It’s hard to take your eyes away from the ongoing political drama in Washington, as the presidential transition turns violent and even fatal. Yet at the same time, it’s important to note additional evidence that basic government competency functions have been ignored under the Trump Administration.
As the Washington Post reported earlier this week, the IRS has sent out about 68% of the second stimulus payments. But many Americans will have to file a 2020 tax return to get their money, much to their disappointment.
This problem should not have been a surprise to the IRS. As the even-keeled “Accounting Today” noted: “The Internal Revenue Service is once again depositing the latest round of Economic Impact Payments in the wrong bank accounts in a replay of problems experienced last year by many taxpayers.” According to the Post article, the National Consumer Law Center “blamed the IRS for not being ready after it had months to prepare for this second round of aid payments and said as many as 20 million people could be impacted.”
In a narrow sense, the IRS fumbled the ball on an issue that was clearly going to reoccur, perhaps because of all the other demands on the agency. Tax preparation companies sometimes set up temporary bank accounts for taxpayers to receive their refunds. Instead of mistakenly using those temporary accounts, and running the risk of the deposit being rejected, the IRS could have mailed the checks to the current address on the return.
That’s one of those problems which can be a surprise the first time, but should be easily fixable the second time around. Unfortunately, the IRS made it worse. WHen this problem occurred for the first stimulus check, the IRS tried to issue new payments or allow updated information on the bank accounts. This time the needs of the upcoming tax season means that the IRS doesn’t have the human or computing resources to make fixes. As a result, it’s telling Americans to file their tax return to get their money.
In a broader sense, this points out long-standing issues with government IT spending and execution. In a September 2020 report, PPI showed that the government has fallen short on IT spending by hundreds of billions of dollars relative to the private sector. An October 2020 PPI report focused directly on the IRS, and the dangers of pushing the IRS beyond its core mission of handling tax returns rather than giving out money for social policy purposes, which the agency was never set up up to handle.
There’s no free lunch here. If we want the IRS to handle a wider scope of activities, it needs more resources and more attention to consumer service. In the short run, we should focus on making sure the agency does its core mission right.
