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After Crippling IRS, Republicans Find Ways To Worsen Tax Delays

After years of eroding the Internal Revenue Service's ability to enforce tax law through staff reductions, congressional Republicans are now complaining about the backlog of unprocessed tax returns and the lack of available customer support staff. But while their Democratic colleagues propose funding increases to solve the problem, the GOP lawmakers instead want to further restrict the agency's ability to do its job.

In February 10 letter, 30 Senate Republicans wrote to IRS Commissioner Charles Rettig and Treasury Secretary Janet Yellen to express their concern "about the existing delays and backlogs" facing the agency and "reports from taxpayers who cannot resolve their tax problems because the IRS is unresponsive." They noted the fact that the agency has a current backlog of about 8.3 million tax returns and that its customer service agents were able to answer only 11 percent of calls last year.

Those problems are real and the agency has acknowledged them. In recent years, Republicans have declared war on the IRS by significantly reducing the agency's staff and even proposing its elimination from the federal government.

Since winning control of the House in 2010, Republicans cut the agency's funding by 20 percent, which forced the agency to dramatically reduce its workforce. From 2010 to 2018, the number of IRS operations staff fell by 31 percent, and the number of IRS agents "with the expertise to conduct audits of complex returns" fell by 35 percent, according to the nonpartisan Center for Budget and Policy Priorities.

This reduced funding has made it harder for the agency to handle its basic functions of processing tax returns and enforcing tax law.

President Joe Biden and the Democratic majority in Congress have proposed increased funding for the agency so that it may hire more agents and modernize the technology it uses.

Every Republican in Congress opposed Biden's $1.75 trillion Build Back Better plan, which would have added roughly $79 billion in IRS funding over 10 years. While much of that money would have been focused on stepping up enforcement to catch wealthy tax cheats, billions would have gone to operations and taxpayer services.

"The framework will create a fairer tax system through transformation investments in the IRS: hiring enforcement agents who are trained to pursue wealthy evaders, modernizing outdated IRS technology, and investing in taxpayer service, so regular Americans can get their questions answered and access to the credits and benefits they are entitled to," the White House stated last fall.

Sen. Elizabeth Warren (D-MA) proposed a Restoring the IRS Act last May to increase the agency's funding by $31.5 billion. Not a single GOP senator has backed her legislation.

NPR reported on Monday that Democrats have also suggested increasing IRS funding in the 2022 budget, but that GOP lawmakers have called it a "poison pill" that would cause them to block the overall package if it is included.

Short-staffed and stuck with outdated technology, the tax agency says it is doing its best. It has suspended some collection letter mailings and set up "surge teams" from other parts of the agency to help process the backlogs.

But while no GOP lawmakers have offered solutions, some have tried to seize the moment to offer legislation that would further restrict the agency.

On Friday, Rep. Bruce Westerman (R-AR) announced legislation he called a bill "to end [the] IRS backlog." But his IRS PRIORITIES Act — co-sponsored by Reps. Tim Burchett (TN), Buddy Carter (GA), Louie Gohmert (TX), Bob Good (VA), French Hill (AR), Fred Keller (PA), Bob Latta (OH), David McKinley (WV), Mary Miller (IL), Mariannette Miller-Meeks (IA), Barry Moore (AL), and Glenn Thompson (PA) — would bar the agency from hiring any new enforcement staff until the backlog is eliminated.

This would do nothing to help the agency to handle the unprocessed returns and would hinder its ability to catch the wealthy tax cheats, who underpay what they owe by hundreds of billions of dollars each year.

In a February 7 column, Sen. John Boozman (R-AR) cited the crisis as an excuse to target the agency's unionized workers to use work time to assist colleagues with labor issues:

The taxpayer must be a priority, but many IRS employees are allowed to spend time on the clock completing tasks unrelated to their official duties, called Taxpayer-Funded Union Time. This policy needs to end. That’s why I support the IRS Customer Service Improvement Act so we can be sure IRS employees are fully devoted to fulfilling their mission to help Americans meet their tax responsibilities, rather than doing representational work, during tax season.

He and other GOP senators proposed that bill last June, baselessly suggesting that federal workers spending an average of a couple of hours per year dealing with union issues was a significant cause of the delays.

On February 8, Sen. Rick Scott (R-FL) filed a bill that would bar the IRS from ever using facial or fingerprint recognition technology — a move meant to help prevent identity fraud.

