Don’t draft me into working for ICE or the IRS.
While I understand that Immigration and Custom Enforcement is a necessary evil in a nation that still attracts the huddled masses seeking to be free of the wrecked economies and ruthless predators of the world, I don’t want my modest tax practice to be conscripted into enforcing bad law.
Nor do I want to have a responsibility for cross-examining clients who I trust are presenting me with bonafide information and documents about their citizenship, income and eligibility for education benefits. If the IRS wants to examine a return, that’s fine, just don’t be making tax preparers like myself operate under a presumption of guilt standard.
But Congress doesn’t want more enforcement — big donors are a fan of minimal enforcement. Let the tax preparers enforce the requirements on little people.
That’s the effect of the “Paid Preparer’s Due Diligence Checklist (Form 8867).” It requires your tax preparer to “make reasonable inquiries to determine the correct, complete and consistent information” qualifying him/her for education credits, child credits or head of household status and keep a record of the results, the questions asked and the client’s responses. Papers, please!
Asking questions is part of the job and I, like all the tax pros I know this side of the White House, ask questions and look at documents to ascertain our client’s tax status. That’s the job. We can’t and won’t file a fake news return.
But going beyond that professional ethic, the IRS requires that we be involuntary witnesses/agents on behalf of the government, custodians creating a written record of the questions we asked, the answers we got, the documents we were shown and a list of documents that were relied upon in preparing the return. The evidence is to be kept for three years, presumably to be used against taxpayers and the preparers who don’t ask enough of the right questions.
Lawyers being lawyers, it’s always possible to find a weakness in some attorney’s line of questioning: you could have asked this, you shouldn’t have asked that. The examination of O.J. Simpson by the prosecution is still controversial decades later.
Like so many other beleaguered and revenue-starved institutions, the IRS has sought to compensate for its inability to do normal functions, like audits and outreach, by shifting the burden to consumers and their representatives. People that a preparer may have known for 20 or more years are now required to show their driver’s licenses, birth certificates or other proof of citizenship for themselves and their children, the first step in qualifying for education credits or head of household status. And that’s only the beginning of the “due diligence” requirement.
The credits themselves are small, at most amounting to four-figure benefits for a single parent or family. While I would never acquiesce to filing a fake return, I am struck by the Draconian efforts to enforce these provisions while half a trillion (as in $500,000,000) leaks away each year simply because understaffing allows the rest of the rules to go unenforced and the sophisticated big filers to skate. Small leaks are being focused on while the big money shuffles about through complex overseas shelters that cost the government trillions.
Thanks to Congressional demagoguery, much of it emanating from the “Freedom Caucus,” and general anti-tax rhetoric, the IRS continues to lay off revenue agents who are charged with going after the multi-millionaires who don’t pay. Each revenue agent returns about $400,000 in tax collections at a cost of about one third of the revenue recovered.
It’s kind of like imposing big fines for parking while letting car thieves off the hook because you don’t want to hire enough cops to do the job.
And now, the Congress is considering another way to increase the burden on small taxpayers: a bipartisan bill that would prohibit the IRS from deploying free software for tax preparation. That’s right, Democrats are in it with the GOP to serve the interests of Intuit-owned TurboTax and other software vendors who don’t want taxpayers to have easy access to tax preparation software. Are you shocked to learn that Intuit contributed $6.8 million to congressional candidates?
Difficulty and complexity are the allies of software vendors. At least 46 other countries have free tax filing — in many of them, your tax return is sent to you already filled out since, for most of us, all the information is already known. The taxpayer in those systems can do a return if the government gets it wrong or new circumstances arise.
Even Colorado has free state tax return filing online athttps://www.colorado.gov/revenueonline/_/#2. Even Intuit offers free software for small filers, but they don’t make it well known and there are a lot of complaints about it.
So here we are at tax day, and Congress continues to make things more difficult for low-income people, easier for high-end cheaters and passes crap like the “Tax Cuts and Jobs Act” that can be summarized in only 800 pages.
Same stuff, different year. Only death remains as certain as tax inequities.