The IRS and Public Perception

In the United States, payment of taxes is based on “voluntary compliance.”  We figure out what we owe on our own (or we pay somebody else to do it), and then we pay what we owe based on the honor system that we all learned in Kindergarden.  Of course, when you pay less than your legal share, the IRS will bare its teeth and audit you to make sure you don’t get away without paying your tax debt.  The IRS can impose severe penalties and criminal sanctions as well.

The IRS doesn’t have the resources to find and punish each and every tax cheat, so they must do what they can to control public perception.  They do this by publicizing and leveraging stories, events, and statistics that motivate taxpayers to play by the rules.  The IRS is very strategic about the timing of these stories.  Unless you live under a rock, you have probably noticed that they can be found at every turn right around tax time.

Sometimes the message is “Look, U.S. taxpayers are honest with their taxes, and you should be too” (see IRS Tax Cheat Poll).  But, by far the more common message is “Look what this guy did, and how much trouble he got into; you should avoid this.”  Sometimes the intended audience is the taxpayer and sometimes the intended audience is the tax professional.

Here is a current example of the latter.  The IRS recently went public with the disbarment of an Enrolled Agent named Lorna Walker.  An Enrolled Agent is neither an accountant nor a tax attorney, but may represent taxpayers before the IRS.  Their conduct is governed by Circular 230.  Walker will be taking a mandatory 5-year vacation from her EA work because she stole money from her client that was intended for the IRS.  She also prepared tax returns with phony Schedule C deductions.

And finally, if you still don’t think the IRS is concerned about PR and public perception, try explaining why they would consider spending $15 million on a PR contract.

IRS Needs Facelift; Should Taxpayers Have to Foot the Bill?

You already know about the IRS and their search for the ideal marketing firm to help improve their image.  The top PR firms in the nation are salivating over the $15 million contract that is currently on the table.  But should taxpayers have to pay for this sort of thing?  At least one lawmaker believes they should not.

Kansas Senator, Jerry Moran, is seeking to amend a FY 2013 appropriations bill so that the IRS would have to find alternate funding for public relations services.

The IRS would not spend that kind of money if it didn’t think it would improve revenue collection, right?  Some see a correlation between a positive image and voluntary compliance.  Still, in this economy it’s hard to see how some taxpayers are going to find the money to pay their back tax debt simply because the IRS seems like a “nice enough” creditor.  According to Senator Moran, there are other ways to improve the IRS’ image:

As the nation’s tax collector, the IRS already has a relationship with every person in the country. It’s hard to imagine that American taxpayers would be pleased to know the IRS is spending their money on promoting itself and its products. If the IRS genuinely wants to improve its image with Americans, it needs to work with Congress to develop a simpler, fairer tax code.

~  U.S. Senator Jerry Moran (R-Kan.)

Who Can Improve the IRS’ Image?

Clearly there are few firms, organizations, or government agencies that pose a greater PR challenge than the IRS.  That’s why the Service is soliciting pitches from 12 full service communications and marketing companies to replace the current $17.5 million contract it awarded to PR firm Porter Novelli four years ago.  The IRS needs to convince Americans who are only interested in tax relief that filing and paying your taxes is not that bad.

The IRS is in dire need of some PR assistance.

~ Captain Obvious

The Novelli contract is over, and many would ask, “What did they do?”  I suppose they did spruce up the IRS website with some new smiling faces.  And they tried to change the face of the IRS to make it seem younger and more in-touch with technology . . . emphasis on “tried.”

The new contract is worth $15 million and with that kind of incentive, many PR specialists are going to be up for the challenge.  And I’m sure each will have their individual spin on what should be done.  For instance, David Bauman would try to turn things around for the IRS by first changing their name.  That’s how he gradually repaired Ron Artest’s image — by changing his name to Metta World Peace.  See WSJ article for the full story.

What would you chose as the IRS’ new moniker?