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In September 2022, my wife and I decided to replace a bank Certificate of Deposit (CD) of hers -
which was paying less than 1% in interest - with a U.S. Treasury I-Bond - which was paying around 10% in interest at the
time.
In order to do this, we needed to open up a TreasuryDirect account for my wife. I went to the
TreasuryDirect web site and proceeded to fill out the on-line form for the new account. The process took about 10 minutes.
In reply, I received the following response.
“Dear Account Holder,
“Thanks again for opening a TreasuryDirect account.
“Unfortunately, we are having difficulty verifying the information you provided when opening your
account. As a result, a hold has been placed on your account for your protection.
“You must mail a completed Account Authorization form before you will be able to access your
account.
“For your protection and to help resolve any access issues with your account, please complete the
Account Authorization form (FS Form 5444) located at https://www.treasurydirect.gov/pdf/rs/acctauth.pdf and have your
signature certified as described in the form's instructions. Please note, Notary Public certification may also be
accepted.
“You can also watch the TreasuryDirect instructional video on how to complete this form at
https://www.treasurydirect.gov/indiv/tools/account-authorization.htm.
“Mail the completed form to Treasury Retail Securities Site, P.O. Box 9150, Minneapolis,
MN 55480-9150.
“Your new account number is {x-xxx-xxx-xxx}.
“You will not be able to access your account online until we approve your mailed account
authorization form. We are unable to answer questions about your account or the status of your submitted account authorization
form over the phone or by email until your account authorization form is processed.
"After we receive and approve your account authorization form, the hold on your account will be
removed. The average approval takes up to 13 weeks from when we receive the form, but may be longer based on the volume of
forms we receive. [Emphasis mine] You will be notified by email when your account is authorized and ready
to access. When you log into your account, check the Investor Inbox section of your TreasuryDirect account for an important
message.
“To ensure continued delivery of TreasuryDirect related information to your e-mail inbox, please
add the "From" address Treasury.Direct@fiscal.treasury.gov to your address book.”
Thank you for using TreasuryDirect.” (Ref. 1)
What in heaven’s name is going on at the U.S. Treasury? My wife has never had her identity
questioned. She has numerous valid identifications - a driver’s license, bank accounts, a valid Social Security account,
paid her income taxes for the past six decades, voted in the last fifty-plus elections, and much more! Why won’t she be able
to access her account online until TreasuryDirect is able to answer questions about her account or the status of her
submitted account authorization form over the phone or by email until her account authorization form is processed. What
crime is she suspected of committing? Why can’t TreasuryDirect just tell us what the problem is so we can resolve the problem?
My wife and I can instantly respond by phone, e-mail or text message!
After the U.S Treasury receives and approves our completed account authorization form, the hold on
my wife’s account will be removed. BUT,the average approval takes up to 13 weeks or longer –
THAT’S FOUR MONTHS - from when they receive the completed form, but it may be longer based on the
volume of forms they receive!
While the Treasury Department doesn’t have the resources to process a simple request to open an
account in a timely fashion for an ordinary citizen, the Biden administration is pouring 80 billion dollars into the Internal
Revenue Service (I.R.S.) to significantly increase its manpower.
“It has been called President Biden’s ‘shadow army,’ described
as a strike force to shake down small businesses with assault rifles and likened to a militia of auditors on search-and-destroy
missions.
“A decades-long Republican antipathy toward the Internal Revenue Service has reached a new level of
enmity with the passage of {the} Democratic-backed bill that gives the agency $80 billion to beef up its ability to go after
tax cheats. The legislation, which Mr. Biden signed into law . . . , will allow the beleaguered agency to hire more than
80,000 employees . . .” (Ref. 2)
Republicans, who have long accused the I.R.S. of unfairly targeting conservatives, have seized on the
law to fan conspiracy theories about the threat that mom-and-pop shops and middle-class Americans will face from an emboldened
tax collector.
