The results of a July 2012 Inspector General probe into IRS vendors have just been brought to light – and it doesn’t look good. In an article released by the Associated Press (December 18, 2013) entitled: “IRS vendors owed $589 million in back taxes, report says,” we learn 
that: “Altogether, 1,168 IRS vendors owed back taxes totaling $589 million as of July 2012, according to the report released Tuesday. Only 50 were in a payment plan to pay off their debt.”
The article goes on to tell us that: “The IRS checks whether vendors owe back taxes when the agency awards contracts, the IRS said. But the IRS doesn’t continuously monitor whether vendors are current in their tax bills after contracts are awarded.”
The Inspector General’s office has come out and stated that such findings “conveys a contradictory message” and has recommended closer scrutiny for IRS vendors, but the IRS maintains that regulations don’t authorize them to do so.
This sets up a very interesting ethical dilemma for us to bring to light in this post. First, I had better bring a few more numbers into the conversation because it details both the immensity of government and the problems stemming from a lack of oversight.
The article stated that number of organizations owing back taxes is only about seven percent of the total number of IRS vendors; one of the organizations – alone – owed $525 million in back taxes and apparently, “The IRS said 863 of the delinquent vendors — or about three-fourths — provide (essential) services to the agency.”
It means that despite the fact that a vendor such as a bank or financial institution might owe back taxes, the IRS must still use their services to turn over critical financial documents on individuals or companies – and the IRS is obligated to pay for such reports.
Expanding our horizons
In this scenario, I would rather think of the IRS as the bell cow rather than the focus of all that is wrong with government. I have no idea what goes on in some of the corridors of the USDA or FTC or FDA for that matter, but I will take a wild chance and say that if we looked long enough and hard enough, we would uncover many irregularities that could potentially dwarf the IRS irregularities including on-going failed programs, vendor and contractor problems and potential cases of fraudulent and unethical behavior.
When the ethical violations (and they are) are uncovered what is the response? In typical fashion, more bureaucracy will be established; more panels, more oversight and more reports to be filed. In my opinion, when that happens virtually nothing will change.
I would rather see a Department of Ethics established within the Washington D.C. bureaucracy rather than a Department of Oversight, or new commissioners or another layer of surveillance or blue ribbon panel added to the IRS or Inspector General’s office.
Who might I install in the Ethics Department as my blue-ribbon staff? Oh, I might staff it with a couple of 5 year-olds who will spot the difference between right and wrong in a second; an 80 year-old widow on a fixed income who always files her taxes on time; perhaps a few people who have been out of work for a while or a group of people who, unlike some bureaucrats, actually work for a living.
I might drag the company owing $525 million to the IRS in front of the my Ethics Department and ask the distinguished panelists if it’s OK with them that someone who owes hundreds of millions of dollars to the IRS can still do business with the IRS?
Yes, I am being a wise-guy. My much more sound suggestion is to require government managers to go outside the government structure to receive solid and intensive ethical training. Furthermore, whenever a bureaucrat being ethically trained came out with a statement like: “You don’t understand, government works differently than XYZ,” I would make them take the training again and again until they understood.
Government is us. Those committing ethical violations are accountable. If government programs have been established that somehow permit violators to escape scrutiny, the programs must be eliminated or changed.