Regulatory Chaos

Many, many years ago, it was standard practice for the legislature to hold hearings and invite comments on proposed legislation for many months or even years before putting a bill into the legislative hopper. The IRS used to draft proposed regulations and they would hold hearings for years before adopting the regulations. Major changes in the law often took up to ten years of hearings.

Today, the government rushes to pass complex new laws written by their staff and rarely read by any of the legislators. The president is pushing hard to pass his massive 1,000+ page health care proposal that no one has had time to read. Behind the scenes he is also pushing a massive new tax scheme called "Cap and Trade" to allegedly curtail pollution. To add to the nearly comic confusion, the President and some legislative supporters are trying to make fundamental changes in our very complex international tax system without serious consideration of the economic consequences.

Meanwhile, the IRS issues regulations dealing with complex financial matters and then responds to complaints after the fact. Early this year, the IRS issued what they apparently thought was a clear and simple expansion of the instructions to the Foreign Bank Account Reporting Form along with an expansion of the size of the form itself. Questions began to arise within a few months and increased up to the filing date of June 30th. Due to many complaints, the IRS extended the penalty free filing date to September 23rd for those who have reported all foreign source income, but the questions continued to roll in. The IRS was rushing to issue further clarification up to the filing date for the form.

And as of Dec. 26, 2009 the Congress has postponed extension of a variety of expiring tax provisions -- as well as failing to act before the estate tax rate changes to zero in 2010. While I'm personally in favor of total repeal of the federal estate tax, it would be generous to call that wishful thinking in the present political and economic environment. It can't be repealed, but it will cause a great deal of needless problems because of allowing the rate to fall to zero for even a few days in 2010.

And it seems that the IRS is only one of dozens of agencies that are subject to the ineptitude of the Congress.

Vern