Monday, July 24, 2006

IRS cuts estate-tax attorneys

While Congress fought to partially gut the estate tax, the IRS has decided to back off on enforcement of the tax -- by cutting the number of attorneys who audit such returns in half.

The folks pointing this out are the ones poised to lose their jobs, so take what they say with a grain of salt. Meanwhile, the administration says the cuts are related to the legislation -- with fewer people qualifying for the estate tax, fewer auditors are needed to examine them.

Fair enough, as far as it goes. But consider this:

Estate tax lawyers are the most productive tax law enforcement personnel at the I.R.S. For each hour they work, they find an average of $2,200 of taxes that people owe the government.


Why would you cut your most productive auditors?

Further, there seems to be a shifting ground as to how much fraud such auditors uncover. Six years ago, the IRS said that 85 percent of large taxable gifts it audited shortchanged the government. And for the past five years "officials at both the I.R.S. and the Treasury have told Congress that cheating among the highest-income Americans is a major and growing problem."

But now, in justifying the cuts, an IRS spokesman says that only 10 percent of estate audits bring in worthwhile amounts of money.

The IRS will get vilified no matter what it does. And I'm willing to consider the statistical arguments in favor of the cuts. But cutting their most productive people when everyone agrees that cheating by the rich is a huge problem doesn't make much sense on the face of it -- especially when they have to ignore what they've been saying for the past five years in order to justify it.

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