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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

#121

Post by Silverback_VII »

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…

It would not be a very smart move to go after your own supporters... I think politicians know this simple rule of power. they need the money and the connections of affluent ppl.

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

#122

Post by mrguyorama »

missedthecue wrote: post #58
marwatk wrote: post #31

Earlier quoted context omitted.

> IRS accomplished over 650 thousand audits last year by jacking up its already high reliance on so called “correspondence audits” – essentially a letter from the IRS asking for documentation on a specific line item on a return. I can't imagine those are very expensive.

~19 cents in postage and a few cents more for the envelope and letter.

Is the IRS not postage exempt?

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

#123

Post by JumpCrisscross »

moomin wrote: post #23
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.

> they ignore much larger sums

Not really [1]. When you make more than $500k, your audit rate doubles from the national average of 0.25%. It doubles again at $1mm and more than doubles once more at $5mm.

EITC-only returns are audited around the frequency (0.77%) of someone making $500k to $1mm. I'm not sure why $1 to 25k is audited at the same frequency as $500k to $1mm. But given "from fiscal years 2010 to 2021, the majority of the additional taxes IRS recommended from audits came from taxpayers with incomes below $200,000" and that "EITC audits are primarily pre-refund audits and are conducted through correspondence," it seems--very roughly--closer to the optimum than the headline suggests.

[1] https://www.gao.gov/products/gao-22-104960

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

#124

Post by kube-system »

jabbany wrote: post #103
kube-system wrote: post #40

Earlier quoted context omitted.

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)

The second thing could be easy to deal with though, just make data sharing be a consent based process. You can opt in to auto-filing by allowing data sharing with the IRS. People who appreciate the convenience can opt in and those who don't can just not (instead manually providing the requisite documents/proofs/numbers just like today).

Not infrequently, the data involves third party cooperation, so it's not really that simple.

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

#125

Post by OrvalWintermute »

jeffbee wrote: post #70
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.

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 Republicans Democrat (Clinton) Divided

105th (1997–1999) Republicans Republicans Democrat (Clinton) Divided

106th (1999–2001) Republicans Republicans Democrat (Clinton) Divided

107th (2001–2003) Republicans Republicans / Democrats Republican (G.W. Bush) Unified / Divided

108th (2003–2005) Republicans Republicans Republican (G.W. Bush) Unified

109th (2005–2007) Republicans Republicans Republican (G.W. Bush) Unified

110th (2007–2009) Democrats Democrats Republican (G.W. Bush) Divided

111th (2009–2011) Democrats Democrats Democrat (Obama) Unified

112th (2011–2013) Republicans Democrats Democrat (Obama) Divided

113th (2013–2015) Republicans Democrats Democrat (Obama) Divided

114th (2015–2017) Republicans Republicans Democrat (Obama) Divided

115th (2017–2019) Republicans Republicans Republican (Trump) Unified

116th (2019–2021) Democrats Republicans Republican (Trump) Divided

117th (2021-2023) Democrats Democrats Democrat (Biden) Unified

Please, lay off the partisanship.

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

#126

Post by bryanrasmussen »

moomin wrote: post #23
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.

no, the searching for the keys under the streetlight joke is funny because you will never find the keys under the streetlight no matter how nice it might be to search for them with a good light source, whereas you will be able to relatively easy find small sums of money and make people it from the poor families under discussion here.

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

#127

Post by LorenPechtel »

lostcolony wrote: post #47
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 don't ignore much larger sums; larger sums are much harder to automate detection of. So with the limited amount of manpower they have, far fewer are identified. They can send a letter asking for documentation for everything the automated system flags. The automated system detects "simple" cases at a far higher confidence ratio, which tends to be lower income. Once you get upper income, with all manner of complic…

And the rich guy probably has a CPA filing their taxes. It's quite unlikely there will be anything in there that's easily detected.

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

#128

Post by mrguyorama »

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?

Yes. Another important note however is there are several politicians in a strange alliance that sees any simplification of a tax filing process as being bad because they are of the "all taxation is theft" and "I want to drown the government in the bathtub" mindset and making people hate taxes by making the process miserable is their favorite way to keep people angry at the government.

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

#129

Post by albatross13 »

JumpCrisscross wrote: post #109
albatross13 wrote: post #19

Earlier quoted context omitted.

>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 80bn the IRS just got It's not got. (It passed the Senate on Sunday and is scheduled to be passed by the House tomorrow.)

Acting like this dog shit house, senate, and president won't pass this is disingenuous. Your government wants to do nothing but take from you, the money is got.

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

#130

Post by s1artibartfast »

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…

>In fact, auditing anyone who makes less than $50,000 a year should be illegal. Maybe even $100,000.

So everyone files below 100k and everyone is immune to audit.

I might go for that, but I am also receptive to the abolition of taxes.

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