IRS could easily block Democratic scheme to increase CA tax deductions

Tax formDemocratic state lawmakers’ interest in pursuing an unprecedented plan to minimize the hit that California’s high-income residents face because of the federal tax overhaul’s $10,000 cap on deductibility of state and local taxes may be losing momentum – undermined by strong warnings from Treasury Secretary Steven Mnuchin, who oversees the Internal Revenue Service, and by a new analysis that says the IRS could easily squelch the maneuver.

Senate President Pro Tem Kevin de Leon, D-Los Angeles introduced Senate Bill 227 early this month. It would allow the estimated 6 million Californians who itemize their federal income taxes to effectively continue to write off state and local tax deductions in excess of $10,000 by allowing them to pay their state taxes to a state charitable foundation, the California Excellence Fund.

Tax experts note that states have long allowed tax deductions for charitable donations and say de Leon’s ploy is protected by the fact that tax laws are traditionally subject to stricter interpretation than most federal laws because of concerns that a rogue IRS could target individuals or companies it didn’t like.

Democratic lawmakers embraced de Leon’s proposal, saying the move would allow the 6 million state taxpayers who itemize deductions to save an average of more than $8,000 a year.

Washington Post: California shows how to take on Trump

But after Washington Post coverage of the legislation asserted it could create a “national boilerplate for skirting Trump tax changes,” the Trump administration took notice of what California was up to.

Politico reported that Mnuchin called the proposal in California and similar proposals in other high-tax states “ridiculous.” Mnuchin emphasized that the IRS was allowed to decide what qualifies as an IRS-recognized charity.

“Let me just say again from a Treasury standpoint and IRS, I don’t want to speculate on what people will do, but I think it’s one of the more ridiculous comments to think you can take a real estate tax that you are required to make and dress that up as a charitable contribution,” Mnuchin told reporters at the White House. He described the ploy as an obvious attempt by states “to evade the law.”

Mnuchin’s comments were backed up in a report by the Washington, D.C.-based Tax Foundation.

“This proposal, while interesting, is fairly obviously in violation of existing law and jurisprudence,” wrote veteran tax analyst Jared Walczak. “Just because the IRS has not consistently cracked down on some minor efforts here and there does not mean it would turn a blind eye to a concerted effort to contravene the tax code by providing a contribution in lieu of taxes program.”

Walczak warned state lawmakers that when it comes to de Leon’s Senate Bill 227, the IRS could readily thwart it under precedents that allow it to block deductions for charitable donations if the agency concluded there was no “charitable intent” to the donations.

Given that de Leon and other backers of the bill have openly described it as being designed to reduce Californians’ payments to the U.S. Treasury, lawyers defending the bill if it became law and was rejected by the IRS would face a difficult task: making a plausible case that a “charitable donation” that was undertaken with the goal of reducing an individual’s or family’s tax obligations meets the requirements set by the IRS for allowable charitable deductions.

The latest IRS overview of which deductions are allowed – Publication 526, released in 2016 under the Obama administration – doesn’t seem to allow such self-serving deductions.

It says that for a donation to qualify for a deduction, it must be “made without getting, or expecting to get, anything of equal value. … Qualified organizations include nonprofit groups that are religious, charitable, educational, scientific or literary in purpose, or that work to prevent cruelty to children or animals.”

This article was originally published by CalWatchdog.com

Major Blow to Obamacare Mandate

MedizinHow much difference does a single line on a tax form make? For Obamacare’s individual mandate, the answer might be quite a lot.

Following President Donald Trump’s executive order instructing agencies to provide relief from the health law, the Internal Revenue Service appears to be taking a more lax approach to the coverage requirement.

The health law’s individual mandate requires everyone to either maintain qualifying health coverage or pay a tax penalty, known as a “shared responsibility payment.” The IRS was set to require filers to indicate whether they had maintained coverage in 2016 or paid the penalty by filling out line 61 on their form 1040s. Alternatively, they could claim exemption from the mandate by filing a form 8965.

