Don’t tax yourself by rushing
Now’s the time for a reminder to taxpayers who have delayed thinking about their 2017 income tax obligation:
The filing deadline is Tuesday.
That’s two days later than the usual April 15 due date. That’s because of April 15 being a Sunday this year and the fact that the Emancipation Day holiday observed in the District of Columbia is Monday.
Even taxpayers who don’t live in the “District” get the benefit of that holiday for tax-filing purposes. Granting that one-day delay will save Internal Revenue Service employees from the step of having to verify that April 17 filers are indeed “District” residents.
Avoiding that step makes sense.
What might not make sense to some taxpayers, but which no doubt are welcomed by others, are the latest IRS tax-return-audit statistics — the numbers covering the 2016 tax filing year that were released March 29.
In 2017, when the 2016 tax returns were due, the IRS audited only about one in 160 individual tax returns, which, according to an article in the March 30 Wall Street Journal, was the lowest audit rate since 2002 — and the sixth consecutive year that audits declined.
The IRS said audits have continued to decline due a loss of enforcement employees. According to the government tax agency, it has lost nearly a third of its enforcement staff since its employee peak in 2010, when the federal agency audited about one in 90 individual returns.
The Journal reported that in 2017, IRS funding was $11.2 billion, a decrease of nearly 8 percent from its high in 2010. Meanwhile, the funding situation for the agency isn’t destined to be much better this year —
$11.4 billion — when the IRS will decide which 2017 returns to audit.
That evokes questions:
– What is a reasonable estimate for the amount of additional money the government could collect from 2017 filings with an enforcement employee staff the size of 2010’s? Granted, there’s no way to pinpoint an actual total, but a “ballpark” estimate could be derived based on additional collections stemming from prior years’ audits.
– How much would it cost the government in pay, benefits and facilities to increase the IRS enforcement staff to some semblance of the total employee complement of eight years ago?
– Would the difference between the amount of additional money that might be collected and the higher staff costs justify beefing up the size of the enforcement staff?
– Would a smaller beefing-up make more fiscal sense overall than trying to match the 2010 numbers?
Less possibility of being audited no doubt “encourages” some taxpayers to “fudge” numbers to decrease their tax obligation. While most taxpayers presumably are honest, some aren’t, and that works against the nation’s fiscal health.
Even a usually honest taxpayer can be tempted to “cut a couple of corners” when the possibility of an audit seems much more remote.
There’s another point to consider: More-complex returns filed by wealthier individuals usually take longer to examine and generally necessitate availability of more enforcement employees with higher skills.
The Journal’s March 30 report said the number of taxpayers reporting annual income in excess of $1 million rose nearly 25 percent between 2015 and 2017. The need dictated by that statistic is obvious.
The savings from a leaner IRS staff probably don’t amount to savings at all.