Before I review the final version of HR-1, now known as PL 115-97 (the series starts tomorrow!), it’s important to review the current state of affairs at the IRS (Internal Revenue Service).
I’ve written (here’s a relatively recent post) how the partisan attacks on the IRS have devastated the service. Now, when a taxpayer calls the IRS, s/he can expect to be on hold for 75 minutes- and hope that when someone finally comes on the phone, they are not (un)intentionally disconnected- or told that the representative can’t help the caller.
I just had a client try to reach a representative for an error the IRS created (they credited her 2015 tax return to CY 2016- and put her mortgage in jeopardy)- and after waiting for hours, they hung up saying they were now closing. So, she had to shell out bucks to me (who has a special number only available to Practitioners) to handle the issue. Even I had to wait (only 48 minutes) to reach a person. And, while the solution was promised to occur in ten days, it took closer to 10 weeks. (64 days to be exact.)
It is truly amazing to me that any political party considers it acceptable to starve the IRS. There is NO other agency of the government that collects $ 10 for every $ 1 it is provided. Oh, sure, this party is ticked off that the IRS has been charged with enforcing PPACA, the Patient Protection and Affordable Care Act (aka Obamacare) and hopes it fails to do so with so little funding.
The other reason the GOP is attacking the IRS? Because it felt annoyed that the IRS refused to approve fake charities (GOP-leaning or fronts for political contributions) for special tax status. And, claimed it was only the GOP leaning groups (the Tea Party “IRS Targeting Scandal” of 2013 [not]) being hit. Except the data came out a year later showing that the same number (or slightly more) Democratic leaning organizations came under similar scrutiny.
(Let us also not forget that Congressional investigations [and other Federal agencies, including the Federal Bureau of Investigation (FBI)] determined that while the Tea Party applications for “charities” were scrutinized, there was no evidence of of political intent, a liberal conspiracy, or White House involvement. Then, again, there’s this- it’s illegal for a charity to be involved in political lobbying.)
It’s kind of like how TheDonald and Congressman Nunes (who briefed TheDonald with closed, confidential Congressional data) or, worse yet, the Texas Representative Louis Gohmert (who also employs a loose association with the facts) attack Robert Mueller, the special prosecutor (and a Republican himself), whom they lauded a few months ago- before he began finding the truth about illegal activities. Or the world-class US investigation bureau, the FBI because they won’t effect political witch hunts- in contravention of US regulations.
But, back to the IRS. The IRS budget last year was $ 12.1 billion. In 2010, it was $12.1 billion. Sounds like not much of a change, right? Except that there is a decreasing value of the dollar. Oh, and there are now 17 million more taxpayers than there were in 2010. Oh, and the number of “information returns”- the 1099’s (which are required for scrutiny and completeness) and W-2’s- have doubled from 2010- from 1 billion to more than 2.1 billion. (By the way, TheDonald just rescinded some $ 250 million from the IRS budget.)
All this means, without the need to comply with Obamacare, the IRS has really been subjected to the equivalent of a $ 7 billion cut, in terms of the funds necessary to accomplish its tasks.
The IRS must determine the withholding rates for American taxpayers to comply with a tax law that was signed on Christmas Eve. That took effect one week later (1 January 2018). With fewer people, fewer resources, and a bigger task than that of the last major tax cut signed by Ronald Reagan.
Don’t hold out hope that this will be a smooth transition to the new rules.
But, I am pretty certain that our firm’s revenue is going to climb fairly easily- unfortunately on the backs of our clients. (Normally, our revenue growth results from growing the number of projects and clients we satisfy. Now, that will be the gravy on our train.)