NY Times Fails to Do Its Homework on the IRS's Estate Tax Auditor Reduction

In January, in response to the Sago Mine tragedy, editorials at The New York Times charged that the Bush Administration had let mine safety deterioriate and had let up on its mine inspection efforts. A few minutes of looking at the government's own statistics by yours truly (here and here) and others showed that deaths and injuries had both decreased substantially during the Bush administration, even after considering workforce reductions, and that on a per-mine and per-miner basis, there had been no slacking off on inspections.

Now The Times, that former national media powerhouse that seems intent on becoming Manhattan's quaint little alternative newspaper, has done it again. In an article about IRS reductions in estate tax auditing, it shows that it doesn't understand something you and I instinctively know -- when there's less work to do, you need fewer people to do it. It also didn't do the basic research that would have shown that the reductions are not only justified, but that they should have begun several years ago.

And this will sound familiar to Times watchers: They think they have this incredible scoop because some of the people being let go leaked internal documents:

I.R.S. to Cut Tax Auditors

The federal government is moving to eliminate the jobs of nearly half of the lawyers at the Internal Revenue Service who audit tax returns of some of the wealthiest Americans, specifically those who are subject to gift and estate taxes when they transfer parts of their fortunes to their children and others.

The administration plans to cut the jobs of 157 of the agency’s 345 estate tax lawyers, plus 17 support personnel, in less than 70 days. Kevin Brown, an I.R.S. deputy commissioner, confirmed the cuts after The New York Times was given internal documents by people inside the I.R.S. who oppose them.

..... Mr. Brown said in a telephone interview Friday that he had ordered the staff cuts because far fewer people were obliged to pay estate taxes under President Bush’s legislation.

But six I.R.S. estate tax lawyers whose jobs are likely to be eliminated said in interviews that the cuts were just the latest moves behind the scenes at the I.R.S. to shield people with political connections and complex tax-avoidance devices from thorough audits.

Sharyn Phillips, a veteran I.R.S. estate tax lawyer in Manhattan, called the cuts a “back-door way for the Bush administration to achieve what it cannot get from Congress, which is repeal of the estate tax.”

Mr. Brown dismissed as preposterous any suggestion that the I.R.S. was soft on rich tax cheats. He said that the money saved by eliminating the estate tax lawyers would be used to hire revenue agents to audit income tax returns, especially those from people making over $1 million.

..... Mr. Brown said that careful analysis showed that the I.R.S. was auditing enough returns to catch cheats and that 10 percent of the estate audits brought in 80 percent of the additional taxes. He said that auditing a greater percentage of gift and estate tax returns would not be worthwhile because “the next case is not a lucrative case” and likely to be of relatively little value.

All the whining and borderline moonbattery notwithstanding, the fact is that a 5-minute review of the IRS's own statistics shows that there are many fewer returns to audit (each year's link at "Estate "Tax Returns By Tax Status and Size of Gross Estate" is an Excel spreadsheet of the relevant stats):


Based on the trends, it would seem nearly certain that fewer estate tax returns were filed in 2005.

The IRS's estate tax auditors are also charged with reviewing gift tax returns. IRS Gift tax statistics are not as complete, but the data available indicate that a similar workload reduction has taken place, from 13,815 taxable returns filed in 1997 to only 5,468 in 2004.

The headcount reduction of 157 out of 345 IRS estate tax lawyers is a 45.5% reduction, which appears to be right on the money. In fact, with the workload falling as it has, the real criticism of the IRS should really be directed at why they have taken so long to respond to it.

The Times' coverage of the story without looking at, or perhaps ignoring, the relevant statistics is incompetent and inexcusable -- and, sad to say, all too typical.

Cross-posted at BizzyBlog.com.

Taxes Economy New York Times