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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

#61

Post by SQueeeeeL »

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…

>Congress made the EITC complex. EITC errors/fraud cost the public purse $10-20bn a year. Is the IRS just supposed to ignore that?

I love the advanced level of neoliberalism we're seeing now. Oh no, poor people aren't committing tax fraud properly, gotta run after them. Meanwhile pretty much every US corporation abuses tax laws to the absolute limit to serve their shareholders (on the order of trillions of dollars of lost revenue), and somehow that's "okay" (i.e. the IRS doesn't audit them and the justice dept doesn't go after them)

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

#62

Post by kube-system »

cma wrote: post #38
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…

We should have an electronic filing system: if someone else filed claiming a dependent the next person to try to gets an error message and can resolve it amicably instead of hiring manual auditors to deal with an error/crime that shouldn't even be able to exist.

We do have an electronic filing system, and it does throw errors for some filing issues.

The US has >0 people who do not use computers, though, so a manual intervention process is necessary.

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

#63

Post by missedthecue »

shkkmo wrote: post #33
jimbob45 wrote: post #24

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 th…

> I’m flabbergasted that we don’t do the same. It is because Intuit and other large tax preparers have lobbied heavily against anything that makes taxes easier to file.

How are you sure it's because of that?

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

#64

Post by Invictus0 »

If the IRS randomly selected returns to examine, I would expect the poor to be samples more than everyone else because that is the largest category. Likewise if the IRS is sending automated letters to anyone that improperly claimed a credit commonly claimed by the poor, then I would expect that to disproportionately affect the poor. Sending an automated letter is hardly comparable to a real audit in any case. Without more context I don't think this can be deemed a scandal.

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

#65

Post by JumpCrisscross »

jeffwask wrote: post #39

The budget for the IRS has been continually slashed since Reagan despite all research on the subject showing increasing funding to the IRS funding increased revenue well beyond it's cost. The IRS has publicly stated on a number of occasions they do not go after the wealthy because they do not have the resources to win in the ensuing legal battles. This leaves the poor and middle class as the only groups they can targ…

> budget for the IRS has been continually slashed since Reagan

Congress is working on boosting it [1].

[1] https://crsreports.congress.gov/product/pdf/IN/IN11977

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

#66

Post by washbrain »

jeffwask wrote: post #39

The budget for the IRS has been continually slashed since Reagan despite all research on the subject showing increasing funding to the IRS funding increased revenue well beyond it's cost. The IRS has publicly stated on a number of occasions they do not go after the wealthy because they do not have the resources to win in the ensuing legal battles. This leaves the poor and middle class as the only groups they can targ…

This is 100% the story. The IRS can help make sure everyone is playing fair if we sufficiently fund them. And they can stop policing all the little issues and go after the big ones if we sufficiently fund them. AND sufficiently funding them is expected to increase tax revenue above the cost of funding them.

It's the most obvious and should be the most bipartisan approach. It's introducing no new taxes, it's equitable, it improves revenue (which could allow you hypothetically cut taxes.) It drives me up the wall that this isn't just a fast, handshake and proceed bit of legislation.

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

#67

Post by oaththrowaway »

enterthematrix wrote: post #52
tomohawk wrote: post #44

And we're now going to get 87,000 more auditors. This is the largest increase in the federal police force (they are all armed) ever. The politicos are already dancing around this saying how "middle class" people will not have an increased chance of audit.

Fundamentally if you just pay your taxes, you shouldn't be audited (ideally.) That being said... an increase in auditors is net good because then the IRS can actually audit some of the massive number of tax crimes that occur. This is good.

Less good for your pets

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

#68

Post by [deleted] »

marwatk wrote: post #51
moomin wrote: post #23

Earlier quoted context omitted.

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.

This is addressed in the article: > A critical limitation in the IRS’s ability to audit millionaires is the availability of IRS revenue agents. Only this class of auditors, given sufficient training and experience, are qualified to examine complex tax returns – the types of returns typically filed by high-income individuals and large-scale businesses. > With severe budget constraints, IRS has tended to trade off the…

[deleted]

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

#69

Post by wongarsu »

marwatk wrote: post #51
moomin wrote: post #23

Earlier quoted context omitted.

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.

This is addressed in the article: > A critical limitation in the IRS’s ability to audit millionaires is the availability of IRS revenue agents. Only this class of auditors, given sufficient training and experience, are qualified to examine complex tax returns – the types of returns typically filed by high-income individuals and large-scale businesses. > With severe budget constraints, IRS has tended to trade off the…

I'd be interesting to see how the ratio of revenue agents to tax examiners would shift if the IRS would get a portion of discovered tax fraud back into their budget.

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

#70

Post by jeffbee »

jeffwask wrote: post #39

The budget for the IRS has been continually slashed since Reagan despite all research on the subject showing increasing funding to the IRS funding increased revenue well beyond it's cost. The IRS has publicly stated on a number of occasions they do not go after the wealthy because they do not have the resources to win in the ensuing legal battles. This leaves the poor and middle class as the only groups they can targ…

"Defund the Police" but for rich republicans.
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