Wasting and Wanting: Our Politicians and Our Needy

Wasting and Wanting: Our Politicians and Our Needy
 by: Walter "Bruno" Korschek

In this time of Thanksgiving and the year end holidays, I was quite annoyed by a recent Associated Press article. According to the article, the IRS has determined that it is losing out on about $380 million a year in income taxes when separated or divorced parents both claim their children as deductions on their tax forms, basically double counting the deductions they are entitled to and underpaying the IRS.

What was really annoying was the IRS spokesperson who said that while the tax agency had identified and quantified the non-payment of income taxes, they would do nothing to go after the abuse since it was not worth their time and resources. This kind of attitude raises any number of questions:

- When is a taxpayer abuse big enough for the IRS to get interested? $380 million sounds like a lot of money to me to go wanting, especially if you have done enough work to identify the abuse and quantify the abuse. Obviously, the IRS has already done some work on the issue.

- If the IRS acknowledges that it is missing out on $380 million on this just one, specific type of abuse, what other types of abuses are they not following up on? Fix a lot of $380 million abuses and before you know it you are saving some real money for the taxpayers.

- If the IRS does not have the time, resources, and desire to close down this abuse, why would they not hire a collection agency or company to do it for them in a risk free manner? Why would they not go to a collection specialist (or several) and offer a deal: we will give you 10% (or 15-20%) for every delinquent dollar you collect for this specific type of abuse. If the collection agency collects no money, they get no reward, Risk free, no money up front from the IRS to the collection specialists. I am sure there are plenty of capable collection agencies in the country that would salivate about the opportunity to collect on a multi-million bounty, especially since the IRS has done a lot of the identification work up front. Makes no sense to not follow in this manner - while the IRS would not get all $380 million, it would get something with very little risk vs. getting nothing.