For most filers, filling out line 61 would be mandatory. The IRS would not accept 1040s unless the coverage box was checked, or the shared responsibility payment noted, or the exemption form included. Otherwise they would be labeled “silent returns” and rejected.

Instead, however, filling out that line will be optional.

Earlier this month, the IRS quietly altered its rules to allow the submission of 1040s with nothing on line 61. The IRS says it still maintains the option to follow up with those who elect not to indicate their coverage status, although it’s not clear what circumstances might trigger a follow up.

But what would have been a mandatory disclosure will instead be voluntary. Silent returns will no longer be automatically rejected. The change is a direct result of the executive order President Donald Trump issued in January directing the government to provide relief from Obamacare to individuals and insurers, within the boundaries of the law.

“The recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden,” the IRS said in a statement to Reason. “Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.”

The tax agency says the change will reduce the health law’s strain on taxpayers. “Processing silent returns means that taxpayer returns are not systemically rejected, allowing them to be processed and minimizing burden on taxpayers, including those expecting a refund,” the IRS statement said.

The change may seem minor. But it makes it clear that following Trump’s executive order, the agency’s trajectory is towards a less strict enforcement process.

Although the new policy leaves Obamacare’s individual mandate on the books, it may make it easier for individuals to go without coverage while avoiding the penalty. Essentially, if not explicitly, it is a weakening of the mandate enforcement mechanism.

“It’s hard to enforce something without information,” says Ryan Ellis, a Senior Fellow at the Conservative Reform Network.

The move has already raised questions about its legality. Federal law gives the administration broad authority to provide exemptions from the mandate. But “it does not allow the administration not to enforce the mandate, which it appears they may be doing here,” says Michael Cannon, health policy director at the libertarian Cato Institute. “Unless the Trump administration maintains the mandate is unconstitutional, the Constitution requires them to enforce it.”

“The mandate can only be weakened by Congress,” says Ellis. “This is a change to how the IRS is choosing to enforce it. They will count on voluntary disclosure of non-coverage rather than asking themselves.”

The IRS notes that taxpayers are still required to pay the mandate penalty, if applicable. “Legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe‎,” the agency statement said.

Ellis says the new policy doesn’t fully rise to the level of declining to enforce the law. “If the IRS turns a blind eye to people’s status, that isn’t quite not enforcing it,” he says. “It’s more like the IRS wanting to maintain plausible deniability.”

Tax software companies are already making note of the change. Drake Software, which provides services to tax professionals, recently sent out a notice explaining the change in policy. As of February 3, the notice said, the IRS “will now accept an e-filed return that does not indicate either full-year coverage or an individual shared responsibility payment or does not include an exemption on Form 8965, as required by IRS instructions, Form 1040, line 61.”

The mandate is a key component of Obamacare’s coverage scheme, which is built on what experts sometimes describe as a “three-legged stool.” The law requires health insurers to sell to all comers regardless of health history, and offers subsidies to lower income individuals in order to offset the cost of coverage. In order to prevent people from signing up for coverage only after getting sick, it also requires most individuals to maintain qualifying coverage or face a tax penalty. While defending the health law in court, the Obama administration maintained that the mandate was essential to the structure of the law, designed to make sure that people did not take advantage of its protections.

In a 2012 case challenging the law’s insurance requirement, the Supreme Court ruled that the individual mandate was constitutional as a tax penalty. The IRS is in charge of collecting payments.

Some health policy experts have argued that the mandate was already too weak to be effective, as a result of the many exemptions that are included. A 2012 report by the consulting firm Milliman found that the mandate penalty offered only a modest financial incentives for families making 300-400 percent of the federal poverty line. More recently, health insurers have said that individuals signing up for coverage and then quickly dropping it after major health expenses is a key driver of losses, and rising health insurance premiums.

