IRS tax attorneys tracking developments regarding the IRS have learned the Agency is currently planning to add literally thousands of new employees. Not since withholding taxes were first introduced during World War II has the IRS witnessed such a massive staffing expansion. The projected growth is arguably necessary to help enforce new tax mandates and penalties included within Obama Care. In fact, IRS tax lawyers note a new analysis by the Joint Economic Committee and the House Ways & Means Committee staff estimates up to 6,500 new IRS personnel will be needed to collect, examine and audit new tax information mandated on families and small businesses as a result of Obama’s healthcare legislation.
Despite President Obama’s pledge not to add new tax burdens onto the middle class, many IRS tax lawyers report there are literally scores of new federal mandates and approximately 21 new different tax increases totaling $400 billion under Obama Care. Perhaps it’s a sign of the times, but many of those increases have been hidden from voters, according to several IRS tax attorneys and many financial experts.
As most Americans have come to expect these days, the political fallout from the opposition has been deafening. Congressman Brady, a top House Republican and member of the Joint Economic Committee has said that “when most people think of health care reform they think of more doctors’ exams, not more IRS exams.” Congressman Brady went on to say “isn’t the federal government already intruding enough into our lives? We need thousands of new doctors and nurses in America, not thousands more IRS agents.”
Significantly, many IRS tax lawyers have expressed concern that the IRS’s projected staff expansion includes an increased number of criminal investigators whose job will be to arguably “make cases” whenever possible in order to increase financial penalties. In addition to more complicated tax returns, families and small businesses will be forced to reveal further tax information to the IRS, provide proof of government approved health care and submit detailed sales information to comply with new excise taxes. Whether these new requirements will cause a higher number of unfiled tax returns remains the subject of some speculation.
Unfortunately, several IRS tax attorneys along with the Centre for American Progress have expressed concerns that the IRS’s structure of using private agencies to collect “debts” encourages abuse. Under the current program, 12 private collection agencies are awarded as much as 25 cents of every dollar they collect, in addition to a $100 bonus for every account they close. The IRS strategy of paying private debt collectors a 25% commission to collect back taxes originally met with bipartisan resistance from Congress. Members of Congress claimed that the proposal jeopardized the rights and privacy of American taxpayers.
According to political consultant Mike Baker, the very nature of the program incentivizes collectors to push the limits of legality to extract more revenue from their intended targets. As part of the IRS Restructuring and Reform Act of 1998, Congress, fearing overly aggressive collection practices, explicitly prohibited the IRS from compensating its own collectors based on the amount of money they collect. “If Congress believes that incentive-based pay will cause official IRS collectors to cross the line, why would they think private collectors would behave any differently?” asked Baker.
These latest developments cause many IRS tax lawyers to question how much authority the private agencies will be given by the Agency to use IRS levies, wage garnishment and IRS liens to collect back taxes owing. A number of IRS tax attorneys have commented that the IRS’s plan for using these private collection agencies to collect back taxes is not well documented and there remain several important unanswered questions about how the IRS will manage these private collection vendors.
Ultimately, while many Americans applaud the President’s efforts at attempting to craft a national healthcare plan, “the devil is always in the details.” Literally thousands of IRS tax lawyers across the country are still waiting for details on what may only be described as one of the largest tax increases in history.
Mike Baker summed it up for many Americans when he said “It’s a sad situation when the President and Commander in Chief is drastically cutting defense spending including reducing the size of the military while at the same time hiring more tax collectors to squeeze every dime — the dime Obama said would never be levied against Americans — out of taxpayers.”
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