An underfunded IRS rewards intellectual bankruptcy

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I have often advocated for increased funding from the IRS.

I doubt I convinced anyone. Perhaps my arguments lacked passion.

Today I try the passion. You must know something about me. Growing up, my mom endured many parent-teacher conferences where she heard a consistent story. Her son was an academic underachiever.

My mother was a 4.0 student until high school. She openly admitted that she worked better than everyone. My teachers said my test scores were extremely high, but in class I was disinterested.

The apple fell far from the tree. Yet my mother never told me to get in shape. She knew me. I didn’t know myself. I had to learn and it was difficult.

The children I hung out with at the time did not advocate academic success. Neither do I. Except a few times.

In CM2, we had to build something historic. I chose an Inca village. I worked for three weeks with slowly hardening creek bank clay.

In the end, I had my own Machu Picchu. It was so heavy that my dad had to come with me on PS 4 to help carry it to our class. Upon entering, I expected to see more masterpieces.

Other kids had used a shoebox to make something stupid the day before the deadline. I was mortified.

I had a huge wooden board with a clay village made up of many buildings. My friends couldn’t understand why I spent so much time there. Neither do I.

In seventh grade math class, we were told there was a school-wide contest to see how many permutations or arrangements one could make. I spent the whole evening on it and got somewhere in the 700s. The next closest kid was in the 300s.

Again, I felt embarrassed for spending so much time. There were one or two legitimate math geniuses in my school and I beat them. I knew it was because I had taken the task a little too seriously.

It took me years to get comfortable with pursuing intellectual challenges. When I told my mom that I got a 4.0 in my freshman year in college, she didn’t care and just said, “That doesn’t surprise me.” I felt like shouting, “Well, that shocks everyone!”

Comfort in intellectual pursuit led me to tax practice. Transactional tax planning is intellectually challenging. It takes time, effort, study, thought, research, analysis, trial and error. There are false starts and dead ends.

When I was mature enough to want to build an Inca village with my mind, to want to be Mr. Permutation, tax practice suited my needs.

I taught my children to willingly be exposed to new ideas. Listen. Then criticize. Learn to think and analyze.

William James said, “Many people think they are thinking when they are just rearranging their prejudices.”

Aristotle said, “It is the mark of a learned man to be able to entertain a thought without accepting it.”

Early in my tax career, we researched in detail and wrote a critical analysis of transactional ideas and possible challenges to those ideas.

It may be hard to believe, but tax practice was to build villages of ideas and then test them to see if they would crack when subjected to the elements.

And there were elements. The IRS has been funded and its agents trained. The audit rate was relatively high. My firm taught that we had to do it right. There were consequences.

The IRS, too, had a village built of clay and its permutations were many. You had to be on your intellectual game. It was a challenge.

Now the ill-funded IRS is hanging around in a shoebox with a few papier-mâché buildings and people made of cigar cleaners. Why build a clay village to compete with that?

Tax practice has become increasingly intellectually lazy. People want quick answers and the audit rate means no one is likely to challenge those answers.

I hope I never feel embarrassed spending hours researching, formulating and challenging a tax idea.

Poor IRS funding leaves us with a tax system that rewards intellectual bankruptcy and does not deserve a great democracy.

James R. Hamill is the director of tax practice at Reynolds, Hix & Co. in Albuquerque. He can be reached at [email protected]

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