Sage Investment Club

by James Bovard

The Internal Revenue Service is perhaps the ultimate sacred cow in Washington. It is the “goose that lays the golden eggs” for the city’s power and prestige, delivering trillions of dollars to politicians to work miracles (or at least get reelected). When criticism erupted over the 87,000 new revenooers to be hired thanks to Biden’s Inflation Reduction Act, Washington’s Defenders of Correct Thinking rushed to the ramparts.The media goes to bat for the IRS
Washington Post columnist Dana Milbank, in an article headlined “Another Republican Lie is Born,” caterwauled that Republicans’ anti-IRS rhetoric is one of the “hallmarks of authoritarianism” and justified Biden’s condemnation of Republicans for “semi-fascism.” Post columnist Joe Davidson fretted that “attacks on the IRS” are part of Republican efforts “delegitimatizing government.” Another Post article warned that Republicans are “putting federal workers in danger” by “repeating baseless claims” about the IRS. A Post purported humor columnist did a piece headlined, “Farewell, Mother I am off to join the IRS army!” sneering at baseless fears about Biden weaponizing IRS agents.
“Baseless?” At the time the Inflation Reduction Act passed, the IRS was advertising for “special agents” who must “carry a firearm and be willing to use deadly force, if necessary” during “execution of search warrants, and other dangerous assignments.” The IRS had recently made massive purchases of new firearms and ammunition. The job notice declared: “No matter what the source, all income earned, both legal and illegal, has the potential of becoming involved in crimes which fall within the investigative jurisdiction of the IRS Criminal Investigation.”
Rep. Thomas Massie (R-Ky.) observed, “The IRS has never pointed a gun at a billionaire or his employees, so why does the IRS need 87,000 new agents, AR-15s, and 5 million rounds of ammunition? They’re not gunning for billionaires or their bank accounts.”
Shock brigades of Fact Checkers rushed to rescue the IRS’s reputation. Reuters announced that it is “false” that the IRS “is hiring 87,000 new armed IRS agents” because only a couple thousand IRS agents carry firearms. Similarly, an Associated Press “fact-checking” report derided as “false” the allegation that “all new employees that the IRS intends to hire … will be required to carry a firearm and use deadly force if necessary.” Since not all IRS new hires will be heavily armed, it is “misleading” to pretend that any danger exists.
Controversy also swirled about a film clip of an IRS recruiting program on college campuses. A clip from Utah shows students putting on flak jackets and readying toy guns and handcuffs for “taking down a landscape business owner who failed to properly report how he paid for his vehicles.” “First they came for the tulip bulbs….”
Associated Press Fact Checkers complained that the video is “being misrepresented to falsely claim it shows a new force of IRS special agents being trained as part of agency expansion efforts.” But it is a recruiting video for college students that shows how they will be trained and use their power as IRS agents.
Since not all IRS employees will be carrying Glocks or AR-15s, Americans should presume that every IRS employee is a well-meaning civil servant waiting to assist people tormented by convoluted IRS instruction booklets. And it won’t matter if the new hires abuse their power. An IRS “enforcement operation” won’t count as a raid unless agents shoot at least three people. And then it still won’t matter because anyone who is gunned down will be labeled a suspected tax scofflaw. Regardless, Americans should presume that the IRS is actually less aggressive than a Girl Scout cookie-selling campaign.
There were plenty of “Iron Fist Bellwethers” last year when Biden first announced plans to vastly expand the IRS. The Washington Post reported that “the single biggest source of new revenue in the plan comes from dramatically expanding the clout of the nation’s tax agency.” Slate reported, “Biden wants to fund a massive upgrade to the American welfare state by making the IRS great at audits again.” And there aren’t that many billionaires to go around to finance all the schemes that Team Biden favors.
While Fact Checkers zealously squelch nitwit comments from random dudes on Facebook, they are ignoring far bigger howlers from the White House. On August 19, the White House promised that “No one making under $400,000 per year will pay a penny more in taxes” thanks to the Inflation Reduction Act. Team Biden effectively insists that “those who have nothing (or at least no income) to hide have nothing to fear.” According to Sen. Ben Cardin (D-Md.), “If you’re not cheating on your taxes, you have nothing to worry about.” But the Joint Committee on Taxation estimated that “between 78% and 90% of the estimated additional $200 billion the IRS will collect [over the next decade] will come from small businesses making less than $200,000 annually,” the New York Post reported.
Biden and his media allies pretend that the federal tax code is as lucid as the Ten Commandments and that depravity and/or iniquity are the only reasons people underpay taxes. But Americans are confounded by the four million words in the tax code and by the IRS’s failure to answer more than 90 percent of phone calls from taxpayers. Did the IRS need an $80 billion bribe to answer the phones? Actually, only 4 percent of the new $80 billion in funding will be devoted to customer service while 58 percent will go to turbo-charge enforcement.
IRS a law unto itself
Biden is acquiring a new army of IRS enforcers at the same time the agency obliterates unlucky taxpayers with deluges of penalties —which have increased tenfold since the 1950s. Sen. David Pryor (D-AR) complained that the IRS used penalties “as a weapon, as a whip over the innocent and the guilty taxpayer’s head, and as a point of leverage.” IRS enforcement policies have been travesties of due process for longer than Joe Biden has been in Washington.
