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IRS audits poorest families at five times the rate for everyone else

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Re: IRS audits poorest families at five times the rate for everyone else

#21

Post by josephcsible »

oneplane wrote: post #8
josephcsible wrote: post #2

There's one statistic that I didn't see but I'm now really curious about: what percentage of audits discover irregularities, per income level? If lower-income people are more likely than average to cheat on their taxes, then it makes sense to audit them more, but if they don't, then this is indeed totally unfair.

If we were to try to assess fairness, wouldn't it make sense to also take effects and side-effects into account? Say a disproportionate amount of poor families cheat, but also end up on the street after an audit, either not able to pay any outstanding taxes, or having paid them and no longer being able to afford a roof over their head. At the same time, while breaking the law should be the same for everyone else, wou…

There's a big difference between acknowledging that you owe taxes but not paying them, and lying that you don't owe taxes when you really do. I can only sympathize with people who do the former, and these audits are all about catching the latter.

Re: IRS audits poorest families at five times the rate for everyone else

#23

Post by moomin »

NovemberWhiskey wrote: post #11

The reason for this is almost entirely the Earned Income Tax Credit. The IRS estimates 21-26% of all EITC claims are improper. The rules are quite complex, which results in more errors and it is relatively straightforward for the IRS to detect certain classes of mistake or fraud through automation (i.e. to detect if the same child was claimed as a dependent by two different people on their return). Congress made the…

They ignore much larger sums. The real reason they’re targeted is that, quite simply, they’re unable to fight back. It’s the equivalent of searching for your keys under the streetlight.

Re: IRS audits poorest families at five times the rate for everyone else

#24

Post by jimbob45 »

There was talk during the Trump administration of bringing the tax code in line such that it could “fit on a large postcard” or something like that. That went out the window for the final bill. I have to imagine that tax simplification would provide as much benefit to revenue as boosting audit counts.

I’m told in European countries that y’all have your taxes pre-calculated and sent to your homes? I’m flabbergasted that we don’t do the same.

Re: IRS audits poorest families at five times the rate for everyone else

#25

Post by shkkmo »

PsySecGroup wrote: post #3

Curious timing given the expansion of the IRS. EDIT: why is this getting down voted?

This comment is likely being down voted because it provides zero analysis or factual content while appearing to be an attempt to stir the partisan pot.

Re: IRS audits poorest families at five times the rate for everyone else

#26

Post by PsySecGroup »

inanutshellus wrote: post #17
PsySecGroup wrote: post #3

Curious timing given the expansion of the IRS. EDIT: why is this getting down voted?

If I were wealthy enough to be /actually/ affected by the IRS expansion (400k+/yr) it would be a wise investment to spread articles like this to make sure The People are as against the IRS expansion as possible. I'm curious what the avg income level of your downvoters is... ;-)

A 2022 $400K/year threshold hits population A.

With inflation, The 2023 population A is much larger. The idea of $400K/year being slated as a "minority of easy-to-dismissed wealthy" will be an important frame to keep alive as population A keeps growing due to inflation.

Re: IRS audits poorest families at five times the rate for everyone else

#27

Post by offsign_p »

josephcsible wrote: post #2

There's one statistic that I didn't see but I'm now really curious about: what percentage of audits discover irregularities, per income level? If lower-income people are more likely than average to cheat on their taxes, then it makes sense to audit them more, but if they don't, then this is indeed totally unfair.

Exactly. Study makes a huge assumption that low earned income means the recipient is poor. Investment only income isn't "earned" income, unreported income isn't earned income -- both are probably good targets audits.

Re: IRS audits poorest families at five times the rate for everyone else

#28

Post by tpmx »

graton wrote: post #6

As the article states the "audits" are for the most part (~85% of the time) a letter sent to the person asking them to provide documentation for something. I would think most people think of an audit as having to meet in person with an IRS representative going over their taxes.

No post body was provided.

Re: IRS audits poorest families at five times the rate for everyone else

#29

Post by dheera »

pilgrimfff wrote: post #4

This just doesn’t make sense from a financial standpoint. It seems doubtful the money recovered covers the cost of the audits.

I mean the reality is they can fine the poor however much they want and the poor can't afford lawyers. Fining rich people doesn't pay because they'll lawyer up. Reality.

Re: IRS audits poorest families at five times the rate for everyone else

#30

Post by jabbany »

NovemberWhiskey wrote: post #11

The reason for this is almost entirely the Earned Income Tax Credit. The IRS estimates 21-26% of all EITC claims are improper. The rules are quite complex, which results in more errors and it is relatively straightforward for the IRS to detect certain classes of mistake or fraud through automation (i.e. to detect if the same child was claimed as a dependent by two different people on their return). Congress made the…

If it's that complicated and they are doing audits anyways, can't they just automatically apply EITC without relying on people to figure out this stuff and how to claim it?
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