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Sympathy for the Devil? Study shows IRS is in bad shape.

Taxpayers probably aren't too upset over a new report showing that the Internal Revenue Service is in bad shape. As reported by ProPublica after a lengthy investigation, years of budget cuts have left the IRS starved for staff and bleeding out experts who are capable of handling the most complex filings, like those submitted by corporations and the ultra wealthy.

Among the findings was the fact that the agency's staff of auditors dwindled to 9,150 last year, making 2017 the first year since 1953 that the IRS had fewer than 10,000. At that time, the economy was a seventh of it's current size. The auditing crew is down a third since 2010, the year before severe budget cuts starting hitting the IRS.

It's a double edged sword. Many Americans are saying "good riddance," but the staffing cuts are resulting in billions of dollars in lost government revenue- money that could of otherwise been used to fund the military, infrastructure, health care for veterans and the elderly, and any number of other programs and services that benefit Americans.

The news organization estimated the losses at $18 billion a year, but added that the true cost could easily run tens of billions of dollars higher.

Among the details of the story:

  • ​The IRS has drastically cut back on pursuing people who don't file tax returns. Investigations of so-called nonfilers plunged from 2.4 million in 2011 to 362,000 in 2017.

  • Similarly there's been a major scale-back in pursuing collections from people who have filed but haven't paid. There's a 10-year window for those collections. The IRS reported that $8.3 billion in obligations lapsed in 2017, compared with $482 million in 2010.

  • The IRS conducted 42 percent fewer audits in 2017 than in 2010. The total number was down 675,000.

  • Top-level examiners are leaving in droves, leaving the IRS less able to uncover problems in filings from more affluent tax filers.

  • On the flipside, years of pressure from Republicans have prompted the IRS to prioritize auditing of taxpayers eligible for the Earned Income Credit. 36 percent of the IRS's audits in 2017 were on returns filed by that group. The credit's recipients- whose annual income is typically around $20,000- are now examined at rates similar to those who make $500,000 to $1 million a year.

Here's a link to Propublica's report

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