Over a decade ago, I worked as a seasonal temp at a service center. Then, we moved and I worked for a department called ACS, or Automated Collection System, which means the 1-800 call-in call center where people take your call when the IRS says you are in trouble and you better call this number.
Each year, IRS service centers where tax returns go hire something like 200 people in advance of tax season. It gets busy in the days after April 15 when post office trucks from distant cities unload. At some point in the process, returns are sorted into stacks by the size of the checks submitted with them.
The case histories I cite below came from experience working with the IRS, but are only typical and categorical, with identifying particulars not included. I figure the IRS itself and my observation of it is a public policy matter.
Under $6,000. Over $6,000 but under $250,000. $250,000 to a million. Something like that. I remember glancing through the big check stacks to see what in the heck these people were doing for a living. Hard to tell, most of the time. I was struck by seeing hot dog vendors in there. You'd figure you'd see oil and gas earnings. I saw surgeons. I thought that figured. Probably why health care costs are so high.
The biggest check that I ever handled personally was for $13 million. Interestingly, it was no special check. Looked like any other generic looking check torn out of every other checkbook. Just more zeros.
These amounts represent an amazing economic power that comes out of the whole societal grid which included an educational system that helps talent become realized potential, a roadway system and communications grid for exchanging goods and services and a health care system that prolongs productive life for Americans.
How many people sending in their money orders for 50 bucks or checks for a few hundred or a couple thousand are needed to make up for a 13 million dollar check?
When the very blessed earners pull out of the social compact, essentially the middle class is left on its own. The infrastructure that we all contribute to begins to degrade. How long before the educational system that produced the realized potential quits doing so as a result?
Perhaps the story will pick up as the educational systems that afford the children of the future their potential write it, from India or China. The question is really whether we are a community or whether we are just a collection of selfish individuals who can't form a basic economic and social compact to operate from.
I saw a story on one of the TV Network news shows last night. People were in a fight with the IRS over checks they had submitted but which the IRS claimed they never got.
This caused me to reminisce about a workstation I spent some days at. It was a very boring job, but absolute dedication to detail was important. This was the last of something like fifty workstations or areas where the incoming returns were processed. This job was to sort through envelopes, detached vouchers, attached miscellaneous papers that were not relevant and make sure there were no live checks in there after everybody else had gone through the material.
I found a check every now and then. Usually it was just about the time I was thinking that this was a futile effort and a job that could be skipped. What I would find was anything from a money order for a few dollars to checks for several thousand. I think the biggest check was for something on the order of 11 or 12 thousand.
All of this material would be carefully stacked into cardboard boxes that were labelled with a precise set of numbers that would identify exactly when in the process the box was put into storage.
One time I saw a correspondence with a couple of dozen pages. Essentially, the taxpayer was going back and forth with the IRS over a money order that had been submitted some years before. The taxpayer had gone back to the 7 Eleven where he bought the order, only to find out that the company that issued it had gone out of business. It took him a couple of years to track down a receipt, but he did it. Since I was sitting at the work station where these missing checks would likely wind up missing, this story motivated me to greater alacrity in searching through the paper.
But it was still a very boring job and it seemed to me that there ought to be more appreciation for the ways in which small pieces of paper could be missed.
The debates about reforming tax policy to me entirely miss a couple of areas that are generally out of public awareness.
My prime issues in tax reform are elderly fixed income citizens and when wage earners go into business for themselves.
One woman called in who was all full of outrage and "The IRS operates illegally." I figured there was something more specific on her mind, so I let her talk until she calmed down, which took a while. It turned out that her checking account, which amounted to her teacher retirement pay (normally around 1500 bucks a month) was being levied. The IRS simply withdraws a penalty amount such as 500 dollars each month until the balance due is satisfied.
I looked at the cryptic green or orange COBOL codes on various screens and figured out what was going on. Each year, when it receives income reporting for individual taxpayers the IRS opens up a file in the vast galaxy of computer databases on mainframes in various congressional districts around the US that date back to the 1960s when they were set up. This begins a cycle. When a return is filed that includes the correct amount, the automated computation is satisfied.
However, when TAXMOD remains open and "unsatisfied" mathematically, routines are applied that determine delinquent penalties and interest over time.
This taxpayer had a whole series of years in which these babies were set to go off.
