“Auditing the IRS” is a conversation series featuring IRS watchdog Bruce Willey and tax experts, legislators, former IRS officials and other experts focused on the struggles and future of America’s most critical government agency.
Today’s guest: David DeJong, Chair of the Tax Law Group at Stein Sperling in Rockville, Maryland. He’s the former president of the American Academy of Attorney-CPAs and has more than five decades of experience in tax law, tax litigation, and tax planning. He was longtime co-author of the JK Lasser’s Year-Round Tax Strategies guide and holds an LL.M. in Taxation from Georgetown University Law Center.
Bruce Willey: David it seems to me that there's just nobody to talk to and get an answer from at the IRS. Client matters seem to just kind of get stuck in an alternate universe – it’s like being in the “Twilight Zone.”
David De Jong: Well in the early days of my practice, when I had relationships with specific people in the local IRS office, whether it was examination, collection, or appeals, I could just call one of them and they could either help me or direct me to the right person. Now that kind of personal touch is essentially unavailable.
Bruce Willey: Can you go through a timeline of when you really started to notice changes?
David De Jong: The changes became obvious, I would say, about 20 years ago. The ranks (of IRS employees) were thinned out and retirees were not replaced. And the Appeals section, being historically the best place to resolve issues, especially complex ones, lost their senior personnel.
The last 20 years of my practice have been more challenging than the first 30 years. Things take longer. The revenue agents who do exams just do not have the training that experienced practitioners formerly had.
Now in fairness to IRS, the law has gotten ridiculously complicated largely, I believe, because of tax law changes that are for political purposes. That has happened in both Democratic and Republican administrations. Politicizing the Internal Revenue Code has turned what was much simpler when I went into practice in 1975 into something that is hard for taxpayers and tax practitioners both to navigate.
Bruce Willey: Do you think the pace of change to the code has increased? It seems like we're talking about a new tax bill every other year, or at least every 3 or 4 years. But legislators are writing really, really sloppy tax law and then leaving it to the discretion of the IRS to interpret it. The IRS doesn’t even get new regulations fully issued, and two years later, the code changes again.
David De Jong: The biggest tax law changes were in the 1976 Tax Reform Act, the ‘86 Act, and there were two of them during Trump I and II -- the 2017 legislation, and then again, the 2025 Big Beautiful Bill. There have been others that have been significant, particularly those affecting retirement plans – 1974, 1978, 1982, 2001, and 2019. In recent years legislation has had both pro-taxpayer and anti-taxpayer provisions, but the changes keep coming, probably much faster in fact than in almost any other area of the law.
Bruce Willey: With the backlog the IRS has, we're seeing amended returns take a year to a year and a half to process. And we're going to start having statute of limitations hitting before the IRS can even process the return! What do you see as practical remedies so taxpayers know the IRS is there and doing its job?
David De Jong: Number 1, the IRS needs to be adequately funded. I've seen varying statistics but there’s no dispute that for the cost of each additional IRS employee, far more revenue is raised than the cost of that additional employee.
One thing that I have found that is consistent with many clients I've met with who come to me after not having filed returns for many years and are out of the system: They found the tax system complicated, they found it intimidating.
We could ideally create a simpler tax code.
Bruce Willey: That takes me back to the complexity issue. Most taxpayers don't see the complexity. They have a couple of W-2s, maybe some small investment earnings on a normal, ordinary basis. But I read a statistic one time that said people that don't understand the complexity needed to understand that 3/4ths of the tax code is basically dedicated to the definition of income.
David De Jong: You get into numerous narrow exceptions in the Internal Revenue Code. One complicated area that should be seemingly simple is forgiveness of debt. If you forgive
an obligation of someone else, is it income to them? The general rule is that it is income, but there's at least 15 exceptions to that. Some are in the Internal Revenue Code, some are in regulations, some are in court decisions, some are shown in letter rulings.
Artificial intelligence may help gather answers to questions quicker, but as we all know, you cannot rely wholly on AI, and you have to be skilled to maneuver your way through the law as it is written. Simplification is very important, but the parties need to be in agreement that you take the policy issues out of the code and you will be eliminating a big chunk of the issues.
So, the question is whether we try to modify the existing code, or go a step further: What policy considerations absolutely need to be in the code, and which one should be eliminated for simplification?
Bruce Willey: I take it that you mean the notion of incentivizing or de-incentivizing certain behaviors or practices in society by trying to build them into the code?
David De Jong: Yes, that's exactly what has gone on, and the number of tax credits available to individuals and businesses has just skyrocketed in the last several decades.
Bruce Willey: So much so that it seems to me that it's very hard for them to function as incentives anymore, because understanding them is so difficult.
David De Jong: That's exactly right. There are large law and accounting firms full of individuals whose focus is strictly in dealing with issues related to a particular tax credit.
Bruce Willey: It's like the law changes and incentivizes behavior and everybody rushes to the incentive, and that's the perversity of using the tax code for public policy. To try to influence behavior means everybody's just going to chase the dollar. And whether it's legitimate or not, they're going to try to make their square peg fit in the round hole. It's just not smart.
Next installment of Auditing the IRS:
Part 2 with David DeJong: How the IRS’s Current Tax System Discourages Compliance
