Of course, "doing the right thing"
often costs more. Training IRS
personnel to know when
self-employment tax should be collected
and not requires, well, training
(time and money). Assigning those
personnel to look at each of these
12,456 cases is more expensive than
just letting the computer spew
letters and forget about it.

I will tell you with confidence, why
the IRS conducted this program with
their computer instead of people; 1)
they would not have collected $3.3
million if they did it the right
way, 2) it would have cost the
government more money than they
would have collected if they did it
fair (man hours, telephone,
follow-up postage, etc) and 3)
Finally and Most Importantly, they
choose the "easy way" to conduct
their tests (it's less costly), then
use the bogus results of their test
to further pursue an incorrect
conclusion in the future.
Just because the computer generated
a certain number of threatening,
scary letters and the government
collected $3.3 million dollars, they
conclude taxpayers are
under-reporting and underpaying
self-employment tax. Want to make
this system really fair? Make the
IRS pay for the taxpayers
representation and associated
expense when the IRS loses a case.
If they had to weigh that possible
expense in these testing programs
they would not undertake such
frivolous projects.
This program won't get much if any
national attention. Why? Because it
affects too few people. After all,
what are 12,456 casualties? In the
two cases that brought this to my
attention, the first taxpayer had
prepared his own return. My firm
actually prepared the return in case
#2, one letter out of approximately
3,000 returns we prepared that year.
I have to make one final
statement about the "implementation
of the SET National Strategy
program".
The federal government could send a
threatening, scary IRS letter to
taxpayers informing them of a
"problem with line 77 of their Form
1040" (note, the Form 1040 only has
76 lines), give the taxpayer the
option of fighting or paying less
than $300 for this problem to go
away, and guess what? That's right,
the IRS will collect millions of
dollars, which will prove that there
in fact was a problem with line 77
of the 1040 and that their new
program entitled "Line 77 Slot
Machine Jackpot" was a huge success
and should be expanded to include
Line 78 next year!