A Dysfunctional Internal Revenue Service (IRS) Poses a Threat to American Citizens; BLS: 29,000 Jobs in September Sends Stock Futures Soaring

Absolutely wonderful news:

"The IRS no longer has the resources to pursue all delinquent filers."

-- Treasury Inspector General for Tax Administration (TIGTA)

What may be even better, after Money Daily tried to find out just who this Inspector General is, is that the position is currently vacant, though, since January, 2024, Heather M. Hill is TIGTA's Principal Deputy Inspector General, performing the duties of the Inspector General, following the death of J. Russell George.

According to Jeremy Portnoy, of RealClearInvestigations, Americans underpaid taxes by by an estimated $696 billion in 2022, which is kind of funny and kind of sad, since those taxes were filed in the early months of 2023, which is now more than three years ago. Even the investigation of unpaid taxes by wily American citizens is past due.

Here is the actual report filed by TIGTA [PDF] just in case anyone wants to pore over completely useless numbers and findings.

The trouble with the IRS is that it's hardly functional in its current form. The system is still running on COBOL, a computer language created in 1959. If it wasn't for automatic payroll deductions, the IRS would hardly collect anything at all. Corporate taxes, which account for less than nine percent of all taxes, are wildly reduced by accounting practices devised by the IRS in its voluminous, 75,000 pages of rules, regulations, guidance, and court interpretations.

Perhaps the worst part of the entire IRS structure is that it is supposedly "voluntary", which, in the strict interpretation of the word means individuals don't actually have to submit tax forms or pay income taxes. Good luck trying that approach. Despite there being no actual laws that require American citizens to file tax returns and pay taxes on their income, the Supreme Court has repeatedly supported the agency's spurious position.

About $14 billion is annually spent by the IRS, a huge number, yet they still have trouble processing returns in a timely, efficient manner. Since they are doing such a poor job collecting taxes, maybe President Trump's concept to abolish the agency in favor of tariffs and other taxes isn't so far-fetched. Of course, when Elon Musk and his DOGE team went snooping around the agency, the blowback from Capitol Hill was swift and thunderous. Senators and Reps in the House don't want their golden calf reduced or even restructured. Thus, the government's chief collection agency remains dysfunctional.

While that's good news, it also implies that the federal government, $40 trillion in debt and generally bankrupt, is unable to collect taxes from its sovereign people. That's really not good news. It means chaos, if not already present in the government architecture, is well on its way and that, if it's even possible, the government will become more broke, faster, unable to pay it's debts with money it can't collect.

If IRS agents and upgraded systems with AI are released upon the general population, the effects could be devastating. The agency is known for its heavy-handed tactics and extreme penalties and interest charges. They have the power to seize assets, close businesses, and generally wreak havoc upon their intended victims.

Knowing all of this, Americans better just keep their heads down, do as they're told, file their returns on time and pay the piper. Of course, there are more than 14 million individuals who don't follow that advice. The number is growing, and, surprisingly, some of these non-filers work for the IRS.

Geez, Louise...

As far as that September Non-farm Payroll report from the BLS was concnerned, bummer!

The labor market gained only 29,000 jobs in September.

According to the BLS (excerpts):

Both nonfarm payroll employment (+29,000) and the unemployment rate (4.2 percent) changed little in September, the U.S. Bureau of Labor Statistics reported today. Employment in all major industries changed little over the month.

Both the unemployment rate, at 4.2 percent, and the number of unemployed people, at 7.1 million, changed little in September. The unemployment rate has remained in a narrow range of 4.1 percent to 4.3 percent since March.

Total nonfarm payroll employment changed little in September (+29,000), following an average monthly gain of 45,000 over the prior 12 months. Employment in all major industries changed little over the month.

While the BLS itself might desire to pooh-pooh what is a disappointing number, the reality of the situation - a weakening labor market - is a forerunner of a weak economy. As usual, prior months were revised lower.

The change in total nonfarm payroll employment for July was revised down by 31,000, from +21,000 to -10,000, and the change for August was revised down by 29,000, from +162,000 to +133,000. With these revisions, employment in July and August combined is 60,000 lower than previously reported.

Wall Street popped champagne bottles and stock futures spiked on the news. The immediate reaction is that a number this weak will put the FOMC on hold at their October 27-28 meeting, keeping the federal funds target rate at 3.75-4.00%, and, with that, everybody should be piling further into overpriced stocks.

Yippie!

At the Close, Thursday, October 1, 2026: Dow: 50,926.56, +20.51 (+0.04%) NASDAQ: 26,871.60, +10.53 (+0.04%) S&P 500: 7,666.45, +14.91 (+0.19%) NYSE Composite: 23,526.84, +36.05 (+0.15%)