IRS Commissioner John Koskinen said the tax code is “more difficult to understand” than when he went to law school so he does not prepare his own tax returns.
"Actually, I do get a refund myself. And what I usually do is then figure out how much of it I can use to start paying my estimated taxes for the next year, as that goes. So I'm just like everybody else – confused a little by the tax code. I do not do my own tax return, even though I went to law school and took tax courses, but the code, compared to when I was in law school, is phenomenally more complex and more difficult to understand,” Koskinen said during a National Press Club luncheon.
“My life is fairly simple. You become the IRS Commissioner and you give up a lot of stuff and get rid of a lot of stuff, so I'm a relatively simple economic being – but the annual return is still much more complicated than it needs to be,” he added.
Koskinen was asked if he thinks tax reform will be more difficult to accomplish than healthcare reform for the GOP-led Congress.
“I think it is. As someone noted, healthcare reform, as people have discovered, is complicated but you're dealing with a segment of the economy – the insurance companies and companies providing healthcare. When you're talking about tax reform, you're dealing with everybody in the economy and, so, it is complicated,” he said. “We haven't done significant tax reform, as everybody knows, in over 30 years, and as you know, we don't have, as I said, a dog in the fight of healthcare, we don't have a dog in the fight of what goes on in tax policy.”
Koskinen referred to reforming the tax code as a “once-in-a-lifetime opportunity” for Congress and the White House.
“I've tried to make it clear with the Hill, with the new leadership at Treasury that we are delighted to provide support, once you decide what the policy is, in terms of how to implement it most effectively and simply for taxpayers, as well as for us. And so, we look forward to cooperating with them,” he said.
“I do view tax simplification as not policy so much as administration. And I've been trying to get everybody to understand it's a once-in-a-lifetime opportunity, apparently, to do tax reform and I hope we don't lose the opportunity to do tax simplification at the same time,” he added.
Koskinen said the IRS is ready to provide support for implementation of a tax reform package.
“People, I've asked them over several months to pull together their suggestions, where you could just streamline the code, not policy-wise, just streamline and get rid of some of the complexity, and we've provided that into the system and we stand ready – both with the Hill and the administration – to provide whatever technical support we can to try to make sure that as we reform the tax code, we do it in a way that simplifies it, rather than complicates it,” he said.
Koskinen said everyone in the IRS would be delighted if Congress simplified the tax code, which he views as more complicated now than ever before.
“Some time ago it was suggested you could do the one-page form and get rid of the IRS. And I said, well, you have to understand, even with a one-page 1040-EZ, somebody has to make sure the numbers are right and somebody has to collect the money. If you want to call it something other than the IRS and it makes you feel better, that's OK with me,” he said.
“But it is clear that – somebody asked in the transition, ‘well, if there were real simplification, is there anybody at the IRS who would be opposed?’ And the answer is that everyone at the IRS would be delighted if you could make the tax code simpler, and you can't make it too simple for us because ultimately our goal is to try to make it as easy as possible for taxpayers to know what they owe and to file it,” he added.
Koskinen described a scenario where the IRS could begin reducing its workforce.
“So if we ended up with the one-pager and everybody could fill it out without worrying about a lot of deductions – we have tax expenditures of $1.3 trillion or more a year. So you could lower rates a lot, get rid of all of that, and have a much simpler process for taxpayers and at that point, we would be able to do with fewer people,” he said. “The likelihood of that probably is not great.”
The moderator asked Koskinen if there is a “top-secret security clearance” needed to see President Trump's tax returns and who within the agency would be able to view them.
“As a general matter, I think what's important for everybody to understand – taxpayers to understand is – no IRS employee can willy-nilly go look at anybody's tax return. You have to have a reason to look at that return. Otherwise, you're subject to dismissal and we monitor that,” he said. “So it's not just the president's tax return. Any taxpayer's return is sacrosanct and the only employees allowed to look at it are people who have some need to actually see that particular return. And we take that very seriously. The employees understand that.”
Koskinen added that “most of what we call the UNAX violations are employees looking at their own return, which is not allowed, or looking at a relative's return, which is not allowed.”
The commissioner said he has not seen any of Trump’s tax returns.
“Fortunately, I'm not allowed to look at anybody's tax return. So if you've filed anytime in the last four years, I have no idea what you said,” he replied.
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