Incompetence at the IRS [Editorial]

Our view: When the agency that forces elaborate bookkeeping on Americans appears overwhelmed by its own internal records, taxpayers have a right to be angry

June 26, 2014

Take a minute and Google the term "Internal Revenue Service" or "IRS," and you will find no shortage of famous quotes from people who are fearful of it. The federal agency has been compared to the Gestapo, the Mafia and the Lord Almighty. Such is the power of the tax collector to strike terror into the hearts of the audited.

But recent testimony before the House Oversight and Government Reform Committee has conjured a new image for the IRS — clueless, bureaucratic, disorganized and technologically incompetent. What started as a Republican inquisition into former IRS employee Lois Lerner and the treatment of conservative non-profit organizations seeking tax-exempt status has morphed into something less nefarious and more pathetic — turns out the agency that requires you keep records for years can't keep theirs for more than about six months.

To any taxpayer who is paying even half-attention to the proceedings, it's infuriating. The IRS wants receipts for everything, elaborate forms properly filled out and for you to hold onto all those records for quite a long time. Yet the agency's inability to produce Ms. Lerner's emails to House investigators (in part because of a computer hard-drive failure in 2011) suggests at the least a double-standard but more likely a deeply dysfunctional organization.

Naturally, Chairman Darrell Issa and other Republicans on the committee have had a field day with this, straining to show higher levels of outrage and anger. Too bad it took a political witch hunt — aimed at the possibility of some level of White House involvement, which now appears to be nil — for Congress to actually show some oversight. Why, for instance, was it ever regarded as acceptable that such a critical federal agency could have such a woeful computer system with such a modest email capability?

Forget potential cover-ups — there's been no evidence of any broad conspiracy — the committee ought to be focused on how the IRS could be allowed to maintain such low standards for technology and was never held accountable. Personal email was never regarded as an official record for anyone employed by the agency, let alone Ms. Lerner. And IRS officials were slow to notify Congress that Ms. Lerner's emails were irretrievable.

Democrats are certain to counter that some of the dysfunction within the agency is because of a deliberate effort by conservatives to "starve" the IRS. The agency took quite a hit in 2011 with a $600 million sequester cut, and there's plenty of evidence those cutbacks have reduced its ability to enforce tax laws — or tackle new responsibilities like enforcing the health insurance mandate imposed by the Affordable Care Act.

President Barack Obama has proposed funding the IRS at 2010 levels, but a House appropriations subcommittee has instead sought to cut it back further — to roughly 18 percent below 2010 levels when inflation is taken into account, according to the Center on Budget and Policy Priorities, a non-profit that studies the impact of budget and tax decisions on low-income families. The agency's staff has been cut by 11 percent over that same period, and one of the worst hit areas has been training, where the budget has been reduced by 87 percent, the CBPP reports. Such reductions offer a dubious benefit to taxpayers and widen the deficit, as studies have shown every additional dollar spent on IRS enforcement efforts translates into $4 in unpaid taxes collected.

If Republicans really want to make political hay over the Internal Revenue Service, they ought to give IRS Commissioner John Koskinen, a management expert who has been on the job less than a year, every tool he needs (including a sufficient budget) to correct these problems and then evaluate his performance. It's fine to yell at him for not informing them about Ms. Lerner's missing emails earlier, but one hopes that the commissioner has bigger fish to fry — like holding the agency to the same record-keeping standards that it holds taxpayers.

Merely vilifying the IRS, railing against Mr. Koskinen or implying massive scheming and coverups isn't really oversight. Congressional investigators ought to be pointing at least one of their fingers at themselves and their failure to overhaul an increasingly complicated federal tax code — or their efforts to starve the IRS into paralysis. The Internal Revenue Service may be incompetent and hypocritical, but it's not the only powerful organization in Washington that looks that way these days.


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