It’s too early to say whether the change will ultimately make any difference. But given the centrality of the mandate to the law’s coverage scheme and the unsteadiness of the law’s health insurance exchanges, with premiums rising and insurers scaling back participation, it is possible that even a marginal weakening of the mandate could cause further dysfunction. Health insurers have said the mandate is a priority, and asked for it to be strengthened. Weaker enforcement of the mandate could cause insurance carriers to further reduce participation in the exchanges. One major insurer, Humana, said today that it would completely exit Obamacare’s exchanges after this year.

It is also possible that congressional Republicans will make it moot by repealing much of the law, including its individual mandate, which, as a tax, can be taken down with just 51 Senate votes.

Regardless of its direct impact, however, the change may signal that the Trump administration intends to water down enforcement of the health law’s most controversial requirement, even if those steps are seemingly small. The Trump administration may not be tearing Obamacare down entirely, but it appears to be taking steps to weaken the law, however subtly, one line at a time.

This piece was originally published by Reason.com

Stolen Social Security number? The IRS doesn’t care

IRSThe IRS is giving away money to people who file tax returns with stolen Social Security numbers, and they intend to keep right on doing it.

That was the message from IRS Commissioner John Koskinen to the Senate Finance Committee during a recent hearing on cybersecurity failures and other problems at the Internal Revenue Service.

“These are cases in which someone uses someone else’s identity, their name or their Social Security number, to get a job illegally,” Sen. Dan Coats, a Republican from Indiana, explained.

The IRS knows but doesn’t care.

Sen. Coats was a bit frustrated. “The IRS continues to process tax returns with false W-2 information and issues refunds as if they were routine tax returns, saying, ‘That’s not really our job,’” he said.

Although the Social Security Administration notifies the IRS when a name does not match a Social Security number, these notifications are ignored. IRS employees are not allowed to tell the real holder of the Social Security number that someone is using their identity, and nobody alerts employers that they have submitted false W-2 information.

Last year, the IRS identified 200,000 new cases of employment-related identity theft.

Koskinen winked at the problem. Sometimes Social Security numbers are “borrowed from friends or acquaintances,” he said, “and people know they’ve been used. Other times they don’t.”

The priority for the IRS, Koskinen told the committee, is “collecting those taxes.”

That’s very misleading.

Millions of low-income people in America don’t owe any income taxes and pay little or nothing to the U.S. Treasury during the year, yet they still receive thousands of dollars in a “tax refund.”

That’s because over the last 40 years, Congress created a financial assistance program which is run through the Internal Revenue Service. For those who qualify, the Earned Income Tax Credit can be worth over $6,000, the child tax credit is worth $1,000 per child, and education credits are worth thousands more. These credits are fully or partially “refundable.”

Most people assume that everyone who receives a tax refund is simply getting back the money they overpaid during the year. Not so.

“Refundable” tax credits are paid out in a tax refund, even if no taxes at all were paid in. The money comes from the U.S. Treasury; in other words, from other taxpayers.

These annual “tax refunds” are routinely worth thousands of dollars, which is why you see storefront tax preparers pop up in low-income neighborhoods every January, why retailers like Walmart offer to cash tax refund checks for customers who don’t have bank accounts, and why there’s so much fraud — over $15 billion in fraudulent refunds for 2014 alone.

However, it’s perfectly legal for undocumented workers to claim the child tax credit and the education credit and to receive a taxpayer-subsidized tax refund.

The government knows who’s working illegally, because the IRS gives undocumented workers an Individual Taxpayer Identification Number, or ITIN, that can be used to file a tax return. An ITIN can’t be used to get a job, because employers aren’t supposed to hire unauthorized workers. Hence, stolen Social Security numbers on the W-2s of people who file their tax returns with ITINs.

The IRS, which will happily send you a threatening letter if you fail to report 12 cents in interest income, has no interest at all in enforcing the laws against working in the United States without legal authorization.

