IRS Commissioner Douglas Shulman spoke Monday at a National Press Club luncheon,discussing his agency's work in light of the economic recession.
“This tax season,the IRS's job is particularly tricky. It must collect the taxes necessary to keep the deficit from spiraling out of control,” said club President and USA Today reporter Donna Leinwand in her introduction. “But at the same time,with millions of Americans facing job losses and the threat of foreclosure,the IRS can't be so tough that it makes the economic crisis worse.”
Describing the IRS as the “face of the government to more American people than any other government institution,” Shulman said his agency is concentrating on providing relief to Americans in economic distress. Shulman emphasized tax credits,including the Earned Income Tax Credit,credits for first-time home buyers and credits for energy-efficient windows.
“In today's tough times,this extra money can go a long way to putting food on the table or someone being able to make rent,” he said.
The IRS also offered a “Super Saturday” program this year for the second time. Agency employees offered free tax preparation and answered questions. Shulman read first-hand accounts submitted by volunteers,including one about a single mother who cried when she found out she would get a tax refund.
“It was so gratifying for IRS employees across the country – who work on computers or do audits usually – to go in and volunteer with taxpayers and have this direct experience,” he said. “I anticipate we'll do it in the years to come.”
Shulman also said the IRS expects to issue $300 billion in tax refunds this year. He called tax filing season its own stimulus because tax refund money spurs spring shopping.
While the tax code is “incredibly complex,” Shulman offered “low-hanging fruit” to simplify the code. It would help to use only one definition throughout the tax code for such terms as “dependent,” he said.
The president's tax reform panel may also suggest reforms,he said.
“One of my favorite facts is that the tax code is four times as long as ‘War and Peace,' so it gives you an idea of what people are wrestling with,” he said. “Any efforts for simplification certainly would be helpful to the average American just trying to pay their taxes on time.”
International issues are the IRS's biggest challenge,Shulman said. The agency will need to evolve to deal with an increasingly global economic focus. To stop international tax evasion,the agency is beefing up enforcement and fostering more cooperation with foreign banks.
“The IRS has been turning up the pressure on offshore financial institutions that help U.S. citizens conceal taxable income,” he said. “We are breaking down the much-vaunted veil of secrecy.”
The IRS also must do a better job working with the tax preparer community as part of an overall compliance strategy,Shulman stressed. This is especially critical because 84 percent of individuals and businesses use either paid preparers or computer software to file their taxes.
“We have to be tough on those who flout the law and won't pay what they owe,” Shulman said. “The American people who play by the rules every day expect us to go after those taxpayers who don't pay their taxes. And we're going to vigorously enforce the law.”