In a letter sent Thursday, Sen. Bob Menendez (D-NJ), Rep. Abigail Spanberger (D-VA), and dozens of other congressional Democrats wrote to the agency to ask for "immediate actions to reduce its massive backlog and improve its customer service during the 2022 tax filing season."

Reprinted with permission from American Independent

Judge Rejects Trump Bid To Withhold His Tax Returns From Congress

By Eric Beech

WASHINGTON (Reuters) -A Federal judge on Tuesday dismissed a bid by former President Donald Trump to keep his tax returns from a House of Representatives committee, ruling that Congress' legislative interest outweighed any deference Trump should receive as a former president.

U.S. District Judge Trevor McFadden said in his ruling that Trump was "wrong on the law" in seeking to block the House Ways and Means Committee from obtaining his tax returns.

McFadden, who also said it was within the power of the committee's chairman to publish the returns if he saw fit, put his ruling on hold for 14 days, allowing time for an appeal.

Trump was the first president in 40 years not to release his tax returns as he aimed to keep secret the details of his wealth and the activities of his family company, the Trump Organization.

The committee sued in 2019 to force disclosure of the tax returns, and the dispute lingers nearly 11 months after Trump left office.

Trump lawyer Patrick Strawbridge told McFadden last month the committee had no legitimate reason to see the tax returns and had asked for them in the hope of uncovering information that could hurt Trump politically.

House Democrats have said they need Trump's tax returns to see if the Internal Revenue Service is properly auditing presidential returns in general and to assess whether new legislation is needed.

McFadden, a Trump appointee, said the committee would be able to accomplish its stated objective without publishing the returns.

He cautioned the panel's Democratic chairman, Representative Richard Neal, that while he has the right to do so, "anyone can see that publishing confidential tax information of a political rival is the type of move that will return to plague the inventor."

Neither the committee nor Strawbridge immediately responded to requests for comments on the ruling.

(Reporting by Eric Beech; Editing by Tim Ahmann and Peter Cooney)

Romney And McConnell Whine Over Proposal To Tax Billionaires

Democrats in Congress are proposing a new tax on American billionaires as part of President Joe Biden's Build Back Better jobs package.

Originally, Democrats had proposed a plan that would have raised taxes on corporations and individuals earning $400,000 or more.

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Trump Lawyers Make Desperate Bid To Conceal Tax Returns

Reprinted with permission from Daily Kos

Attorneys for Donald Trump are making a last-ditch effort to prevent Congress from getting Trump's tax returns, a week after the Justice Department cleared them for release.

On Wednesday, Trump's lawyers urged a federal judge to block release of the tax returns from the Treasury Department to the House Ways and Means Committee, according to NBC News.

The lawyers argued that the committee's stated purposed of using Trump's returns in order to refine how the IRS audits presidents was just a pretext for alternative motives.

"While House Democrats had offered countless justifications for obtaining the president's tax returns, no one at the time had ever mentioned a desire to find out how the IRS audits presidents," they wrote. The committee, they said, had only sought returns for one commander in chief and failed to ask the IRS for the "most relevant information—namely, how it audits presidents."

Democrats on the panel have been seeking tax returns for Trump and his businesses since 2019 and made a renewed push this year with the incoming Democratic administration.

While former Attorney General Bill Barr had inserted the Justice Department into the process in order to reject the committee's request, last week the department's Office of Legal Counsel (OLC) ordered Treasury to comply with the committee's request.

"We cannot know where receipt of the requested tax information will take the Committee, any more than the Committee itself can predict what it will find or determine," wrote OLC. "After reviewing and analyzing the information, it will be squarely within the Committee's responsibility to decide whether or not to include some of that information in a report to the full House that might be available to the public."

Presidents always get audited by the IRS, but the audit is supposed to be done expeditiously. Trump's perennially specious claim that he couldn't publicly release his tax returns because they were under audit was part of what motivated the House Ways and Means Committee to seek review of the audit process.

Ruling: IRS Must Deliver Trump Tax Returns To Congressional Committee

Reprinted with permission from Alternet

In a new opinion from the Justice Department's Office of Legal Counsel, officials conclude that the administration is legally obligated to hand over former President Donald Trump's taxes to Congress, as requested.