“I think they’re going after middle-class and small business people,” said Republican Senator Chuck
Grassley of Iowa. “With 87,000 additional employees, you can imagine what that harassment is going to be to middle-class
Americans and our small business people.” [2]
With the infusion of the new money, the I.R.S. is beefing up its staff to keep pace with the growth
in the number of taxpayers and to replace departing employees. The Biden administration expects that about 50,000 I.R.S.
employees will retire within the next decade and that the agency will hire 87,000 new employees, bringing the overall size
of the agency to around 120,000. The number of enforcement agents is expected to double to about 13,000 from 6,500 over the
next decade. Republicans have been eager to fan fears about a scaled up I.R.S. ahead of midterm 2022 elections, which will
determine which political party controls Congress.
Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, said
that families making less than $75,000 annually would face 710,000 additional audits, suggesting that the Biden administration
had lied about its pledge to not increase audit rates of taxpayers who make less than $400,000. Mr. Brady also suggested that
the I.R.S. would have to target middle-income families to generate the kind of tax revenue that it has assumed the new law
will generate. “Middle-class families ought to be frightened,” he said on Fox News.
The 87,000 hires were described on various social media platforms as “thugs” and “terrorists” and
likened repeatedly to the Gestapo and the K.G.B. Some took to calling the I.R.S. an “army.”
[1]
Did a shiver go down your spine when you heard that Congress is pouring a whopping $80 billion
into the Internal Revenue Service over the next 10 years to beef up the nation’s tax collection system? To borrow from
President Reagan, among the most dreaded words in the English language are: I’m from the I.R.S. and I’m here to audit your
taxes.
Who will all these new I.R.S. agents be going coming after? The answer to that is a little like what
the notorious bank robber Willie Sutton is supposed to have said when somebody asked him why he robbed banks: “Because that’s
where the money is.”
Contrary to what politicians sometimes say, those bureaucrats in Washington are not dumb. The I.R.S.’
assignment is to collect all the money Washington is entitled to under existing law. So, like Sutton, they go where the money
is: the very high-income individuals, partnerships and corporations.
Those taxpayers also have batteries of lawyers and accountants to help them slip around the rules in
ways that only equally skilled I.R.S. experts can combat.
The nonpartisan Congressional Budget Office (CBO) estimates that the new funds will enable the
government to collect about $180 billion over the 2022-2031 period.
Like my current experience with the Treasury Department, customer service at the I.R.S. has also been
abysmal. In the most recent tax filing season, I.R.S. employees answered less than 15% of calls from taxpayers, said a senior
Treasury official.
And a lot of taxpayers, and not just those who file with paper forms instead of electronically, have
to wait while their returns are entered into the I.R.S. system.
Although most of the new funding will go toward enforcement, tens of billions will be used to upgrade
telecommunications and IT systems. All of that should make the I.R.S. more responsive.
[2]
Maybe some of that $80 billion slated for the I.R.S. should go to the Treasury Department
instead so that investors shouldn’t have to wait some 13 weeks or more to get their accounts opened!
As a consequence of the increase in I.R.S. funding, small business owners may soon be in for a lengthy
and expensive battle with the I.R.S., tax experts warn.
A key provision in the Inflation Reduction Act - which throws the extra $80 billion to the I.R.S. to
improve the agency’s collection of under-reported income - will end up targeting small business owners to pay for the
legislation, according to nonpartisan watchdog the Joint Committee on Taxation.
The group estimates that between 78% and 90% of the estimated additional $200 billion the I.R.S. will
collect will come from small businesses making less than $200,000 annually.
Just 4% to 9% would come from businesses making north of $500,000 a year - meaning the
reality of the legislation is in sharp contrast to President Biden’s longstanding claim that he wouldn’t raise taxes on
anyone making less than $400,000.
“The I.R.S. will have to target small and medium businesses because they won’t fight back,” Joe Hinchman,
executive vice president at National Taxpayers Union Foundation, told The New York Post. “We’ve seen this play out before . . .
the I.R.S. says ‘We’re going after the rich’ but when you’re trying to raise that much money, the rich can only get you so
far.”
In fact, going after the lower and middle class can actually be more lucrative for I.R.S. auditors than
trying to get more money from the wealthy. “The rich have their lawyers and fight it — that’s why the poor are easier to go
after,” Hinchman added.