She said that she and her buddies had talked about this over coffee some time back and decided that they were beyond the system at their age and that they would quit fooling with tax returns. So everything from the IRS went into the trash, unopened.
I pointed out to her that all she needed to do was to get some help filing those prior year returns and they would quit the levy process. It would all go away.
As I described what was happening to her, that each and every year another levy would go into effect and it would wind up cleaning out her retirement if she did nothing about it, and that it would be easy to stop this, she was no longer strong, hostile and full of pepper. She was now a feeble old lady, helpless. She thanked me and said she was going to just let it happen and she hung up.
A lot of senior citizens find themselves in trouble with the IRS because they have been through a couple of years in which a spouse was ill before dying. Their paperwork is in disarray and they are unable to motivate themselves for grieving.
Why should We The People want to put a lien on some old woman's old pickup truck that might be worth as much as twelve hundred lousy dollars?
I think the proposal to let people over 70 and who live on a fixed income off the hook makes a lot of sense. We waste a lot of manpower on going after the retirement income that these people ought to be allowed. It is little enough. Few of these people can afford to hire attorneys and accountants to advocate on their behalf.
People who go from earning wages to becoming self employed, tend to get into trouble over quarterly earnings reporting. This can turn into a really nasty situation.
I will never forget the sound of a woman's voice in my ear. She had called in because she was confident that a check had crossed in the mail with a bill and she wanted to just simply have someone look to see and assure her that this was the case.
She had refinanced her house in order to make a payment that I seem to recall was in the neighborhood of thirty thousand dollars. She and her husband were making an amount that varied a lot from year to year with the market, but which was something less than a hundred grand a year, doing some sort of real estate appraisals.
They had been confused about quarterly reporting during their first year in business and had gotten into penalties and interest that kept mushrooming. The decided to bite the bullet and write a big check.
The cryptic little COBOL codes told the story. Basically she really did owe another 30 grand, on top of the 30 Gs that she had just sent in. Her check was in the system with a receipt date already.
The sound I won't forget came when I explained what I was seeing in the system, how penalties and interest add up and how the bill she got was indeed a balance due. She
sounded like someone had come up and stabbed her and she was trying to remain dignified instead of crying out.
I heard that sound a number of times.
There was a large yellow sticky note on one fellow worker's desktop in this call center you had to enter through a series of punch code locks. It was in ball point pen, very dark for being traced over and over again. It said: Don't Care.
I think the truth of the matter is that people who get this treatment are out of sight and out of mind for the policy makers. The complaints that Congress hears are from the IRS about deadbeat taxpayers and how much money would come in if the IRS enforced collections more aggressively.
These taxpayers are simply easier to collect against than the wealthy taxpayers who can become the clients of accounting firms and can afford to hire teams of attorneys - not to mention lobbyists and whole big chunks of the Washington Establishment.
I remember that one caller was a young woman who lived on interest from stocks. She was very upset to learn that her income was reported and that she needed to pay taxes on it. She was very indignant and pointed out that she was not like everybody else who had to work for a living and refused to hear that she was part of the same society. She angrily hung up.
I suspect that people like her are pushing Congress and the President very hard, because they have the money to play the game. It is probably cheaper than paying taxes as well as more fun.
Overall, when you roam hallways lined with carts full of returns from millions of people, and see the massive paperwork piled up in workstations everywhere in a huge building dedicated to processing it all, there is a palpable sense of an American compact that is present. No police force or army could possibly ever enforce against noncompliance if the entire population withdrew from the enterprise. What is present in these hallways and these rooms with all these workers earnestly working overtime for a few months, is that this system represents a serious commitment on the part of citizens, with all the grumbling that we can manage, to being America in the most active sense of the verb.
There is in fact a community and a compact that is unwritten, save for the laws that Congress passes to reflect it, in which all members of society are party to the benefits and the costs associated with being American.
Citizenship turns out to mean accepting responsibility for maintaining what makes Freedom and Liberty possible and which give it meaning.
Consumers are essentially something different from citizens. Selfish units only concerned with gratification, the more immediate the better, and who want to be relieved of the burden of belonging to any community or having any responsibility to others.
Actually what we do when we go look for our tax documents and get ready to sit down to the task of adding and subtracting and filling out these forms is to work out the difference between being consumers and being citizens.
Reforming the community compact is our constant work in progress. It is the work of responsible citizenship.