Want to Avoid Taxes? Become President and Fire the Auditors!

Posted on 26. Jul, 2006 by in News, Taxes

irs_audit.jpgI try not to blog about politics too much here on BeancounterBlog- for many reasons actually. First and foremost I get too worked up about politics and believe that the blog might easily slip into a rut of political tirades about every current political issue that is bothering me. However, sometimes politics influences the way we deal with money – and there is no arena that is more heavily influenced by politics than taxes.

The New York Times is reporting that the Bush Administration plans to cut the jobs of 157 of the IRS’s 345 estate tax lawyers, plus 17 support personnel, in less than 70 days. Why? That’s a great question that any informed voter or taxpayer would want to know. After all, you and I (the “working class” of America) might want to know why the wealthy portion of the population (the portion who really care about the impact of estate taxes) are no longer being audited. There’s no easy answer to this question, and the answer depends on whom you ask.

According to the IRS deputy commissioner, Kevin Brown, the IRS ordered the staff cuts because far fewer people were obliged to pay estate taxes under President Bush’s legislation which reduced the number of Americans who are subject to the estate tax.

But if you ask the six I.R.S. estate tax lawyers whose jobs are likely to be eliminated, they will tell you a different story. According to them, the cuts are just the latest moves behind the scenes at the IRS to shield people with political connections and complex tax-avoidance devices from thorough audits.

This seems a little odd seeing that estate tax lawyers are the most productive tax law enforcement personnel at the IRS – finding an overage of $2,200 of unpaid taxes each hour they work. The six lawyers who received the pink slips stated that “clear evidence of fraud was pursued vigorously by the agency, but that when audits showed the use of complicated schemes to understate the value of assets, the I.R.S. had become increasingly reluctant to pursue cases.”

Why is the government backing off of complicated tax schemes? This one’s easy – lack of qualified personnel.

When auditing complex tax returns you’re pitting an IRS tax lawyer who is on government salary with highly paid accountants from the world’s largest accounting firms. Who do you think is going to win? The IRS should be paying much higher salaries to attract accountants from other firms to audit the tax work of their peers.

But you don’t even have to be a big-shot accountant to know more than the IRS. When the IRS audited my father they claimed he owed them money for not filling out his returns correctly. After a little research my father wrote the IRS back stating that he had crunched the numbers again… only to find the IRS owed him money!

I’ve always been of the opinion that the enforcer should know the law better than anyone else – and this applies to auditors as well. If auditors don’t know the ins and outs of taxes better than the people trying to avoid them, you might as well chalk up another point for the well-paid accountants.

One Response to “Want to Avoid Taxes? Become President and Fire the Auditors!”

  1. Tim MMF

    26. Jul, 2006

    It shouldn’t come as a surprise that the Bush Administration would do that.

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