Accordingly, tax experts warn that the I.R.S.’s audits will be far more painful and costly for small
business owners — even for those who think they’re filing their taxes correctly.
“Most small business aren’t doing anything wrong,” Daniel Bunn, executive vice president at the
Tax Foundation, told The Post. “We don’t make the tax code simple and the complicated tax code makes it difficult for small
business owners to comply with all the requirements.”
Even if small business owners get everything right, they may still be faced with a headache since
part of the I.R.S. expansion will involve sending out more notices and letters to businesses, Bunn added. For individual
contractors or small businesses, an I.R.S. letter that they owe more money or made an error on their taxes can put them
underwater.
“Anytime you get {an} I.R.S. letter, it could take months or years to get it settled - we’re talking
many thousands of dollars to address,” Bunn added. “Large companies have constant reviews and lawyers going through
everything . . . small business doesn’t have the resources to fight back in {that} way.”[3]
My recent problem with the Treasury Department is not new nor is it unique. Back at the start of
2022, the Treasury Department announced that it was “facing significant challenges this year”. Officials warned that many
taxpayers could see significant delays in receiving their tax refunds in 2022.
As of 23 December 2021, the I.R.S. had a backlog of more than 8 million returns. The previous
year, the I.R.S. ended the tax filing season with about four times as many unprocessed returns as they had the year before.
Simply put, things at the I.R.S. were – and still are - extremely backed up.
Then – as now – it was reported that taxpayers should be prepared to have trouble reaching the I.R.S.
for support should they encounter an issue with their taxes or with simply applying to the Treasury Department for an I-bond
account.
A survey by the National Taxpayer Advocate showed that only 9% of calls to the I.R.S. were answered at
all.
While the I.R.S. has spoken at length about its staffing and fulfillment issues, it didn’t give a
specific timeline for how long its problems would persist. It’s quite likely that their guidance will continue to be
relatively vague.[4]
The 2022 Treasury Department inefficiencies were so severe, that members of Congress
complained.
“After encountering unnecessary hurdles when helping constituents resolve delayed tax return
cases, Congressman Dave Joyce (OH) {wrote} to Internal Revenue Service (I.R.S.) Commissioner Charles P. Rettig and
Treasury Secretary Janet Yellen to request answers on how they plan{ned} to manage the I.R.S.’ processing backlog during
the current 2022 tax filing season.
“ ‘My office has received dozens of requests from constituents asking for help with challenges
they’re facing with the I.R.S.,’ said Joyce. ‘Ohioans don’t need to be burdened with additional unwarranted surveillance and
auditing. They simply need the I.R.S. to manage its current workload effectively and on time. Rather than asking Congress for
tens of billions more dollars for enforcement, I ask that Treasury work with the I.R.S. on a plan to reduce the ongoing
processing backlog. The uncertainty brought on by this backlog and the delays it causes places a real strain on Ohio
families and businesses, particularly those living on the margins.’ ” (Ref. 5)
Parts of the U.S. federal government are grossly inefficient! The fact that the average
approval time for a simple review of a request to open an account with the Treasury Depart can take 13 weeks or more bears
out this fact! The fact that, in the most recent tax filing season, I.R.S. employees answered less than 15 percent of calls
from taxpayers bears out this fact! Clearly, providing service to the ordinary citizen of this country is not a high
priority for some deprtments of our federal government.
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References:
- More Money for I.R.S. Spurs Conspiracy Theories of ‘Shadow Army’, Alan Rappeport and Tiffany Hsu,
The New York Times, 19 August 2022.
- The I.R.S. is getting a lot more money for audits. Should you be worried?, Don Lee, yahoo!news,
14 September 2022.
- 80% of new I.R.S. revenue will come from small businesses earning under $200K: tax experts, Lydia Moynihan,
New York Post, 3 August 2022.
- Many Tax Refunds Will Be Delayed, Treasury Says: How to Get Yours Sooner, Sam Lipscomb,
yahoo!finance, 11 January 2022.
- Joyce Calls on Treasury, I.R.S. to Address Processing Backlog, Office of Congressman Dave Joyce
of Ohio,
1 February 2022.
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