seven months of 2010 were erroneous, costing U.S. taxpayers more than $33 million.

You get the picture. Big Brother is proposed to get bigger regardless of performance accountability. In 1986, the tax code was reformed. Since then all we see is more complexity subject to special interests, abuse and human error. Presidential candidates and congressmen championing reform that embraces the KISS principle (keep it simple stupid) have the right idea.

Mike Tennis

Sleepy Hollow