Marc Caputo: IRS does bad job with bad laws



Congress vs. IRS: The do-littles vs. the do-wrongs.

With 79 percent of Americans disapproving of its performance, Congress finally found a government group that’s probably more disliked than the politicians: the tax bureaucrats.

The U.S. House's tax-agency inquests that began Thursday and run through this week are bad American government on display.

At the least, the hearings make clear that the IRS does a bad job enforcing bad law. And those laws are written by Congress.

And that’s not only the case when it comes to the way the IRS unfairly profiled and delayed the formation of 298 tea party and other groups applying for nonprofit political status.

Just last month, on tax-filing day, as many as 1.5 million American citizens learned that their tax IDs had been stolen.

It happens every year. Especially here. Nine of the top 10 metropolitan areas hardest hit by this crime are in Florida, from Miami-Fort Lauderdale (1) to Orlando-Kissimmee-Sanford (10).

Yet the IRS and Congress do relatively little to stop it.

Now tax ID fraud is a roaring $5.2 billion industry.

Both cases of IRS incompetence (or worse) deserve far more Congressional scrutiny, answers and, perhaps, action.

But review the numbers:

*1.5 million victims; the U.S. treasury deprived of $5.2 billion annually in tax-fraud cases

*298 unfairly targeted nonprofits; only 32 percent appeared ostensibly tea party-related; none denied nonprofit status.

One situation is the subject of multiple hearings, nationally watched drama and swift political action.

The other, by comparison, gets a few low-profile hearings, a handful of bills being filed annually that die and few let’s-get-to-the-bottom-of-this statements of outrage from Congress.

A major difference between the two cases?

Politics, the campaign-industrial-complex kind.

That appears to be Congress’s chief concern, the political game.

The tax-ID fraud cases likely involve just the average Joe who’s struggling to get ahead. He’s not forming political committees that masquerade as “social welfare” nonprofits. He’s not as likely to be marshaling money to help anyone in Congress.

The tea party cases involve many politically motivated groups who are registering as social-welfare 501(c)4s. That way, they don’t have to disclose donors.

Political nonprofit filings have increased 64 percent between 2009 and 2012. With scant disclosure, the nonprofits spent $133 million in 2010 and then $315 million in 2012 on elections, according to the open-government group, Center for Responsive Politics.

“The real IRS scandal is not the targeting of tea party groups (though that is a scandal); it's the shocking lack of much scrutiny at all of the vast majority of politically active nonprofits that poured hundreds of millions of dollars into our elections over the last four years,” the center wrote on its blog.

The center is partly right.

The real scandal is also that common-sense solutions can’t pass a Congress in thrall to special interests and hidden money.

The real scandal is also the fact that the federal government’s executive agencies under President Obama are just as opaque, arrogant and citizen-unfriendly as ever – despite his pledge to have “smart, effective government” and one that’s more-transparent than ever.

"We provided horrible customer service here. I will admit that," outgoing IRS chief Steve Miller told a House budget committee at its Friday hearing. "We did horrible customer service."

This was one of the most honest-sounding statements from Miller.

It was false.

The IRS continues to provide horrible customer service.

It's clear to anyone who's had to lose a day of work by going to Miami's Claude Pepper Federal Building just to file an income tax form because someone stole your tax ID.

Just to get into the IRS office, you might notice that security personnel (7) outnumber the IRS officials (6) who can help. The room seats about 50 and it’s a safe bet you’ll be 60th in line. So you sit on the floor and wait for hours. Then you wait for six months to a year to get a tax refund.

You can't correspond with anyone by email because the IRS doesn't use email for security reasons, it says. You can seldom find anyone to answer the phone. When you get someone, you're not told who got your ID or how. You're not told why you can't just get your money now, considering the fact that the thief was able to get it instantly and anonymously by using a laptop computer and few-questions-asked prepaid debit cards (which make the crime easy to commit and tough to stop).

In fairness to Congress, individual members’ offices (particularly U.S. Senators) can help a taxpayer get his money back far more quickly. Still, the wait is needlessly long.

Why won’t Congress limit the issuance of tax-refunds on prepaid debit cards? Visa won’t like it much. How about having the IRS send taxpayers a form estimating how much taxes each person owes (rather than they other way around)? Turbo-Tax won’t like that.

And, in the case of changing the tax code, why doesn’t Congress require political nonprofits to disclose their donors? The secret-money groups and don’t like that, either.

So what we get are recriminations, political shenanigans and deception.

Too bad the IRS doesn't seem as zealous to catch tax-fraudsters as it was with the 298 nonprofit groups, of whom 170 received intrusive and lengthy delay-inducing questionnaires. Too bad the IRS didn't appear to do the same with the two dark-money nonprofit heavy hitters in national politics: the conservative Crossroads GPS and the liberal Priorities USA.

Last year, I asked the IRS a series of simple questions about the incidence and costs of tax ID fraud.

I seldom got straight answers and was instead pointed to testimony on the matter given by… Miller, who boasted how much fraud the IRS claimed it stopped.

Two months later, the inspector general issued a report estimating the fraud at $5.2 billion in 2010 and as much as $21 billion over five years.

That’s how you get straight answers out of the IRS. You wait for the inspector general to do it.

Congress found that out Friday when members realized Miller didn’t disclose to them that the IRS used “be on the lookout” buzzwords to target nonprofits: “tea party,” “9/12,” or “Patriot.’ It’s unclear how many of those groups were liberal.

But if compelling evidence shows the IRS acted out of purely political motivations to help Obama or Democrats, it would be a monumental scandal that deserves more coverage than tax fraud. That's still an "if" right now.

In the short term, Wisconsin Rep. Paul Ryan got Miller to acknowledge the IRS didn’t use liberal or progressive-sounding BOLO terms.

As for getting Miller to admit he misled Congress, it wasn’t so easy.

“I did not mislead the committee. I stand by my answer then. I stand by my answer now,” Miller said. “There is no political motivation.”

Members of the committee were clearly and rightly unsatisfied with the answers.

Just wait till they get their tax IDs stolen.

They might realize they’re part of the problem..

Read more Marc Caputo stories from the Miami Herald

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