They just process the returns and send out the refunds.

They know they are sending money to people who filed false W-2 forms with somebody else’s Social Security number.

And now, so do you.

Power to investigate the government mustn’t be erased

congressHere are two important questions which are often obscured by the noise and spatter from the blood sport of electoral politics.

Does honest government matter?

Can anything be done to prevent dishonest government or clean it up?

The answer to the first question is yes, it matters. Voters make choices based on the information they have. A government that makes dishonest statements cannot claim to have the consent of the governed. Instead, it’s governing by force and fraud.

The answer to the second question is yes, unless the government is dishonest.

The tools for preventing and cleaning up dishonest government include laws like the Inspector General Act of 1978, which created internal watchdog offices in government agencies, Justice Department prosecutions and congressional oversight.

It’s easy to dismiss congressional investigations as politically motivated, but the Constitution gives Congress broad authority to conduct oversight, per the language of Article II, Section 4: “The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.” The House of Representatives “shall have the sole Power of Impeachment,” and “the Senate shall have the sole Power to try all Impeachments.”

A necessary part of the power to impeach is the power to investigate.

The House has just initiated impeachment proceedings against IRS Commissioner John Koskinen. He’s accused of failing to respond to a lawful subpoena for documents, obstructing a congressional investigation, giving false and misleading statements under oath, and failing to competently oversee an investigation into “Internal Revenue Service targeting of Americans based on their political affiliation.”

Because the definition of “high crimes and misdemeanors” is left to our elected representatives, impeachment is completely different from criminal charges, which the Justice Department declined to bring against anyone in the case of the alleged IRS targeting of conservative groups seeking tax-exempt status.

“Our investigation uncovered substantial evidence of mismanagement, poor judgment and institutional inertia,’’ Assistant Attorney General Peter Kadzik said in a letter to Congress. “But poor management is not a crime. We found no evidence that that any IRS official acted based on political, discriminatory, corrupt or other inappropriate motives that would support a criminal prosecution.’’

They may have found no evidence because 422 back-up tapes containing the e-mail correspondence of IRS official Lois Lerner were degaussed (magnetically erased) by IRS employees. The Treasury Department’s inspector general said the destruction of the tapes happened “on or around March 4, 2014, one month after the IRS realized they were missing emails from Lois Lerner, and approximately eight months after the House Committee on Oversight and Government Reform requested ‘all documents and communications sent by, received by or copied to Lois Lerner.’”

Was it a misunderstanding or a successful cover-up?

Consider this: Last year, 47 inspectors general signed a letter protesting that three agencies, including the Justice Department, were obstructing investigations of alleged wrongdoing. Then in July, the Justice Department issued a new policy that blocks IGs from gaining access to certain kinds of evidence, including grand jury and wiretap information, unless they first obtain the permission of the head of the agency they’re investigating.

Nixon was run out of town for less.

If an administration won’t investigate itself, there’s no tool in the toolbox except congressional oversight and, if necessary, impeachment.

The only other check on dishonest government is the ballot box. But first, voters would have to believe that honest government matters.

California’s Government Unions Collect $1 Billion Per Year

PileOfMoney“If you say there is an elephant in the room, you mean that there is an obvious problem or difficult situation that people do not want to talk about.”

–  Cambridge Dictionaries Online

If you study California’s Legislature, it doesn’t take long to learn there’s an elephant in both chambers, bigger and badder than every other beast. And considering the immense size of that elephant, and the power it wields, it doesn’t get talked about much.

Because that gigantic elephant is public employee unions, and politicians willing to confront them, categorically, in every facet of their monstrous power and reach, are almost nonexistent.

