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Taxation & Estate Planning
: IRS Problem Solver BlogThe Tale of Two Tax Collectors
By Darrin Mish
A tax collector from California's State Franchise Tax Board and another from the federal Internal Revenue Service compared notes on how their respective offices are handling the economic crisis. The focus of the California tax collector's office is on cost-cutting whereas that of the IRS is on revenue collection.
One way of cutting costs for the California Tax Board is through an enforced furlough arrangement where staff workers are compelled to take three days off work a month without pay. This reduced the amount of taxes collected by an estimated $177 million for the fiscal year that just ended. This number is anticipated to rise to $372 million for this year and next year combined.
To reduce the impact of the furloughs, the tax board has implemented a self-directed furlough system whereby the employees can choose which day of the month to take their no-pay leave depending on the work needs of their respective departments. This way, the board still works a normal five day week without having to shut down three Fridays a month like some other agencies. In addition, the board also has cut down its call center hours by two hours a day. This would explain why you might not get a response when you call the board at certain times.
During previous economic crises, the California Franchise Tax Board would raise money by increasing efforts in collecting taxes. But not this year. This year, the board is not making any extra effort to collect taxes but instead, is cutting overhead costs instead. In the last fiscal year the board was allowed to hire an extra 125 tax collectors bringing its total to 665. But with a freeze on new recruitments this year and with some choosing to leave when optional layoff notices were offered, the number fell to 642 at present.
On the other hand, the way the Internal Revenue Service is increasing its revenue collection is by simply employing more tax collectors. The IRS recently confirmed that it intends to hire thousands of new enforcement staff for its current fiscal year ending September 30th. The staff positions include tax agents and officers, tax compliance officers and customer service representatives.
In fact, the IRS has embarked on a novel way of recruiting and training staff through the creation of its virtual presence in Second Life, a 3D virtual world where users can connect with each other just like in real life. You can carry out just about any function in the virtual world as you would in the real world, including advertising employment opportunities and recruiting new staff, which is what the IRS has been doing.
So the two tax collectors found lots of differences in their respective offices' approach in dealing with economic problems. Which one is better? You decide.
Full post as published by IRS Problem Solver Blog on August 29, 2009 (boomark / email).

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