Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

trac.syr.edu

Post reply on HN
Print view View original

81–90 of 231 posts

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

#81

Post by alistairSH »

PsySecGroup wrote: post #26
inanutshellus wrote: post #17

Earlier quoted context omitted.

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.

$400k is a 98% percentile income in San Francisco metro, DC metro, and NYC metro.

Sure, inflation may increase the number of households earning $400k, but it's still a tiny minority of the population and will be for a long time.

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

#82

Post by raunak »

tpmx wrote: post #28
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.

Quoted post unavailable.

I think you have that backwards buddy.

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

#83

Post by syspec »

wongarsu wrote: post #69
marwatk wrote: post #51

Earlier quoted context omitted.

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.

There's no way that's a good idea. See police departments + (civil asset forfeiture and small town speed traps)

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

#84

Post by washbrain »

missedthecue wrote: post #63
shkkmo wrote: post #33

Earlier quoted context omitted.

> 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?

It's widely reported and widely understood that lobbying has specifically killed bills that have been introduced to simplify tax prep.

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

#85

Post by NovemberWhiskey »

jmyeet wrote: post #75
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…

> Is the IRS just supposed to ignore that? Yes. Or, better yet, just give it to everyone and pay for it by: 1. Eliminating the carried interest tax credit, which has somehow survived 15+ years. It is quite literally a giveaway to hedge fund managers who get to pay lower taxes on managements because reasons. It most recently survived by being removed from the Inflation Reduction Act at the behest of Senator Kirsten Se…

>Or, better yet, just give it to everyone and pay for it by

The IRS doesn't author tax policy. Congress is over there --->

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

#86

Post by s1artibartfast »

nonameiguess wrote: post #13
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.

Not sure that really follows. Is the goal of the audit to punish the maximum number of people or recover the maximum amount of money? If the latter, then it doesn't make much sense to spend most of your effort assessing $400 penalties.

That depends on the ROI. If it costs a fraction of a penny to write a code that catches hundreds of thousands of $400 errors, the ROI is pretty good

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

#87

Post by JumpCrisscross »

SQueeeeeL wrote: post #61
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…

> the IRS doesn't audit [U.S. corporations]

Corporate auditing is down, but with audit rates at 50% for $20+ billion in assets and 22% for $5 to 20bn [1], corporate America is the most thoroughly tax audited slice of the country.

> the justice dept doesn't go after them

Yes, it does [2].

[1] https://www.washingtonpost.com/business/2021/07/14/corporate...

[2] https://www.justice.gov/tax/tax-division-press-releases

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

#88

Post by ribosometronome »

AnimalMuppet wrote: post #42
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.

> They ignore much larger sums. Source? What category of stuff the IRS ignores adds up to more than $20 billion?

https://www.crfb.org/blogs/primer-understanding-tax-gap

The IRS estimates there's a net tax gap of $554 billion in 2019. They break it down into 5 categories with values from 2011-2013 that all are over 20 billion each: underreported income, over/misreported adjustments, underpayment, non-filing, and other underreporting. They note that their 2011-2013 estimate failed to include underreporting of offshore wealth and wealth going through pass through entities, which resulted in a tax gap of $33 billion per year to the 2011-2013 estimate and 46 billion for 2019.

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

#89

Post by TAForObvReasons »

wongarsu wrote: post #69
marwatk wrote: post #51

Earlier quoted context omitted.

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.

Looked into this years ago in a semi-related discussion: https://news.ycombinator.com/item?id=21874358

https://www.finance.senate.gov/ranking-members-news/irs-budg...

> IRS Research Division estimates in the 2003 GAO report, however, placed returns for activities such as tax enforcement at more than ten – and in some cases more than 20 – dollars collected for every dollar spent. Phone calls to follow up on tax debts owed were estimated to return 13 dollars for every dollar spent. Audits by mail returned as much as 11 dollars for every dollar spent. Using the overall rate of a four to one return, this year’s $100 million budget cut translates to a $400 million loss.

Imagine 20 dollars per dollar spent, that's the type of unicorn investment that basically every VC hunts for.

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

#90

Post by diputsmonro »

PsySecGroup wrote: post #3

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

The expansion to the IRS will directly alleviate the injustice implied by the headline. But your headline focused on the problem, not the solution which is already underway, so it just seems like misinformation and outrage bait.
Post reply on HN