Wednesday, January 11, 2006

Move along folks, there's no story here... at least not the one the reporter is trying to sell us...

Despite the thrust of the Washington Post headline, "IRS Froze Refunds, Study Says", someone actually reading the story would learn that the IRS is doing what we'd like them to do - being aggressive in going after suspected tax fraud...

Let's start at the top of the story... the IRS "froze more than 120,000 taxpayers' refunds last year on suspicion of fraud without notifying the taxpayers or giving them a chance to respond". Well, shouldn't the IRS freeze suspicious refunds until they've had a chance to investigate? How stupid would it be for the IRS to allow hundreds of millions of dollars in refund checks to be issued, only to have to try to recover those later determined to be fraudulent? Isn't it smarter to 'check first, write check later'?

As even the reporter admits (but buries), there was fraud in 1/3 of these cases - in other words, 40,000 refunds - representing potentially hundreds of millions of dollars - were in fact problematic... should we not be glad that those refunds were frozen?

And despite the best efforts of Nina Olson, the IRS's Taxpayer Advocate (a sop to the right who years ago complained about IRS 'stormtrooper' going after taxpayers suspected of committing fraud) to portray the IRS as full of problems, we learn (near the bottom of the story) that "fully 80 percent of these (120,000 cases) ultimately received either full refund or partial refund of the amount they had originally claimed"... which means that 20% of the cases got NO money back... and some portion of the 80% (the story doesn't indicate how much) had sought refunds higher than they were entitled to. Again, isn't this something we should celebrate, that the IRS was able to stop a minimum of 24,000 improper refunds from being paid out?

Even the second premise of the story is ridiculous, that taxpayers weren't told of the suspicions of fraud. Do we really want those suspected of fraud to be told they're under suspicion?

C'mon IRS, screw the Advocate, full speed ahead.

FULL DISCLOSURE: I pay a boatload in taxes every year... a large boatload. And it really bothers me that I'm being looked to to cough up even more in taxes at the same time there are probably millions of taxpayers who are stiffing the country of what they owe. So I have no problem with the IRS being real aggressive in going after suspected tax cheats.