The NYT’s IRS Puff Piece

In advance of a rigged Senate Finance Committee hearing, the New York Times recently ran an article that blindly accepted the assertions of those who want more powers and money for the Internal Revenue Service.

Part of the article dealt with a report from the Government Accountability Office  that purports to show that offshore tax evasion is easy because of a three-year time limit. Yet buried later in the article is an acknowledgement that the time limit is not binding.

The real issue is that IRS agents actually are subject to poor performance reviews if it turns out that they were engaging in baseless harassment of law-abiding taxpayers. Needless to say, the reporter did not bother to interview anyone representing the interests of taxpayers:

The IRS is curtailing audits of many people who use offshore tax havens, even when agents see signs of tax evasion, because agents fear they cannot meet a three-year deadline for finishing an examination, congressional investigators have found. In a report to be released on Thursday, the GAO found that I.R.S. agents are so hobbled by “dilatory tactics” by offshore taxpayers and other problems that it takes almost two and a half years to complete a typical audit.

…The average assessment of unpaid taxes tripled to $17,500 for the limited number of audits that were allowed to run longer than three years, and it shot up to nearly $100,000 for the small number allowed to run four or five years.

…As part of its inquiry, the G.A.O. examined 12 offshore tax audits. …Audits can be pursued for more than three years, but agents have to meet tough requirements and their findings can be dismissed and the agents reprimanded if the unpaid taxes turn out to be smaller than expected.

It’s also worth noting that the story allowed a left-wing law professor to make an extremely weak claim about the amount of tax evasion taking place offshore, even though the so-called offshore sector does not show up in IRS tax-gap estimates and the Congressional Research Service has determined that similar evasion estimates are, for all intents and purposes, fabrications:

…Reuven S. Avi-Yonah, a professor of law at the University of Michigan who will testify at the Senate hearing on Thursday, estimated last year that the United States could be losing as much as $50 billion from international tax maneuvering.