Government reformers and transparency advocates are fond of attacking “money in politics.” They attack “soft money” and “dark money.” Most of the time, these reformers are on the so-called political left, concerned that “rich billionaires” and “out-of-state corporations” have too much political influence. They are misguided and manipulated in this sentiment. Because billionaires contribute to both major political parties (and both political wings) roughly equally, and the largest corporations – in state and out of state – play ball with the government unions because, as monopolies or aspiring monopolies, large corporations and government unions have an identity of interests that far outweighs any motive for conflict. At the state and local level in California, there is no amount of money, anywhere, that comes close to the sums that are deployed by government unions to control our government.

Thanks to a lack of transparency so thick that public corporations, and even private sector unions, are required to submit far more publicly available reports on their operations than public sector unions, it is almost impossible to estimate how many government union members there are in California. From the U.S. Census we know that California’s “full-time equivalent” state workforce numbers 397,348, for local governments, 1,313,344, meaning there are – on a full time basis – about 1.7 million state and local workers in California. But how many of them pay dues? And what is their total statewide revenue?

If you turn to the 990 forms that government unions file with the IRS, you’ll note that the California Teachers Association’s 990 reported “dues revenue” of $172.3 million in 2012. You’ll also know they were sitting on $100 million in cash and securities, net of all long and short term liabilities and not including their fixed assets and real estate. But that’s just the financials for the CTA’s state office. If you search for “California Teachers Association” on Guidestar, here’s the message you get on the results screen: “Your search for California Teachers Association produced 1,083 results.”

As we noted in a 2012 CPC study entitled “Understanding the Financial Disclosure Requirements of Public Sector Unions:”

Most of the statewide unions, such as the CTA, the CSEA, the CFT and the CPF, collect revenue from members through their local affiliates, which themselves retain most of the money for local collective bargaining and political expenditures. There are over 1,300 CTA local affiliates, 20 (public sector) SEIU local affiliates, 42 AFSME local affiliates, 45 AFT local affiliates, several hundred CSEA (School Employees) local affiliates, and hundreds of CPF (Firefighter) local affiliates. Then there are federations of various unions, such as the California State Employees Association and the Peace Officers Research Association of California, which also collect revenue from members through local affiliates.

There are over 6,000 local government union organizations in California, each of them an independent financial entity, each of them merely required to file a minimal 990 form that barely, and with a maddening lack of clarity, discloses financial transfers between entities. Against this opacity, there is no precise way to learn just how much money California’s public sector unions collect every year, no way to determine how many members they’ve got, no way to determine their annual dues assessments.

An article published nearly five years ago on UnionWatch, “Public Sector Unions and Political Spending,” estimates the total annual dues revenue of California’s public sector unions at $1 billion per year. While the number of state and local government workers has actually declined slightly since 2010, the percentage of unionized state and local government workers has increased, as has their average pay upon which dues are calculated. That estimate, $1 billion per year, is probably still accurate.

Behind closed doors and off the record, Democrats resent government union power with increasing intensity. But apart from an isolated whisper here, a passing utterance there, they are silent. Just like their Republican colleagues who grasp for their own pathetically minute share of government union contributions, they fear the wrath of the elephant in the room at the same time as they keep taking the money.

*   *   *

Ed Ring is the executive director of the California Policy Center.

CARTOON: Tax Freedom Day!

Tax Freedom Day

Eric Allie, Caglecartoons.com

Humor and History on Day Tax

“April is the month when the green returns to the lawn, the trees — and the Internal Revenue Service.” So observed Evan Esar, a collector of humorous sayings who understood that humor is the ultimate therapy. All of us need this therapy now that tax time is here.

Fortunately, a rich vein of humor and wry observations exist about taxes to help us through this time.

When tax day comes, most citizens pay what they owe … or what they think they owe. Discovering what you owe can be a challenge. Even one of the century’s greatest geniuses, Albert Einstein said, “The hardest thing in the world to understand is the income tax.”

Humorist Will Rogers put it this way: “The income tax has made more liars out of the American people than golf has. Even when you make a tax form out on the level, you don’t know when it’s through if you are a crook or a martyr.”

