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The IRS as an underfunded Goliath: why it matters to taxpayers

"No one roots for Goliath," the Goliath-size basketball player Wilt Chamberlain once said. In a sense, that is indisputably true. Many people do enjoy cheering for an underdog who is going up against a bigger opponent.

Tax disputes do not really involve single combat, as in David versus Goliath. But if one were to make the analogy, the IRS would have to be Goliath. That doesn't mean individual taxpayers always pull off upsets in tax controversies, as the biblical David did in his battle with Goliath. But it does mean that, at least at the outset, it seems as if the advantage lies with the IRS.

After all, it is typically the IRS that is seeking an audit or referring a potentially criminal tax fraud issue for further investigation. In this post, however, we will explore the notion that the IRS lacks sufficient funding to be properly cast in the Goliath role.

This concern about lack of funding has been on the radar of the national taxpayer advocate for several years. In 2011, the advocate issued a full-scale report with the most straightforward title possible. The report was called "The IRS Is Not Adequately Funded to Serve Taxpayers and Collect Taxes."

And this was in 2011, before the Sequester budget cuts took hold. This year, as those cuts rolled out, the IRS has had to put employees on scheduled furlough days and scale back many of its services.

Why is this important to taxpayers? It could, on some level, be considered a relief to have a diminished IRS that will get off people's backs.

The answer is that in order for a system of voluntary tax compliance to be fully functional, the IRS must do its part to empower and equip taxpayers to make that happen.

With a tax code that is widely acknowledged to be overly complex, the technical assistance provided to taxpayers by the IRS is especially important. And the IRS finds itself constantly playing catch-up, like a Goliath whose armor has become increasingly frayed.

Source: Forbes, "Guest Post: Funding The IRS Is Critical For American Taxpayers," Carolyn Linkov, August 26, 2013

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