The announcement is the latest development in Democrats' years-long struggle to see Trump's tax records. He conspicuously refused to make his tax returns public during the 2016 (and 2020) presidential campaign, despite having said he would do so. Many critics believed they would provide evidence of wrongdoing, impropriety, financial failure, or even criminality. So when Democrats took control of Congress in 2019, the House Ways and Means Committee requested his records from the IRS using a statute that allows lawmakers to obtain such information.

But the Trump administration stonewalled, using highly dubious legal reasoning. Now, the Biden administration, and Attorney Merrick Garland's Justice Department in particular, has reversed that decision:

When one of the congressional tax committees requests tax information pursuant to section 6103(f)(1), and has invoked facially valid reasons for its request, the Executive Branch should conclude that the request lacks a legitimate legislative purpose only in exceptional circumstances. The Chairman of the House Ways and Means Committee has invoked sufficient reasons for requesting the former President's tax information. Under section 6103(f)(1), Treasury must furnish the information to the Committee.

The Trump administration had argued that Congress did not have a legitimate legislative purpose to request. But the new OLC document rejects those claims, saying that lawmakers clearly have presented facially valid reasons for requesting the returns, and that is essentially the end of the story:

The statute at issue here is unambiguous: "Upon written request" of the chairman of one of the three congressional tax committees, the Secretary "shall furnish" the requested tax information to the Committee. 26 U.S.C. § 6103(f)(1). As the 2019 Opinion recognized, this statutory directive does not exempt the June 2021 Request from the constitutional requirement that congressional demands for information must serve a legitimate legislative purpose. 2019 Opinion at *17–19. The 2019 Opinion went astray, however, in suggesting that the Executive Branch should closely scrutinize the Committee's stated justifications for its requests in a manner that failed to accord the respect and deference due a coordinate branch of government. Id. at *24–26. The 2019 Opinion also failed to give due weight to the fact that the Committee was acting pursuant to a carefully crafted statute that reflects a judgment by the political branches, going back nearly a century, that the congressional tax committees should have special access to tax information given their roles in overseeing the national tax system. Particularly in light of this special statutory authority, Treasury should conclude that a facially valid tax committee request lacks a legitimate legislative purpose only in exceptional circumstances.

It added:

Even if some individual members of Congress hope to see information from the former President's tax returns disclosed on the public record merely "for the sake of exposure," Trump v. Mazars USA, LLP, 140 S. Ct. 2019, 2032 (2020) (internal quotation marks omitted), that would not invalidate the legitimate objectives that the Committee's receipt of the information in question could serve.

However, Trump may still have the opportunity to delay disclosure further. BuzzFeed reporter Zoe Tillman noted that Trump has a short period of time to try to intervene:

Even if the House committee obtains the tax returns, they won't immediately become public. Documents identifying particular people are supposed to be kept by the committee in closed session.

Senate Republicans Shield Super-Rich Tax Cheats — And Democrats Are Silent

Reprinted with permission from Daily Kos

Senate Republicans are dead set on making sure that the rich people who they've been helping to avoid pay their taxes continue to have the privilege of cheating the rest of us. It would appear that the Democrats participating in the sham called bipartisan infrastructure negotiations are okay with that. According to Sen. Jon Tester, a Montana Democrat, the group is "looking at alternative pay-fors to IRS tax enforcement."

Again, this is about letting the wealthy off the hook for the taxes they already owe. It's not about new taxes. It's not about raising anyone's taxes. It's about continuing to allow the super-rich to cheat the rest of us, who do pay our tax bills every year.

Republicans have been raising holy hell over the idea that President Joe Biden wants to strengthen the IRS enough so that it can go after the really big tax cheats, the ones robbing the nation of hundreds of billions of dollars, instead of the working poor peoplewho are easier to audit, the ones who can't afford lawyers to intervene. Fully funding the IRS and clawing those owed tax dollars out of the hands of people who can damned well afford to pay has been included as one of the ways that the bipartisan group has said they'll pay for their almost $600 billion proposal for hard infrastructure.

That, apparently, is out and apparently Democrats in the bipartisan group are accepting that fact. Even though it's the likes of extremist Republican Sens. Ted Cruz and Marsha Blackburn who are raising hell—extremists who were never going to vote for an infrastructure plan that helps President Joe Biden in the first place. Senate aides working with the group confirmed to The Washington Post that "it is likely to be removed from the deal."

