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...''What evidence is there that the IRS is overwhelmed? Why is the IRS overwhelmed? Why should...

...''What evidence is there that the IRS is overwhelmed?

Why is the IRS overwhelmed? Why should we feel sorry for them?

Consider the fact that the IRS has issued no guidance for determining gain or loss on professional sports trades, and Congress has remained silent. What can your surmise, then, about a gains tax on player trades?...''

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The Internal Revenue Services (IRS) is the revenue service of the US federal government. Their responsibilities include collecting taxes and administering the Internal Revenue Code. Providing assistance to tax-payers and resolving fraudulent tax fillings are some of the duties performed by them. The IRS is a large entity which makes it difficult to administer. It is a system with multiple competing databases. The budget allocation to this government body has been cut by 17% since 2010 and they are given more things to do. This might lead to the following problems The information technology may fail resulting in collapse of filing and refund systems. . Audits and enforcement will become scarce which will encourage people to evade taxes. The IRS has been struggling to keep up with an expanding workload. Their staff has been reduced significantly They do not have necessary resources to carry out the tasks. The salaries of their employees have been raised only by 2% in the last four years. An agency cannot perform at its peak if the budget allocation is not in their favour and their employees are burdened with monumental tasks as the office is short-staffed. This is the reason the IRS is currently overwhelmed as they pursue almost every household in the US without the reasonable resources that are required to complete the task.Trades occur frequently in professional sports leagues. The National Basketball Association (NBA) and Major League Baseball (MLB) have been trading player contracts without paying taxes until the player is ultimately sold (called deferring taxes) The IRS has not issued any guidance related to gains or loss on professional sports trade. After the tax reforms of 2017, the US sports teams may have to face higher tax rates on trading of players contracts. Until 2017, the professional sports teams were able to defer income tax on unrealized gains (which was called the non-recognition treatment). Under a revised rule, this treatment is limited to real property such as land or buildings Now, these sports teams will realize gains from player-to-player trades and pay taxes in accordance with the performance of a player since he/she joined the team. This implies they will have to pay higher taxes if the players performance is good. Hence, a gains tax on players trades is a nice way to enhance the enforcement of tax. It will ensure that the tax is not deferred and will lead to a more stable administration.

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