The Tax Man Cometh: IRS Commish Emphasizes Crack Down and Compassion

WASHINGTON, April 13, 2009 -- The Tax Man Cometh...

With the tax filing deadline fast approaching Wednesday, the Internal Revenue Service will crack down on offshore tax evasion, while taking extra measures to help Americans struggling to survive the current recession, commissioner Douglas Shulman said today.

"We're going to go the extra mile during these difficult economic times to help you out if you're in distress,"  Shulman said in a speech at the National Press Club.

"We need to walk in the taxpayers' shoes," he said. "We need to see things from their perspective. We need to be in tune with their situation. We need to take each taxpayer as they come and ensure that we are treating people fairly and compassionately, especially during these difficult economic times."

But the IRS must balance the desire to help hurting taxpayers with the need to recoup much-needed government funds. As the government has shelled out record sums of money to address the economic crisis, the nation has run up a record budget deficit of $956.8 billion in the first six months of fiscal year 2009.

"This is a very fine line for us," he said. "On the one hand, we need to raise the funds to run the government -- I think the American people are counting on their government to do a lot more for them as we try to work our way through this recession -- and we have to be tough on those that flout the law, that won't pay what they owe."

Shulman's stern warning was directed at Americans engaging in international tax evasion as he promised to break down "the much-vaunted veil of secrecy".

"In today's economic environment, it's more important than ever that the American public feels confident that individuals and corporations are playing by the rules and paying the taxes they owe," he said. "With so many of our friends and our neighbors feeling deep financial pressures as they struggle to stay in their homes and pay for the most basic necessities of life, there is very little tolerance for those that have the means to pay their taxes, but shirk their responsibilities."

However, some of the high-profile people who have faced tax problems have been none other than a number of President Obama's Cabinet nominees. A handful of nominations were derailed by tax issues, including Department of Health and Human Services secretary nominee Tom Daschle.

But the nation's tax chief today chalked such problems up to "inadvertent errors", instead choosing to highlight that there were "a phenomenal number of people who have gotten nominated and sailed right through."

In the coming weeks, as the IRS cracks down on tax evasion, Shulman emphasized that the agency also wants to do its part to help needy Americans.

"Tax filing season is also its own stimulus for the economy," he pointed out, recalling that last year, 24 million poor Americans received about $48 billion in earned income tax credit.

The task of collecting tax revenues while remaining compassionate for recession-ravaged taxpayers is by no means the only challenge Shulman faces.

As he starts his second year of a five-year term at the head of the agency, the IRS boss must manage the handling of more than 150 million individual tax returns this year, compared to only 14 million individual returns back in 1940. He is now responsible for collecting $2.4 trillion in tax revenue, overseeing more than 100,000 employees, and handling a budget of more than $11 billion.

The huge increase in the intake of tax returns is just one of many recent changes Shulman must combat. The agency now also faces the challenges of skyrocketing big business and recent globalization.

From 1995 to 2006, filings by businesses with more than $250 million in assets increased by 85 percent, he said. Since 2000, the number of individual foreign tax credits has increased by more than 170 percent.

Another sign of the IRS' growing responsibility is the 353 million visits to its Web site last year, making it the 10th-most trafficked business Web site in the world, Shulman said.

"The number one happens to be Wal-Mart," he noted.

One way to help Americans, he suggested, would be to simplify the nation's "incredibly complex" tax code.

"Any efforts for simplification certainly would be helpful to the American people and certainly would reduce a number of inadvertent errors," he stated.

With so many challenges ahead, Shulman told the guests gathered at the press club luncheon one of his frequent reminders for agency employees.

"The IRS represents the face of the government to more American people than any other federal institution," he said. "At the end of the day, everything runs through the IRS."