Wall Street Journal Op-Ed: Congress gave $80 billion to a lawless IRSBy Travis Nix (JD 2023, Georgetown):
After nearly eight months of deliberation, the Internal Revenue Service has finally released a slightly detailed report. plan on how to spend the additional $80 billion appropriated by Congress in 2022. Taxpayers should question IRS promises to use these funds to ensure fairer and more lawful tax code enforcement. The few details in the report’s vague language indicate that the IRS wants to use its newfound money to enforce sections of the tax code that courts struck down twice as illegal last year. Congress should stop funding illegal purposes at the IRS.
One of the few definitive action items the IRS included in its 150-page report was a compliance goal to impose tax penalties on taxpayers who engage in “listed transactions” — practices the service has labeled as prone to tax abuse. These currently consist of a series of 36 transactions that the IRS has simply posted on its website and in taxpayer notices for the past two decades. The IRS enforces and cites these notices as having the force of law even though taxpayers were not given an opportunity to voice concerns about these rules. Because the notices did not go through the proper review process to become regulations, they are not legally enforceable and should not be binding. …
None of the IRS rules on listed transactions have gone through notice and comment. Unless a taxpayer is willing to engage in a costly court battle, the current regime allows the IRS to easily collect $10,000 for simple reporting errors, while taxpayers who failed to report their listed transactions may go unnoticed. Taxpayer advocacy groups such as the National Taxpayers Union have argued that the notices give the IRS too much discretion to determine what is an abusive tax practice. The lack of notice and comment procedures insulates the IRS from democratic accountability.
Unless the IRS follows the proper procedures for its listed transaction regime, Congress must step in and stop the IRS from wasting taxpayer money by harassing them with illegal audits.
Wall Street Journal Publisher, Cooking IRS Study Books:
The Internal Revenue Service isn’t saying how it will spend Congress’s new $80 billion windfall, but the political shenanigans over a proposed new tax-reporting system by the IRS are no consolation. The agency is hiring progressives to study how to make the tax collector the first and last arbiter of how much Americans owe.
Most of the $80 billion will go toward overeating audits, but the Cut Inflation Act also earmarked $15 million to study a bad idea. Progressives led by Sen. Elizabeth Warren want to create what they call a “free and direct electronic filing tax return system,” which would put the agency in charge of both calculating and auditing taxes. This would end America’s longstanding voluntary system that allows taxpayers to determine their tax, subject to IRS review. The law directed the IRS to hire an “independent third party” to examine the idea.
The IRS has announced that its notion of neutral investigator is New America, a left-leaning nonprofit whose top officials include Obama Administration alumni and a former Hillary Clinton aide, and which has already praised the Warren plan. The IRS also selected to work on the project Ariel Jurow Kleiman, a professor at Loyola Law School, who wrote a document calling on the IRS to adopt a program similar to Warren’s, “one that includes the maximum amount of taxpayer information and requires the least amount of taxpayer input. Why bother with the ruse of an “independent” study?