I was making a few thousand a year chopping firewood and selling it to restaurants with my dad and the IRS audited me at 17. I’m pretty sure it was because I had donated to the Holy Land Foundation but come on.
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
#142If 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…
Incidence of audits per 1000 returns filed by poor people is (13.0/2.6)=5x the incidence of audits per 1000 returns filed by non-poor people.
Re: IRS audits poorest families at five times the rate for everyone else
#143Earlier quoted context omitted.
That is funding that has just been allocated, the results of that funding obviously won't be seen in data that predates that funding..
>article about IRS auditing >person I'm replying to is talking about funding for auditing >IRS says they're going to hire 87,000 more auditors Gee I wonder what the results will be.
> Gee I wonder what the results will be.
On the FY 2021 audit rate? Little or no effect, I expect.
Re: IRS audits poorest families at five times the rate for everyone else
#144Earlier quoted context omitted.
"Defund the Police" but for rich republicans.
In recent years after Reagan, both the Executive branch and Legislative branch have been dominated by the same party, at various times Congress | House | Senate | Presidency | Status 101st (1989–1991) Democrats Democrats Republican (G.H.W. Bush) Divided 102nd (1991–1993) Democrats Democrats Republican (G.H.W. Bush) Divided 103rd (1993–1995) Democrats Democrats Democrat (Clinton) Unified 104th (1995–1997) Republicans…
Correct neither party cares about the will of the people both parties are beholden to the rich and corporations.
https://www.cambridge.org/core/journals/perspectives-on-poli...
Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.
Re: IRS audits poorest families at five times the rate for everyone else
#145The 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…
Exactly. It's easier to catch when things are automated. People of lessor means generally have simple tax returns. However, good luck catching a rich persons 1031 Exchange or an improper 83(b) Election. Those just don't scale.
Re: IRS audits poorest families at five times the rate for everyone else
#146Earlier quoted context omitted.
From the article: > A large increase in federal income tax audits targeting the poorest wage earners allowed the Internal Revenue Service to keep overall audit numbers from further declines for Americans as a whole during FY 2021. I'm guessing low-income people are, for a bunch of reasons including having simpler finances and ~no ability to hire legal counsel or other outside help, way cheaper to audit than those wit…
>without requiring more funding I might be missing something here, but are you disregarding the 80bn the IRS just got for another 87,000 auditors? Or are we talking funding for something else?
The 87,000 additional auditors is a misleading interpretation [1]
Summary: - IRS used to have over 100,000 employees a decade back. This number has fallen due to funding cuts etc to less than 78,000 today.
- The employees are not just auditors - they are support people for tax filing, IT etc.
- There will be further employee attrition over the next decade that would need to be backfilled.
- What Congress has given them is funding to cover hiring of 87,000 employees over the next decade. This will cover backfill for employee attrition + new employees that will include auditors, enhanced support, IT etc. The total growth (again over the next decade) is expected to be 20-30,000 with will bring the IRS back to last decade levels.
TL;DR: IRS isn't going out and hiring 87,000 new (and in some misleading reports, gun toting) agents tomorrow and doubling their workforce. Instead, they are bringing their employee count (auditors and others) back to last decade levels and also replacing departing employees.
1. https://time.com/6204928/irs-87000-agents-factcheck-biden/
Re: IRS audits poorest families at five times the rate for everyone else
#147Earlier quoted context omitted.
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?
No because tax prep companies have lobbied our legislators to make that illegal (and many would politically be against the data collection that would be logically necessary to determine many of the common credits/deductions)
They already have the data to auto-prepare most tax returns. That would be very bad news for the tax prep companies, though.
There also is the problem that if they auto-prepare returns they're telling the taxpayer exactly what they know and thus how the taxpayer can cheat with a low probability of detection.
I don't think that's an adequate reason against automating it, though. What I would like to see is say March 1 they mail out pre-filled tax forms, except every line has an extra box on it that's empty. If you think it's right you simply sign and return it with payment if needed. If you have minor disagreements with it (for example, it's unlikely they'll know everything for schedule A) you can fill in the extra boxes with the correct values. You may then either propagate those numbers through and pay the adjusted amount, or you can ignore this part, they update the return with your new numbers and send you a bill. Lastly you can bin it and do it yourself from scratch.
Re: IRS audits poorest families at five times the rate for everyone else
#148And 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.
I was the unfortunate subject of a TCMP/NRP audit. Even with no tax issues identified in the audit, this took over $2K in my representation costs, ran over a year in calendar time, and seemed to exhibit no concern for the wastefulness on either party’s time and money. This was a fairly simple W-2, 1099-B, 401(k) couple of regular workers with a couple kids return.
Based on my experience, I’m not in favor of this expansion.
Re: IRS audits poorest families at five times the rate for everyone else
#149The 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.
No; it's simpler than that. Tax fraud doesn't distribute by income; it distributes by nature of income, and the ease with which that income is validated.
Some really large proportion of Americans are basically W-2 filers taking the standard deduction. These Americans have no opportunity to evade taxes.
Most income tax fraud probably takes place in the area of passthrough businesses and other areas where tax verification isn't simply a problem of reconciling what employer A (or brokerage B, for dividends and stock sales, or bank C, for interest) said they paid to person P with what person P reported on their return.
TL;DR - it's hard to execute a fraud when the IRS already has the corresponding 1099s on-file for you.
Re: IRS audits poorest families at five times the rate for everyone else
#150Curious 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.
Why do you think adding more agents means they will target the poor less?