Indeed, taxes and golf are comparable. You drive your heart out for the green, and then end up in the hole.

The first income tax in this country was levied during Abraham Lincoln’s administration. Money was needed to fund the Union war effort. That income tax was repealed in 1872, seven years after the war ended.

Later attempts to bring back an income tax were thwarted by the United States Supreme Court, which declared the tax unconstitutional because it represented direct taxation on the citizenry. During the Civil War the Court had ignored this concern.

A constitutional amendment was necessary to establish an income tax. In arguing for such an amendment, proponents asserted that the income tax would only tax the rich. (Sound familiar with some of the tax increase strategies here in California?)

Rep. James Monroe Miller of Kansas said, “I stand here as a representative of the Republican Party of the central west to pledge you my word that the great western states will be found voting with you for an income tax. Why? Because they will not pay it!”

It was generally believed that residents of perhaps six wealthy industrial states in the Northeast would pay nearly all of the new income tax.

Well, you can’t fool all of the people all of the time. Editors of The Nation magazine warned at the time: “It is possible for a government to increase repeatedly the rates of such a tax.”

Or as Will Rogers put it: “Noah must have taken into the Ark two taxes, one male and one female. And did they multiply bountifully! Next to guinea pigs, taxes must have been the most prolific animals.”

In 1913 the 16th Amendment was passed, which allowed Congress authority to directly tax a citizen’s income.

The first year under the income tax, 357,598 Form 1040s were filed. Yes, the form carried that famous number even then. (Jay Leno explains Form 1040: For every $50 you earn, you get $10 and they get $40!)

The tax rate was one percent on incomes above $3,000 and rose to seven percent on incomes above half a million. This first income tax affected only one percent of the population.

Before the 16th Amendment, tariffs and excise taxes provided 90 percent of the federal revenue.

By 1920, the income tax was the dominant revenue raiser for the federal government. Middle income taxpayers were hit by the income tax to help fund World War I. Top tax rates eventually climbed to 91 percent before President John F. Kennedy proposed cutting them.

Taxes increase and government expands in times of crisis. Great growth in government and taxes occurred when this country began, during the Great Depression and when at war, particularly, the Civil War, World War I and World War II. American Patriot Thomas Paine saw this clearly at the nation’s founding. “War involves … unforeseen and unsupposed circumstances … but one thing certain, and that is to increase taxes.”

As a people, we have always been wary of taxes. U.S. Supreme Court Chief Justice John Marshall is often quoted from his groundbreaking decision in McCulloch v Maryland (1819): “The power to tax involves the power to destroy.”

However, 109 years later another Supreme Court Justice, Oliver Wendall Holmes, wrote: “The power to tax is not the power to destroy while this Court sits.”

On the façade of the mammoth IRS building in Washington, D. C., other renowned words of Justice Holmes are chipped in stone: Taxes are what we pay for a civilized society.

It should be noted, however, that Holmes made his famous remark in 1904 before the income tax was sanctioned. Taxes at that time took about seven percent of average incomes.

But even in Holmes’ day there were complaints about taxes. Two years before Holmes issued his famous saying, Mark Twain wrote in his notebook, “What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin.”

Of course, we need money to run the government. The argument is over how much and how it is spent.

Will Rogers recognized the problem in his inimitable way. “Of course we know our government is costing us more than its worth, but do you know of any cheaper government that’s running around? … You can try Russia! There’s no income tax in Russia, but there’s no income.”

Still, today the IRS has hundreds of different tax forms, plus pages of additional information to explain how to fill out those forms. The original Tax Code had 11,400 words; today it has over 7 million.

Despite the complexity, taxes are not avoidable and woe to him or her who tries evasion. Al Capone got away with vice, and he got away with murder, but he didn’t get away with not paying his taxes.

So we have to pay our taxes.

