Who is minding the IRS?
That is the first and most logical question to ask after a front-page story in The Washington Times on Wednesday revealed that the Internal Revenue Service wasted more than $13 billion on bogus claims for the Earned Income Tax Credit over the past decade.
While the egregious waste of taxpayer money is hardly new, part of the problem stems from mixed signals from President Obama, who in 2009 issued an executive order to get more folks signed up for the tax credit and, at the same time, crack down on bogus payments.
The IRS has seemingly carried out that first mission but failed to deliver on the second.
In short, they put the cart carrying the honest working man's (and woman's) cart before the horse.
First established in 1975, the credit is intended to help individuals and families, including the hardworking poor, keep more money in their own hands.
Since then, it has undergone several changes, including during the Reagan years. After Mr. Obama entered the White House in 2009, he expanded the tax credit by raising income levels for families of three or more children and by raising the income threshold for married couples.
What a relief.
But that also is where the conundrum rests.
On the one hand, Congress and presidents have agreed the tax breaks are a good thing, whether the taxpayer receiving the tax credit is a single dad raising a single child, or a husband and wife struggling to raise a blessed brood. The dollars and sense of the credit for both family situations are laudable.
The conundrum springs from Mr. Obama's mixed messages in his 2009 executive order amid the recession, states' attempts to sign up more of their taxpayers for the credit, and the IRS left to its own devices to stem the flow of wasted tax dollars.
Dozens of states (most of them blue) and the District of Columbia have enacted state credits. In the District, city officials enlist the aid of volunteers, who then are trained in tax law and tax preparation. Virginia's program is similar.
The problem is that the IRS, recognizing part of its own flawed attempts to rein in billions upon billions of waste, began upping the fines on professional, paid tax preparers who turned a blind eye on or sent fraudulent claims for taxpayers seeking the credit. The law, which upped the ante from $100 per erroneous claim to $500, took effect in January 2012.
Still, there are no guarantees ill-suited volunteers who prepare erroneous claims will be penalized by the IRS or caught before a tax form is filed with the IRS or a state.
Indeed, the District's program seems extremely lax.
"To volunteer as a tax preparer, you should have relevant experience, which includes preparing your own returns, preparing returns for others, or working with numbers. However, preparers do not need to have significant individual income tax preparation experience since all preparers will be trained by the Campaign and complete the IRS certification process before the tax season begins in late January," according to the DC EITC Campaign website.
Training included using a commercial tax-preparation software program called Taxwise and passing a test for IRS certification.
Wiz, bam, boom — a tax specialist is born.
But you know better. And so does Congress. And the White House.
And, most important of all, the IRS knows better.
An anti-poverty tool from its very beginning, the EITC was supposed to simply reward poor people for working and encourage welfare recipients to become employed. Ronald Reagan and other conservatives re-embraced it in the 1990s, Congress revisited it at the turn of this century and Mr. Obama has left his presidential imprimatur on more than one occasion.The earned tax credit is a necessary thing. But $13 billion worth of foul-ups over 10 years means lots of families and individuals who deserve the federal and state money back guarantees are losing out because of tax cheats.
In recent days, as Obamacare bumps along, the president has promised he is whipping the responsible agency, the Department of Human and Human Services, into shape.
Some folks hope he does, others just want Obamacare to die a horrible death.
The IRS is different. There is not one family, one individual, one business, one nation in the world that the tentacles of the IRS cannot reach. Let's see if Mr. Obama is truly eager to whip the IRS into shape.
If he's not, the Senate and the House ought to give it a beat down.
IRS officials need to go before the cameras and explain to underprivileged and hardworking Americans alike how the IRS plans to stop the tax cheats.
• Deborah Simmons can be reached at firstname.lastname@example.org
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