What the IRS critics in Congress don't want you to know

Also, Iowa's shrinking economy

Photo by Jon Tyson on Unsplash

Strangely, I like to write about the IRS.

There is no federal agency with a bigger target on its back; yet my own interactions with the IRS have been positive, and in my three decades covering government at the local, state and national levels, I have generally found people in the bureaucracy to be thoughtful, conscientious and apolitical.

In short, it’s always struck me that the IRS was getting a bad rap.

By nature, the tax collector is unpopular. I get that. But it’s only gotten worse as budget cuts, largely at the hands of congressional Republicans, have damaged the agency’s ability to do its job. The cuts, which amounted to about 20% in real terms over 2010 levels, greatly diminished the IRS’s customer service and limited its ability to go after rich tax cheats.

In 2021, the Biden administration and congressional Democrats got tired of this and allocated an additional $80 billion over 10 years to try to right the ship.

The idea was to improve service, but also to increase audits on the wealthy, who have over the years come up with increasingly complex tax-dodging schemes that the IRS hasn’t been able to rein in.

Most recently, the IRS began targeting a loophole that the government says the top 1% of filers exploit, contributing to the $160 billion in taxes they avoid paying each and every year.

Republicans in Congress squealed about the new IRS funding. They lied and told you a better-funded IRS was coming after the middle class. Politicians like Joni Ernst tried to distract you by targeting low level IRS workers, all the while ignoring the tax cheats getting away with billions of dollars of your money.

If they’d been successful—and they still may be—those rich tax cheats won’t have to worry. They will get to keep dodging their taxes and no doubt they’ll kick back some of that money to their congressional benefactors. In the meantime, the tax burden will fall ever more on the rest of us.

So, I imagine IRS critics weren’t happy with parts of the National Taxpayer Advocate’s objectives report to Congress for Fiscal Year 2025. The NTA’s office, a part of the IRS, serves as a watchdog and reports its findings to Congress.

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The agency’s latest report, submitted by Erin Collins, recalled the depths of the pandemic when the closure of facilities led to a backlog of 35 million paper returns and the level of telephone service fell to all-time lows. But it also recognized the changes that have occurred over the past four years, when the agency has worked to deal with “hundreds of millions” of refunds, stimulus payments and other benefits authorized by Congress.

Collins writes:

“Did the IRS do a perfect job? No. But I believe the IRS has turned the corner and with additional multiyear funding provided by the Inflation Reduction Act, particularly for Taxpayer Services and information technology (IT) modernization, I am bullish that the taxpayer experience will continue to improve and move onward and upward.”

“For most taxpayers,” she added, “the filing season is the only time they interact with the IRS. Delivering a successful filing season is therefore the agency’s highest priority. The IRS largely succeeded in 2024.” The agency’s taxpayer service, she said, had been “abysmal” for several years but has been restored to pre-pandemic levels in most, but not all areas.

“This is excellent news for most taxpayers,” she wrote.

If you haven’t seen this reported in the media anywhere, that’s a shame. It deserves notice.

To be sure, Collins’ report pointed out several problems.

Among the most troubling is the increase in time that it takes for the IRS to resolve the growing number of identity theft issues that have slowed refunds. In one category of theft identity, Collins said that as of April, it was taking 22 months to resolve these cases, which number approximately 500,000. That is up from the 19 months she cited in her 2023 report. To make matter worse, most of those cases that were resolved involved people who were at or below 250% of the federal poverty line. She called the delay “unconscionable.”

The report also said that of the 40 million calls received by the IRS, just 12.4 million were answered by an IRS employee. Of the roughly 2 million calls seeking the agency’s automated collection system after getting a collection notice, only 19% were answered by an employee.

Improvements clearly are needed. But it seems unlikely this will happen if the IRS’s budget is cut to its pre-Biden levels. And that is exactly what congressional Republicans want to do. It would be wise to remember this come November.

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I am approaching the two-year anniversary of Along the Mississippi, and it has invigorated me and given my long career in Iowa journalism a new life. If you value this work, please consider upgrading your subscription to paid. Contributions help to make this newsletter possible. Thanks for your consideration.

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Iowa’s shrinking economy

Media in this state have been reporting the results of the latest quarterly survey by the Iowa Business Council. The council says its index for the second quarter of 2024 stood at 55.26. That’s still in positive territory, but it is down by 7.9 points from the previous quarter.

Workforce is still the top concern among IBC members, who include some of the largest employers in the state. The business climate, including supply chain issues, infrastructure, and federal regulation, also are primary worries, along with inflation and the domestic economy.

Iowa’s economy has not been doing well lately.

As the Des Moines Register reported, “only three other states—Kansas and North and South Dakota—had steeper declines in gross state product in the first quarter of 2024 than Iowa’s 3.3% drop over the previous quarter.”

The federal Bureau of Economic Analysis issued its quarterly report on state economies nearly two weeks ago, and Iowa got clobbered. Even Illinois, which conservatives in this state love to lampoon, fared better than Iowa.

A year ago, Iowa’s gross state product had grown 5.2% from the previous quarter. This year, it’s down 3.3%.

We hear from the governor and legislative Republicans all the time how fantastic things are under their leadership. But at least as far as the economy goes, that doesn’t seem to be the case right now. And the IBC survey showed workforce problems continue to persist, even as GOP leadership has gone out of its way to push an agenda that ignores the real issues.

We all know the country has challenges with high prices, and Republican leaders in this state are quick to try to shift the blame to President Joe Biden. But these figures ought to make voters ask: Even with the headwinds, why were 39 other states able to expand their economies, but not Iowa?

Will he, or won’t he? The Biden debate fallout continues

Democrats are barreling toward their second week of discussion over whether Biden should remain on the ticket.

I said the day after the presidential debate there was little chance Biden would step aside, and if you heard him on MSNBC’s “Morning Joe” program Monday morning, he sounds more resolute than ever.

If you didn’t get to hear it, let’s just say he was more State of the Union Joe than Debate Joe.

Still, this hasn’t quelled the worries and the talk of a replacement, nor the media questions over his fitness. Which is probably why you’ve hardly seen much of Donald Trump lately. I mean, why get in the way when the other party is slowly strangling itself?

It’s hard to tell how long this debate will go on. To me, this looks like the competitive primary the Democratic Party never really had—but with two differences: 1. Biden doesn’t have an opponent. 2. It’s happening four months before the general election, rather than the year before.

Obviously, this is not ideal from the Democrats’ standpoint. I heard an analyst say the other day that, because both Biden and Trump are so unpopular, whoever is the topic of the national conversation is losing ground.

At the moment, that means Biden.

Our podcast

The Iowa Writers’ Collaborative’s politics podcast is kicking off with a taping this week.

I’ll let you know when the podcast is posted. We have a lot of experience on the panel, so I think it will be worth your time.

As always, I thank you for your support.

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