{"id":218,"date":"2025-03-19T18:15:31","date_gmt":"2025-03-19T18:15:31","guid":{"rendered":"https:\/\/www.bourbonnaistax.com\/blog\/?p=218"},"modified":"2025-03-19T18:15:31","modified_gmt":"2025-03-19T18:15:31","slug":"wanted-dead-or-alive","status":"publish","type":"post","link":"https:\/\/www.bourbonnaistax.com\/blog\/wanted-dead-or-alive\/","title":{"rendered":"Wanted: Dead or Alive"},"content":{"rendered":"
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It\u2019s no secret Uncle Sam has been living above his means. He hasn\u2019t balanced his budget since 2001. He put trillions on his American Express card to pay for Covid relief. And now, as he struggles to extend the Tax Cuts and Jobs Act of 2017 later this year, he\u2019s fighting to flesh out a budget resolution that authorizes $86 trillion<\/em> in spending through 2034. If he was your real uncle, you might be googling \u201cDebtors Anonymous\u201d meetings in your neighborhood.<\/p>\n\n\n\n

The new administration has chosen the IRS, among other agencies, for spending cuts. They\u2019ve already laid off 7,000 out of 102,000 workers and have proposed slashing total workforce by as much as 50% by the end of the year. Time will tell how big a wrench the downsizing throws into this year\u2019s tax season, although so far, the Service appears to be handling the challenge better than expected.<\/p>\n\n\n\n

Here\u2019s the problem.<\/strong> The IRS is one of the few parts of our government that actually\u00a0makes<\/em>\u00a0money. This is especially true for the hated enforcement divisions. The IRS estimates that every dollar of enforcement spending can result in five to nine dollars of revenue. If your investment advisor told you every dollar you invest in a particular asset will return five to nine dollars over time, you\u2019d mortgage your house to stuff as much money into it as you could.<\/p>\n\n\n\n

So here\u2019s a modest proposal to shrink the budget deficit, cut the federal payroll, and<\/em> reward the hardest-working people in IRS enforcement. Why not give IRS enforcement staffers a commission<\/em> on every tax dollar they raise through their activity? What could possibly go wrong?<\/p>\n\n\n\n

For starters, it would reduce the need for fixed salaries. Right now, new auditors typically start at around $52,000 per year. Perhaps we could replace that with a small stipend, just to keep food on the table, while they ramp up their career. But it would significantly reduce the government\u2019s risks once those officials transition to full commission status. And it would quickly weed out weak producers who realize they\u2019re not cut out for pay-for-performance comp.<\/p>\n\n\n\n

Turning auditors into bounty hunters might also keep the talented ones around longer. Senior revenue agents\u2019 salaries typically top out around $120,000. That\u2019s decent coin, to be sure. But it\u2019s not nearly as much as they might make by crossing over to the dark side and representing taxpayers at law firms or accounting firms. Ambitious auditors who know they can make high six-figure or even seven-figure incomes might prefer to feel patriotic and hone their skills without taking their specialized knowledge to the private sector.<\/p>\n\n\n\n

This is especially true for the rockstars of the \u201cWealth Squad\u201d targeting ultrawealthy filers (and non-filers) through mazes of partnerships and LLCs. The IRS estimates that the top 1% of filers fail to report 20% of their income and escape $175 billion in tax every year. We\u2019re obviously not solving that problem now \u2013 so why not give capitalism a try?<\/p>\n\n\n\n

Of course, we\u2019d need guardrails to ensure auditors don\u2019t abuse their new opportunity. Paying commissions raises obvious conflicts of interest. It could encourage them to take overly aggressive and legally questionable positions to take more home themselves. It would erode trust in the system\u2019s fairness. It would encourage auditors to focus on cases with the biggest and quickest personal payouts. It could even lead to crooked bargains with individual taxpayers, such as negotiating quick adjustments where both parties benefit in order to avoid drawn out litigation.<\/p>\n\n\n\n

On second thought, maybe turning auditors into hired guns isn\u2019t such a good idea. Fortunately, we\u2019re here to help create the most tax-efficient structure no matter how the IRS pays their muscle. Keep that in mind this tax season and let us know how we can do even better!<\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s no secret Uncle Sam has been living above his means. He hasn\u2019t balanced his budget since 2001. He put trillions on his American Express card to pay for Covid relief. And now, as he struggles to extend the Tax Cuts and Jobs Act of 2017 later this year, he\u2019s fighting to flesh out a budget resolution that authorizes $86\u00a0trillion\u00a0in spending through 2034. If he was your real uncle, you might be googling \u201cDebtors Anonymous\u201d meetings in your neighborhood.<\/p>\n","protected":false},"author":2,"featured_media":219,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[3],"tags":[96,97,50,4,9,6,95,80,64,68],"class_list":{"0":"post-218","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-taxes","8":"tag-auditstrategy","9":"tag-businesstaxes","10":"tag-irs","11":"tag-tax","12":"tag-tax-strategy","13":"tag-taxes","14":"tag-taxnews","15":"tag-taxplanning","16":"tag-taxpolicy","17":"tag-taxrelief","18":"entry"},"_links":{"self":[{"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/posts\/218","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/comments?post=218"}],"version-history":[{"count":1,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/posts\/218\/revisions"}],"predecessor-version":[{"id":220,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/posts\/218\/revisions\/220"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/media\/219"}],"wp:attachment":[{"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/media?parent=218"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/categories?post=218"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/tags?post=218"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}