NCPA - National Center for Policy Analysis


July 19, 2010

It's hard to imagine that anyone would be nostalgic for the tax system of a few months ago, but post-ObamaCare, here we are, says the Wall Street Journal. 

National Taxpayer Advocate Nina Olson, who operates inside the IRS, highlighted the agency's new mission in her annual report to Congress last week: 

  • She notes that the IRS is already "greatly taxed by the additional role it is playing in delivering social benefits and programs to the American public," like tax credits for first-time homebuyers or purchasing electric cars.
  • Yet with ObamaCare, the agency is now responsible for "the most extensive social benefit program the IRS has been asked to implement in recent history."
  • And without "sufficient funding" it won't be able to discharge these new duties. 

These new duties include audits to determine who has the insurance "as required by law" and collecting penalties from Americans who don't.  Companies that don't sponsor health plans will also be punished.  This crackdown will "involve nearly every division and function of the IRS," Olson reports. 

Republicans argued during the health debate that the IRS would have to hire hundreds of new agents and staff to enforce ObamaCare, but they were brushed off by Democrats and the press corps.  The IRS says it hasn't figured out how much extra money and manpower it will need but admits that both numbers are greater than zero. 

  • Olson also exposed a damaging provision that she estimates will hit some 30 million sole proprietorships and subchapter S corporations, two million farms and one million charities and other tax-exempt organizations.
  • Prior to ObamaCare, businesses only had to tell the IRS the value of services they purchase.
  • But starting in 2013 they will also have to report the value of goods they buy from a single vendor that total more than $600 annually -- including office supplies and the like.  

Democrats sneaked in this obligation to narrow the mythical "tax gap" of unreported business income, but Olson says that the tracking costs for small businesses will be "disproportionate as compared with any resulting improvement in tax compliance."  

Source: Editorial, "Lost in Taxation; The IRS's vast new ObamaCare powers," Wall Street Journal, July 17, 2010. 

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