In
Tax
Simplification, Part II, I expounded on a 2010 Annual Report to
Congress, in which National Taxpayer Advocate Nina E. Olson focused on the need
for tax reform as the No. 1 priority in tax administration. In particular, she
focused on the problem of delivering social benefits through the tax system,
which complicates the mission of the Internal Revenue Service (IRS), resulting
in a dual mission of welfare administration as well as revenue collection. But
instead of taking heed, the federal government doubled down, adding a new health
care excise tax and health insurance premium tax credit to the IRS’s
burden.
Telephone
hold times with the IRS can sometimes run as long as four to seven hours these
days, and if you don’t believe me try calling yourself. A taxpayer facing a
federal tax lien, levy or wage garnishment doesn’t have a choice. He or she must
call immediately in order to prevent an adverse action, but unless they have a
day to spare and a very powerful battery, may wind up on the phone for several
days just trying to get someone on the line. The federal government has taken an
agency best suited for revenue collection, and turned it into a socialist style
welfare office, long lines and all.
In
Part 2, I affirmed that the shared responsibility payment isn’t a fee,
because nothing is received in return. Nor is it a penalty, because failure to
purchase health insurance doesn’t constitute a crime. The individual shared
responsibility provision imposes an excise tax on a tiny minority of U.S.
residents who don’t have government-mandated health insurance or qualify for one
of several exemptions. Although Internal Revenue Code
– Section 5000A refers to it as a penalty, in general, if it involves
filling out a federal income tax form (i.e. Form 8965), and is
assessed on and payable with your personal income tax return, it’s a
tax.
