Big Bills, No Balls: How Congress Screws Up Your Taxes
Ever wonder why your taxes feel like a guessing game? Blame Congress. They love passing flashy laws that sound great on the campaign trail—like “no tax on tips” or “no tax on overtime”—but when it comes to the nitty-gritty details, they’re nowhere to be found. Instead of hammering out clear rules, they punt the hard work to the IRS, an agency already drowning in a decade-long backlog of regulations. It’s like handing a chef a vague recipe for “something delicious” and expecting a five-star meal. Congress isn’t doing its job, and the average Joe pays the price when the IRS is left to guess what the law even means.
Take the “no tax on tips” idea. Sounds awesome, right? Who doesn’t want to keep more of their hard-earned cash? But what counts as a tip? Is it just cash left on the table, or does it include digital tips through apps? On September 2, as part of forthcoming proposed regulations, which will be officially published in the Federal Register, the IRS and Treasury Department released the preliminary list of 68 occupations across multiple industries that are considered to customarily and regularly receive tips—potentially making them eligible for the new "no tax on tips" deduction from 2025 to 2028 under recent legislation. But why stop at 68? What about businesses 69 and 70?
And what about “no tax on overtime”? Does that mean you can call anything over 40 hours “overtime” and dodge taxes? Congress has asked the IRS to weigh in here too, providing guidance on the new deduction, updating tax forms and withholding procedures to reflect it, and offering transition relief for taxpayers and employers. Employers must report qualified overtime compensation on Forms W-2 and 1099, and the IRS will issue regulations detailing how to implement these requirements. Meanwhile, they’re still trying to clear a backlog of regulations from laws passed 10 or 15 years ago. They’re forced to drop everything to tackle these new, vague laws, leaving old promises in the dust. It’s a mess, and it’s not the IRS’s fault—they’re just trying to keep up with Congress’s half-baked ideas.
This isn’t just about one bill; it’s a pattern. Congress churns out these big, beautiful laws to win votes, but without clear instructions, they punt to the IRS, which has its own dangers. When the IRS finally rolls out rules to fill in the gaps, people scream, “That’s not what the law meant!” Furthermore, the Lois Lerner experience has shown that the IRS can be inappropriately partisan or biased.
Either Congress has to be more specific, or they have to require oversight of any regulations that the IRS promulgates. If they don’t do one or the other, they are in dangerous territory. Congress keeps shirking its duty, and we’re all stuck in this tax limbo, waiting for an agency that’s stretched too thin to clean up their mess. And "stretched too thin" incorporates the fact that there have been recent severe personnel cuts imposed by the administration, made without regard for the new demands now being made on the IRS. Time for Congress to step up and write laws that actually work.