|Before the furlough; IRS National Taxpayer Advocate Nina Olson testifying to Congress in August. (Image credit: Getty Images via @daylife)|
Can't Stop The Machine: During Shutdown, IRS Computers Still Churn Out Tax Liens, Levies And BillsAt 1 A.M. Tuesday, just an hour after the budget standoff forced the partial shutdown of the federal government , Forbes contributor Kelly Phillips Erb (aka Taxgirl) delivered two pieces of bad news to taxpayers: you still have to pay any taxes due, and if you have problems, tough luck, the Internal Revenue won’t be answering its phones. (Yes, you cynics, that is news. Even during the busy tax return filing season more than two thirds of callers do get through to a human being at the IRS, although they have to hold for an average of 15 minutes first.)
It now turns out there is additional bad news for taxpayers, particularly those with IRS problems, known or unknown. Taxgirl, after studying the IRS’ preliminary shutdown plan, reported that National Taxpayer Advocate Nina Olson and 44 of her employees would continue working. But in the IRS’ final shutdown plan, released Monday afternoon, not a single employee dedicated to protecting taxpayer rights was included in the 8,824 (out of workforce of 94,516 ) kept on the job.
|Janet Novack, Forbes Staff, I write from D.C. about tax and retirement policy and planning, 10/04/2013|
So what’s the problem with the outspoken advocate getting in a little extra quality time with her cats? Didn’t the IRS also halt its audit and collections activities for the duration of the shutdown? Not exactly.
According to Olson, while thousands of human auditors and collectors were indeed furloughed, the IRS’ fearsome computers, which crank out millions of automated tax assessments, liens and levies a year, are still humming away—without any humans available to mitigate potential harm. That fact was conveniently buried in the IRS plan, covered by a single line reading: “Continuing the IRS’ computer operations to prevent the loss of data. ” (More on that later.)
This isn’t to pick on the IRS, which has taken a lot of grief recently (some justified, some not) from the Tea Party crowd. All sorts of curious and contradictory decisions were made as federal departments and agencies furloughed 800,000 of the 2 million plus civilian federal workers. (Uniformed members of the military were all kept on and will be paid; most civilian workers still on the job won’t be paid until Congress passes fiscal 2014 appropriations.)
The 130 year old Antideficiency Act –as interpreted by recent Office of Management & Budget guidance and 1980s and 1990s opinions from the Department of Justice– provides that agencies can’t commit any money that hasn’t yet been appropriated by Congress (meaning they can’t allow employees to work now and get paid later), except in certain circumstances. Those circumstances include when a statute or legal requirement authorizes such spending (think Social Security benefits); where a function is needed to continue an otherwise authorized program (think the people processing Social Security checks); where the function is necessary to carry out the President’s constitutional duties (think the military and foreign affairs) or where the spending is necessary to protect against an imminent threat to the safety of human life or the protection of property.
What’s an imminent threat? “OMB has tolerated, if not encouraged widely divergent standards in different agencies. There’s absolutely no consistency ’’ answers Charles Tiefer, a professor at the University of Baltimore School of Law, who studied the Antideficiency Act as a lawyer for the House of Representatives before the last government shutdown – the 1995-1996 standoff between President Bill Clinton and Speaker of the House Newt Gingrich (R-Ga.)
So, for example, the U.S. Department of Agriculture designated 8,005 out of its 8,387 field employees involved in meat, poultry and egg inspections as necessary to ensure the safety of human life. But the Department of Health & Human Services decided the Food & Drug Administration would have to stop most of its routine food safety inspections and that the Center for Disease Control staffers monitoring this year’s flu season weren’t necessary to protect human life. The Office of the Director of National Intelligence reports that more than 70% of the civilian workers at the spy agencies it oversees have been sent home. Yet the FBI deemed 85% of its workforce exempt from furlough. (You can find links to most agencies’ shutdown plans here, although not to those of the intelligence agencies. Maybe Edward Snowden has them.)
Tiefer is critical of OMB for interpreting the protection of property too narrowly and with too little regard to the nature of today’s information based economy. “Their understanding of property at risk is a 20th century or a 19th century understanding, from a time when the government had forts to defend settlers,’’ he says. “I would describe their understanding of today’s electronic communication as half primitive.”
