Hardly a day goes by when some politician or editorial person doesn’t suggest that we don’t need the IRS or should simply do away with it. Most of them come in connection with suggestions for changing the tax system to something like a national retail sales tax. What these people fail to understand, and this writer is not challenging the sincerity of their views, is that without the IRS, our tax gap would explode geometrically. We call our system a “voluntary” one, but we remain short of “volunteers”: there are simply too many people and businesses who don’t get around to filing tax returns, depositing their taxes, paying with those returns, and sometimes filing false returns. This circumstance is not limited to income tax: it is also present for state sales taxes, employment taxes and excise taxes. As annoying as an IRS audit can be, and as unpleasant as some IRS employees can be to deal with, the reality is that the system does not “enforce itself.”
Those who clamor for an alternative system forget that some agency is going to need to be there to collect it. Sometimes we hear the suggestion that state agencies can handle a national retail sales tax. Most of them are undermanned and underfunded as they presently exist, and several states have no sales tax in place to which the federal tax could be surgically attached. Those of us in the tax profession who deal with the IRS frankly prefer dealing with IRS personnel and the administrative system in place over what we encountered in the state regimes, including this writer’s experience in New York and Texas.
This writer knows that as long as we have a federal tax system, we’re going to have the Internal Revenue Service or some equivalent. As they say, a rose by any other name … would smell as sweet. Changing the name of the IRS to something else will not remove the tax man. No matter what we call him, his job will never change. Meanwhile, calls for abolishing the IRS simply distract the attention that needs to be placed on making the IRS more effective.