For most of us, however, tax time has us simply agreeing with Mark Twain’s admonishment, “[I] shall never use profanity except in discussing (house rent) and taxes.”

Originally published by Fox and Hounds Daily

Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee

CARTOON: Tax Day

tax day

Nate Beeler, The Columbus Dispatch

Judge Rebukes Harris’ Effort to Access Group’s Donor Lists

Written by Steven Greenhut and published in the San Diego Union-Tribune:

California Attorney General Kamala Harris has been in the news lately as the Democratic establishment’s anointed successor to Barbara Boxer, the U.S. senator who has announced her coming retirement. But a recent ruling by a federal court temporarily smacking down one of Harris’ decisions may give her political foes a little ammunition.

In December, this column reported on a federal First Amendment lawsuit filed by the Virginia-based conservative group Americans for Prosperity. The group — co-founded by the billionaire Koch brothers, who are a lightning rod for critics from the political left — argues the AG is trying to squelch free speech by demanding its list of donors.

The IRS requires such tax-exempt charitable groups (the foundation is a 501(c)3, which provides “education” and does some limited lobbying for bills and initiatives) to file an annual report called a Form 990 and a Schedule B, which lists donors who give more than $5,000 a year. The IRS is required to keep the information about donors private.

California also requires groups to register with the attorney general’s office. …

Click here to read the full article

Is It Time To Garnish The IRS’ Pay?

The IRS has abused its power and misused its resources, so it deserves the budget cuts it got in the 2015 spending bill, a leading anti-tax group argues.

“If the IRS wants to see an increase in its budget, it probably should stop harassing conservatives,” Americans for Tax reform spokesman told The Daily Caller News Foundation. ”They used their resources in a completely inappropriate and political way that has basically ruined the reputation of the agency on the Hill.”

Congress cut the IRS budget by $346 million in the 2015 spending bill, reported Politico, and the agency has absorbed about $1 billion in cuts since 2010. It’s one of the only agencies whose budget was cut this year.

“[The cuts] are a logical response to the stewardship they’ve had with the resources they’ve been given,” Kartch told TheDCNF. “They’ve been given certain resources to implement the mission of the agency, and they’ve used them to harass Tea Party organizations. They’ve used them to harass conservative taxpayers. They’ve basically politicized the entire Cincinnati office for several years.”

Commissioner John Koskinen has already announced a hiring freeze and suspension of overtime hours, and said Thursday the most recent cuts could shut the agency down temporarily.

“People call it furloughs,” Koskinen said, according to Politico. “I view it as: Are we going to have to shut the place down? And at this point, that will be the last thing we do … but there is no way we can say right now that that wont happen.”

The cuts come as the IRS prepares to take on new responsibilities implementing Obamacare, and in the face of a mandatory government-wide pay raise Koskinen said will cost $250 million.

Kartch accused Koskinen of trying to extort Congress by purposely absorbing the cuts in a politically painful manner. In addition to the shutdown, Koskinen has warned taxpayers refunds could be delayed this year.

“They have a mandate to implement [the cuts], but the resources that they allocate is up to them,” Kartch said.

But Alan Viard, a budget and tax policy analyst at the American Enterprise Institute, said across-the-board cuts won’t fix the problem and are likely to hurt taxpayers.

“I’m very concerned about what the IRS did on the 501c4 applications by the tea party groups, and so it’s quite proper to try to stop that type of abuse or make sure it doesn’t happen again,” Viard told TheDCNF. “But just cutting the agencies overall funding is really not a good way to do that.”

Viard suggests a more targeted approach, such as clarifying 501C4 laws or reassigning certain responsibilities to other agencies, rather than the easier option of spending cuts.

“It really backfires by harming ordinary taxpayers who still have to comply with the complicated tax code Congress has imposed upon us,” he added. “Having given us this complicated tax system, I think it behooves Congress to try to give the IRS the resources to administer that system.”

This piece was originally published by the Daily Caller News Foundation