That means that the fire sale of existing infrastructure to the highest hedge fund bidders, who would then be in a position to make the public pay for its use all over again, could still be in. Because they have to figure out how pay for it somehow anyway. Or at least they say they do, which they really don't because borrowing money is still cheaper than dirt. As of earlier this month, White House aides were telling Democrats in phone conversations that was not an option, but we haven't seen a high-level, public denunciation of that idea.

Republicans aren't just having hissy fits over the IRS making them and their buddies pay all their taxes, however; they're outraged that Majority Leader Chuck Schumer wants them to finish their work. A short exhibit of their varied tantrums:

Never mind that they've supposedly been working on this since April, when Sen. Shelley Moore Capito (R-WV), who is so concerned that there just isn't enough time, started negotiating with Biden. They announced this supposed bipartisan agreement more than three weeks ago. She added that she thought Schumer's scheduling the vote was an attempt "to put pressure on the group to either put up or shut up."

Well ... yes. And about time, too. Because seriously, they've been at this forever. Now, we all know Republicans are awfully rusty when it comes to doing actual work (like writing bills), but there's a bunch of Democrats who could be doing all of that hard part. So what in the hell have they been doing all these weeks, that they can't be ready by next Wednesday?

They've been wasting time, is what they've been doing, hoping to draw this process out and have it die from neglect. And Democrats have been letting them get away with it because "bipartisanship." Now that the $3.5 trillion budget resolution train is getting loaded up, yes, this group needs to put up or shut up. And pay their damned taxes.

Republicans Oppose More IRS Audits Of Super-Rich Tax Evaders

Reprinted with permission from American Independent

A provision in the bipartisan Senate infrastructure bill announced on June 24 would provide for investing more money in enforcement of laws targeting top earners who evade payment of taxes. Republican senators are furious.

Sen. John Barrasso of Wyoming, the third-ranking member of the minority party leadership, told Axios on Wednesday that "spending $40 billion to super-size the IRS is very concerning." "Law-abiding Americans deserve better from their government than an army of bureaucrats snooping through their bank statements," he said.

Sen. Marsha Blackburn warned of "a huge potential for abuse": "Bigger government results in more waste, fraud, and abuse."

"Throwing billions more taxpayer dollars at the IRS will only hurt Americans struggling to recover after waves of devastating lockdowns," said Texas Sen. Ted Cruz. "Instead of increasing funding for the IRS, we should abolish the damn place."

Even South Carolina Sen. Lindsey Graham, who backed the bipartisan framework, complained, "There's some people on our side who don't like empowering the IRS; I don't mind empowering the IRS if it's a reasonable thing to do. But I mean, how much uncollected taxes can you gather with $40 billion?"

Iowa Sen. Chuck Grassley tweeted on May 17, this year's Tax Day, "Im all for catching tax cheats +closing tax gap BUT Biden plan 2pump more $ into IRS & expand bank reporting is ripe for overreach + imposes more burdens on small biz/family farms."

Earlier in the year, Biden introduced the American Jobs Plan, a $2.25 trillion transportation, climate, water, broadband, child care, and caregiving infrastructure package, and the American Families Plan, a $1.8 trillion package investment in paid leave, free preschool and community college, and affordable health care. He proposed funding the plans by raising tax rates on corporations and those earning $400,000 or more and by spending $80 million more to enforce existing tax laws.

Republicans unanimously opposed the plans, drawing what Senate Minority Leader Mitch McConnell called a "red line" against any tax increases for wealthy Americans or businesses.

Instead, a group of 10 Republican and Democratic senators agreed on a plan to boost enforcement by half of Biden's initial request to help fund $567 billion in new transportation, broadband, and water system infrastructure spending. They proposed that the rest of the funding would come from sources that would include petroleum sales, wireless spectrum auctions, and unused 2020 relief funds.

The White House says $40 billion in spending to improve tax law enforcement would more than pay for itself, bringing in $140 billion. The nonpartisan Congressional Budget Office says it would bring in $103 billion over a decade. All of this is money already owed to the government under existing tax law.

"There's just a ton of money out there that we're not collecting," former IRS Commissioner Charles Rossotti told the Washington Post on Friday. "Why don't we collect some of that before we raise taxes on the people that are already paying?"