IRS bureaucrats don’t even need to file a criminal charge before snaring citizens’ life savings. Consider IRS depredations under the Bank Secrecy Act of 1970, which required banks to file a federal report for any cash transaction exceeding $10,000. The IRS “enforced” the law by presuming that anyone who deposited slightly less than $10,000 was a criminal. The IRS seized a quarter billion dollars because it disapproved of how businesses and individuals structured their bank deposits and withdrawals.
Between 2005 and 2012, the number of IRS seizures rose more than fivefold, but the vast majority of victims were never criminally prosecuted for structuring offenses. IRS criminal investigators simply looked at banking records and then confiscated hundreds of accounts. Most of the victims were “legal businesses such as jewelry stores, restaurant owners, gas station owners, scrap metal dealers, and others.” The IRS targeted businesses with legal sources of income, according to a 2017 Inspector General report, “to engage in ‘quick hits,’ where property was more quickly seized … rather than pursuing cases with other criminal activity (such as drug trafficking and money laundering), which are more time-consuming.” The IG found no evidence in 91 percent of the seizure cases that the money came from illegal activities. The IG noted, “Interviews with the property owners were conducted after the seizure to determine the reason for the pattern of banking transactions and if the property owner had knowledge of the banking law and had intent to structure.”
The IRS is menacing in part because federal courts have been shamelessly docile. As David Burnham, author of A Law Unto Itself: The I.R.S. and the Abuse of Power, noted, “Over and over again, federal judges have found ways either to ignore or actually to legitimize the growing reach of the tax collectors,” a “pattern of judicial tenderness … partly the product of the natural sympathy that those in power always feel toward the tax collectors.”
In U.S. Tax Court, IRS determinations of what citizens owe are “presumed correct,” with taxpayers bearing the burden to prove the feds wrong. Corporations with hefty legal departments routinely defeat the IRS in court, but few citizens can afford to fight a federal agency that appears to hold all the cards. Tax expert Daniel Pilla estimates that the “IRS’s audit results are incorrect between 60 and 90 percent of the time.”
The Supreme Court will soon hear the case of Romanian-American businessman Alexandru Bittner, who voluntarily notified the IRS that he was late filing reports on his foreign bank accounts (he was unaware of his duty to file). The IRS hit him with $2.72 million in fines, penalties, and interest — even though at least one federal court believed he should owe only $50,000. The difference between $2.72 million and $50,000 is a dramatic gauge of the arbitrary power that the IRS possesses over Americans.
The IRS agenda
The power to tax has long conferred the power to destroy political opponents. But in the glorious era of President Joe Biden, all previous cases of government abuse of power are being expunged, at least by the media and Biden supporters. The stunning political bias of Obama’s IRS vanished into the Memory Hole, never to be seen again (at least by respectable media outlets). But in 2014, a report by Republicans on the House Oversight and Government Reform Committee concluded that the IRS’s Lois Lerner, who masterminded the blockade of conservative nonprofit applications, “believed the political participation of tax-exempt organizations harmed Democratic candidates, she believed something needed to be done, and she directed action from her unit at the IRS.”
The Inflation Reduction Act will pay for new IRS computer systems. It has received billions of dollars from Congress to fix its computers since the 1980s, but the system is still a total mess (relying in part on 1960s-era computer technologies that are no longer widely taught in computer science classes).
How bad is the IRS information management system? An Inspector General report revealed that the IRS had destroyed 30 million tax information returns in 2021 without processing them because it was overwhelmed by the accumulating paper. Bloomberg News noted, “The IRS explained the documents were destroyed because the agency’s ‘antiquated’ information technology systems could no longer handle them.” Texas CPA Brian Streig groused, “To see the IRS just destroy these [returns] is almost like the IRS admitting they don’t really care.” Rep. Bill Pascrell (D-N.J.) denounced the document destruction as a “scandal” and lamented that “all the American people see at the IRS is incompetence and catastrophe.” Pascrell called for Biden to fire IRS chief Charles Rettig.
The IRS also sought to cover up the fact that it had failed to process tens of millions of tax returns in 2020 and 2021, continually misleading Congress and the media about the size of the backlog. Citizens faced harsh penalties for not filing their 1040 on time, but the IRS faced no penalty for making false statements about millions of tax returns it had failed to process.
The Inflation Reduction Act should have been named the Boarhawging Taxpayers Again Act. The Internal Revenue Service has perennially been the authoritarian means to paternalistic ends. Since politicians worship revenue above all other gods, don’t expect the Biden administration or Congress to stand up for average Americans unfairly caught in the revenue crosshairs.
This article was originally published in the December 2022 edition of Future of Freedom.

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