The Bureau of Labor Statistics, the Census Bureau and the Bureau of Economic Affairs have all stopped issuing crucial economic reports.
And as Samantha Sharf reported here, OMB Director Sylvia Burwell told agencies in a Sept. 17th memo that they’d have to shut down web sites not serving an excepted function, even if those sites provided valuable data to the public, and even if it would cost more money to restart them later than to keep them running. (Note that according to Tiefer, the government can keep workers on to protect private as well as public property.)
Which brings us back to the IRS. Burwell’s memo said the IRS could keep its web site up and functioning to allow for tax filings and tax collection, which is an activity that continues without annual appropriations. What about the IRS’ continuation of autopilot enforcement? Burwell’s memo doesn’t directly address it. But the IRS’ rationale is that if it shut down and then restarted its mainframes, it would lose taxpayer data–i.e. government property.
Keeping the computers working is a big deal given how much the IRS now relies on them for enforcement. In fiscal 2012, according to he IRS’ Data Book, it placed more than one million liens on taxpayer property through its automated system and served a total of 3.7 million levies on third parties through automated and field (i.e. human) efforts. When a levy is placed on a taxpayer’s bank account, funds are frozen and he or she has 21 days to call the IRS and get the levy released before the bank turns the cash over to feds. Olson argues that issuing automated levies when there’s no one to appeal them to could endanger taxpayers’ lives, as well as their property. “If someone needs their money released to got medicine or pay for surgery, that could be life threatening,’’ she says.
A problem just for tax deadbeats? Nope. Even taxpayers who have never had a past due balance with the IRS need to pay attention. The IRS sends out more than 2 million entirely automated “math error” notices a year telling taxpayers they made an arithmetic error, omitted a kid’s Social Security number, claimed a credit incorrectly, or otherwise did something the IRS considers a mistake. These computer generated notices are “summary assessments”—meaning the taxpayer owes the extra money unless he contacts the IRS within 60 days to clear up the issue and to preserve his appeal rights. Good luck with that. No one is answering the phone or reading the mail at the agency.
You say you’re careful with your math? Wait—there’s more. In 2012, the IRS sent out 4.5 million “automated underreporter” notices (called CP-2000 letters) seeking $7 billion in additional tax because taxpayers allegedly left off their returns some bit of income reported to the IRS on a 1099, W-2 or other form. (Often, these notices are plain wrong, perhaps because the income was reflected somewhere else in the return.) Olson says she doesn’t think new notices will be going out during the furloughs. But taxpayers who have received CP-2000s recently have deadlines they must respond by—if they don’t respond (or there’s no one at the IRS to enter in the computer the fact that they called the IRS and pointed out the mistake), the system automatically sends them a final notice of deficiency, which means they may have to waste time and money filing a suit in U.S. Tax Court to clean up the mess. As for Tax Court, it is closed too, but warns taxpayers they still have to file their suits within 90 days of receiving the final IRS notice of deficiency. Get it postmarked, the court says. We’ll open it whenever.
Olson, for her part, is using her free time to write an appeal of her furlough. Among her arguments: that the 1998 Taxpayer Bill of Rights, which created her job and gave it some independence, creates a statutory authorization for what she does, outside of annual appropriations. “Congress created my office to make sure the tax collection activities went forward properly,” she says. “If we’re going to have tax collections (during the shutdown), we have to make sure the tax collections are legal.”
[SIDEBAR: INTERNAL REVENUE SERVICE (IRS) IS A RACKET AND IT IS THE FURTHEST IDEA FROM OUR U.S. CONSTITUTION'S IDEA OF TAXES. PLEASE THERE IS DIGITAL 'MONEY' AND THIS INDEED NEEDS TO BE KNOWN BY ALL AND RECOMPUTED INTO THE MACHINE PROPERLY!
THANK THESE TWO ENLIGHTENED PEOPLE FOR THEIR WORK! EMAIL THE AUTHOR, THANK YOU AND THANK HER FOR BEING ON TOP OF THE REAL CRIME IN THE SHUT-DOWN, WHERE ARE THE CRIMINALS SUCH AS THE WALL STREET THUGS OF INSANE DEGREES THAT CAN'T BE MEASURED. NOT THE COMBO STALIN - HITLER MATCH WHAT AMERICA HAS DONE TO EARTH GLOBAL.]