IRS Targets Hundreds Of Thousands Of Poor Americans

by Molly Ivins

Boy, you really can't take your eyes off this bunch for a minute, can you? If they're not screwing up one thing, then they're screwing up another -- busy little beavers. And then there are the administrative nightmares they have created all by themselves: The new Medicare prescription-drug benefit is such a disaster area, four states took it over in less than a week just to make sure poor people received their drugs.

Some of the press is starting to get the drill. Give us something like the West Virginia coal mine disaster, and instead of standing around emoting like Geraldo Rivera, a few reporters have enough sense to ask the obvious question: What is this mine's safety record? And when it turns out to be abysmal, a few more reporters have enough sense to ask: Who's in charge of doing something after a mine gets 205 safety violations in one year? Where's the Mine Safety and Health Administration? Who runs it? What's their background -- are they professionals or mining industry stooges? Who's the Michael "Heckuvajob" Brown in this outfit? Why are so many jobs at MSHA just left completely unfilled? How much has MSHA's budget been cut since 2001 to pay for tax cuts for the rich?

The great irony is that this was supposed to be the CEO administration. Bush was supposed to put people in charge of government who had track records in private industry, who did in fact know how to run a railroad. For just sheer incompetence, this administration sets new records daily. All those years the right wing sat around yammering about government incompetence, and it took this administration to make it true.

But while the press is busy sort of figuring out what government needs to do -- homeland security, anyone? -- other agencies are slipping quietly out of control, with almost no attention paid. In the case of the Internal Revenue Service, the problem appears to be more malice than incompetence.

Right-wing conspiracy theorists used to enjoy frightening themselves with the possibility that the IRS would somehow become politicized and be used as a tool by some nasty socialist like Jimmy Carter to go after their ill-gotten gains stashed illegally offshore. Always seemed like a good plan to me. Unfortunately, the only people who ever tried to politicize the IRS were on the right -- first Richard Nixon and now George W. Bush.

Hundreds of thousands of poor Americans have had their tax refunds frozen and their returns labeled fraudulent, according to the IRS's taxpayer advocate, Nina Olson. Testifying before Congress this week, Olson said the average income of these taxpayers is $13,000. Olson and her staff sampled the suspected returns and found that, at most, one in five was questionable.

The poor citizens are seeking refunds under the Earned Income Tax Credit, a Reagan program to help the working poor. The total possible tax fraud amount involved in these returns is $9 billion -- compared to the $100 billion problem with fraud by small businessmen who deal in cash. That's the kind of shrewd administration we've come to expect from the Bushies. Olson points out it is not only unfair, but also a waste of time. Meanwhile, mind-boggling sums in taxes are being evaded by those at the other end of the income scale.

David Cay Johnston, The New York Times' tax expert and author of "Perfectly Legal," reports the IRS is now involved in an effort to cover up these very kinds of incompetence that Olson demonstrated. "Records showing how thoroughly the IRS audits big corporations and the rich, and how much it discounts the additional taxes assessed after audits, are being withheld from the public despite a 1976 court order requiring their disclosure," Johnston writes. In an episode reminiscent of the three stooges, the IRS simply announced there was no court order.

This is, of course, part of a far wider and grimmer shutdown of information about our government. Despite cheerful burbling from the president ("The presumption ought to be that citizens ought to know as much as possible about the government decision-making," he said last year), this administration's love of secrecy is monumental. In fact, the cost of keeping what our government does secret from the public has gone up alarmingly: The classification system that cost $4.3 billion in fiscal year 2000 was up to $7.2 billion in fiscal year 2004. That's a lot of Wite-Out.

Meanwhile, the IRS has also tracked the political affiliations of taxpayers in 20 states. Its explanation is that the information was "routinely collected by a vendor" and, of course, it made no use of it. And now the IRS is planning to "outsource" collecting overdue taxes to private firms around the country. Now, let's see, do we think any of those private firms will have Republican Party affiliations?