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Saturday, May 2, 2015

John Oliver's Defense of the IRS

It was with mixed feelings that I watched John Oliver's  defense of the US Internal Revenue Service on his show Last Week Tonight.

For those of you who don't know him, Oliver is a British comedian who had the good fortune to land in a country - the United States - where the political system is so screwed up that it sits up and begs for political satire. As a US citizen living abroad I've stopped following too closely the US political scene because it is predictably pathetic.  And it is not just the crazy Republicans either;  the Democrats are a few bricks shy of a load, too.

None of this lunacy will be healed any time soon (and, alas, I know of no medicine for what ails us) , which means that John Oliver possesses something that millions of US citizens would love to have:  job security.   And he will never run out of topics as long as he lives in the "Land of the Free" because even in good times the US is a big messy democracy, something that H.L. Mencken enjoyed so much because:  "It is incomparably idiotic, and hence incomparably amusing."

His defense of the IRS is amusing but not his best work.  The song at the end is sappy and silly and not particularly funny.  His attempts to tug at our heartstrings, however, is.  They do a necessary job, he says, for which they are hated.  Yes, that's true.  In fact it's true of just about any country on this planet.  When Oliver describes the venom Americans spit at their tax authorities, he's not giving us a shining example of Americans exceptionalism - he's just showing that Americans are no different from anyone else in the world where it's simply a reality that nobody loves the local "fisc".  

Oliver's point, however, about the IRS budget cuts was right on the money.  But he missed a fabulous opportunity to explain something important to the American people.  It's not just the budget cuts that are causing turmoil in that agency, it's also the expansion of the IRS scope and responsibilities. Congress, in its great wisdom (or complete insanity) handed them both the Affordable Care Act (Obamacare) and something called the Foreign Account Tax Compliance Act (FATCA).

The IRS Commissioner John Koskinen and Nina Olson, the National Taxpayer Advocate, have fired back pointing out to both Congress and the American people of something that every competent project manager understands:  you don't expand scope and cut budget at the same time.

A truly funny aspect of all this is that FATCA was supposed to be all gain and no pain. Hell, it was written so that all of the cost would be borne by those foreign financial institutions.  Foreign countries didn't find that amusing at all and agreements were reached that require American banks to do similar reporting to countries outside the United States.

But the bill on the US side goes beyond the banks:  Koskinen drew a straight line for Congress between FATCA implementation and those "courtesy disconnects" and long lines at IRS offices that Americans in the homeland are suffering..  We must implement these things on your orders, he said, and with lower budgets something has to give.  That something is customer service.

So Americans in the homeland - the ones who can't afford professional tax help -  are paying for FATCA, albeit in an indirect way.  I think it's worth mentioning because it is rather ironic, isn't it?
That a law to catch "rich tax evaders" instead causes direct harm to working Americans everywhere.

And the faute (and it is a faute lourde) should be laid exactly where it belongs - with the not so funny repercussions of a dysfunctional political system.


Unknown said...

Thank you so much for pointing me to this, Victoria- a little ray of (slightly vulgar) sunlight!
As you say, though, they didn't get all the way, to an IRS that has to do more with less, or more frighteningly - as Commissioner Koskinen himself has said - "less with less"....
Vulgarity aside, however, I loved the song... and the deadly earnestness with which it is delivered!

Tim said...

Sorry Victoria have to disagree. FATCA is the IRS' baby they wanted it they have to live with the mess they created.

Anonymous said...

Unfortunately, not unique to US IRS. Canadian government may cuts, claiming that they were only back end service cuts and were never up-front about impact on citizen service. Most egregious - but not unique case - was with respect to veterans.

Blaze said...

Aren't you in Thailand? Why are you spending your vacation posting about the IRS?


Anonymous said...

It is like the Scorpion and the Frog fable. Fatca is the scorpion and frog is the average American who works hard to save money and spread American good will.

A few friends have given up green cards and passports. They say they feel free !!

Victoria FERAUGE said...

@Hi Lucy, John Oliver is always a hoot. :-) Koskinen has said it and said it again and it's like Congress just isn't listening. What a mess he was handed...

@Tim, "IRS" is too broad. I'm sure some folks at the IRS were in favor (and do we have names?) and pushed for it but I doubt the employees at the call centers even know what FATCA is.

@multiculturalmeanderings, good point and one that the IRS commissioner keeps trying to make to no effect.

@blaze, Yep I was in Thailand and due to very poor internet service wasn't able to do much from there. Just this one post.

@anonymous, good analogy. And yes I've talked to many who felt much better after they renounced/relinquished. Nina Olson hit the nail on the head when she described all this as "torment".

Fooled said...

Ha ha...Regarding the frog and the scorpion...I guess that is what many democrats feel now. They voted for current president and felt the big FATCA sting half away across the pond.

Tim said...


I agree that the typical IRS call center employee doesn't even know what FATCA is. However, I do think most of the IRS middle and senior management is pro FATCA. If I was to name names clearly Koskinnen is pro FATCA as is Bob Stack. I would also put former IRS official such as Dick Harvey, Itai Grinberg, Manal Corwin, and Steve Shay on that list.

I also think some of the frustration on the part of Congress is they really want to punish the senior management of the IRS not the worker bees so to speak. However, I suspect the senior management is quite good at passing the burden of these most recent budget cuts down the line. I also think Republicans are mad that Democrats are not just per say letting the whole IRS off the hock but in particular some very bad senior IRS managers who I think did some things that most would consider quite unethical.

Tim said...

Here is a more lower level IRS pro FATCA-ite.

LarryC said...

Posted on Reuters today (5/13/15)

1300 US citizens turned in their passport in the first quarter of 2015.

However, the wording by the journalist is a bit deceptive or manipulative - suggesting that Americans turn in their passports simply to avoid paying the IRS its due.