In recent years, the IRS has had to cut back on enforcing the law due to massive budget reductions. According to the Center on Budget and Policy Priorities, between 2010 and 2018, the budget for enforcement dropped 24%, the number of enforcement personnel drop 31%, and the audit rate for millionaires dropped 61%.

"The steep decline in audits for high-income individuals stemming from IRS underfunding means that low- and moderate-income households claiming the Earned Income Tax Credit (EITC) are now audited at roughly the same rate as the top 1 percent of filers," Chye-Ching Huang — then the senior director of economic policy with the Center — told the House Ways and Means Committee in February 2020.

An April report by the Center for American Progress noted that while recent official estimates suggest the United States loses about $600 billion a year in unpaid revenue "on April 13, 2021, IRS Commissioner Charles Rettig told Congress that he believes the United States is losing much more revenue—possibly $1 trillion or more every year."

Seth Hanlon, one of the report's authors, told The American Independent Foundation in May that smarter IRS enforcement would mean more compliance for the richest Americans — but fewer audits for everyone else.

"The whole point is it will let the IRS target audits in a smarter way, so honest people are gonna be less likely to be audited. People earning under $400,000 — as long as they're tax compliant — are gonna be less likely to be audited. The audit rate for those earning under $400,000 won't go up," he said.

Polling show strong popular support for making sure richer Americans pay their fair share. An April Monmouth University poll found 65% support for funding Biden's spending proposals with increased revenue from those making more than $400,000, compared to 33% opposition.

Published with permission of The American Independent Foundation.

We Need To Tax The Rich — Not Punish Them

Taxes are how we raise the money needed to run government. The rich have the wherewithal to bear most of those costs. These points are especially connected at a time when the rich have gotten so much richer and the government needs to do so much more.

But in making the case to raise taxes on the wealthy, it is counterproductive to portray such a scenario as a kind of just punishment for those who have accumulated wealth. Many on the left can't stop themselves from hurting their cause.

It's true that America's billionaires added $1 trillion to their pile during President Donald Trump's four years. But though the 2017 tax cuts mostly benefited the richest investors, a growing concentration of wealth has been going on for decades. So, raise taxes on these guys because they have the money and not because they are supposedly greedy or otherwise in need of moral teachings.

The pandemic did especially nice things for Silicon Valley companies that helped stay-at-home Americans move their shopping and working online. They didn't create the pandemic. They just happened to be in the right businesses when it hit.

Thus, there was no good reason for the Institute for Policy Studies and others to fulminate against "pandemic profiteers," a list heavy with tech entrepreneurs. The dictionary defines profiteer as one who makes "an excessive or unfair profit, especially illegally or in a black market."

What exactly made Zoom founder Eric Yuan one of the pandemic profiteers? Yuan had no idea when he created his videoconferencing service in 2011 that nine years later, economic shutdowns and social distancing would create a huge market for his invention and make him a billionaire several times over.

Liberals should bear in mind that many of the biggest donors to President Joe Biden's presidential campaign are the very billionaires on whom he wants to raise taxes. They include the top people at the likes of Facebook, Google and Apple. One of them, Google CEO Eric Schmidt, saw his net worth, now $17.4 billion, rise 61 percent in the Trump years.

Also note that several factors influence rich people's view of taxes. Some feel morally obligated to help support the society that has done so much for them. Others consider it very much in their interests to have good roads, ports and internet — things their taxes pay for.

The "fairness" argument does remain valid. The wealthiest Americans have received enormous tax breaks while having the ability, in many cases, to set their own number for taxable income. By contrast, the working stiffs see their taxes automatically deducted every week from their paychecks.

That makes Biden's plan to beef up the IRS to go after tycoons who chisel on their taxes long overdue. IRS Commissioner Charles Rettig has said that tax cheats deprive the government of something like $1 trillion a year.

Just don't blame the honest economic winners in the pandemic for the hardships of others. New York State Sen. Luis Sepulveda, who represents a working-class area of the Bronx, implied as much when he said, "It makes me angry because in the wealthiest city in the world, it's inexcusable to have such a high rate of unemployment in one area."

His largely immigrant constituents did not lose their service jobs because rich people lived elsewhere in the city. They lost them because a deadly virus shut down the businesses that employed them.

So, there's no need here to spin a morality tale about the evils of great wealth. The case for raising taxes on those who could most easily pay them is good. Let's stick to this more sophisticated argument and skip the reproach.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators webpage at www.creators.com.