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The IRS Is Buying an AI Supercomputer from Nvidia

theintercept.com

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Re: The IRS Is Buying an AI Supercomputer from Nvidia

#71

Earlier quoted context omitted.

correct - as long as they don’t make 7-figures. anyone over 7-figures is auto-exempt

"Last September the IRS announced it would hire 3,700 new agents to help increase scrutiny of taxes paid by corporations, wealthy people and the private investment funds they increasingly favor. " [ https://www.icij.org/inside-icij/2024/02/inside-the-irs-unit... ] "IRS launches new effort aimed at high-income non-filers; 125,000 cases focused on high earners, including millionaires" [ https://www.irs.gov/newsroom/irs…

> Your ideological view of reality and what the IRS are objectively doing do not seem to remotely line up.

Except that Project 2025 wants to freeze the IRS budget and hiring:

> Doubling the IRS? The Inflation Reduction Act contains a radical $80 billion expansion of the IRS—enough to double the size of its workforce.34 Unless Congress reverses this policy, the IRS will become much more intrusive and impose still greater costs on the American people.

* https://static.project2025.org/2025_MandateForLeadership_CHA...

Re: The IRS Is Buying an AI Supercomputer from Nvidia

#72

Earlier quoted context omitted.

> The IRS is the most bang for the buck government department. Every dollar spent there nets out many more, because they're chronically under-resourced to audit the whales who can trivially hide their tax obligations. This is just a trope. Auditing big whales is often not the most efficient use of resources because their taxes are a) much more complicated, and so more expensive to audit and b) more likely to have bee…

> This is just a trope. Do you have citations to back up this assertion? The GAO seems to say otherwise[1]. [1] https://www.gao.gov/products/gao-24-106112

It's saying the same thing:

> GAO found that, as income increased, IRS recommended more taxes per audit, on average, but generally closed fewer audits.

They close fewer audits because the audits require more resources (and partially because there are fewer of those taxpayers). Meanwhile the other effect also shows up clearly in their numbers: Average additional tax for the $500k-1M group (midpoint $750k) was ~$20k or 2.67%, for $1M-5M (midpoint 3M) was ~$40k or 1.33%, for $5M-10M (midpoint 7.5M) was ~$86k or 1.15%. Percentage for the top group is unknown because that bracket is open-ended, but $360k for the group that contains billionaires is likely to continue the trend.

They get less as a percentage from the people with better tax lawyers. It's more in absolute dollars because by definition they have more money, but since it also costs more to audit them it's not necessarily worth it.

Notice also that these are heuristics and the actual numbers change with the number of audits. There are going to be some people who are obviously cheating on their taxes, e.g. someone else filed a 1099 or W-2 for paying them and then they filed a return that didn't include the income. The IRS is going to put them at the front of the list to be audited and then that audit is going to show a positive recovery for the IRS.

The more audits you do, the lower the recovery rate gets, because you started with the ones with huge obvious problems and doing more audits means auditing people who are more likely to be innocent.

This is also why the "bang for the buck" calculation is pretty meaningless. Suppose there is one person you can audit for $2000 and then recover a million dollars (+$998,000), and then an unlimited number of people you could audit for $1000 and recover an average of $800 (-$200). If you do one audit of the one who is obviously cheating, you've recovered 500 times more than you put in! Clearly you should keep going. If you audit 100 people, you've spent $101,000 and recovered $1.08M, that's still almost ten times more than you spent! Clearly you should keep going? Except that only one of them was net positive and the additional audits have actually reduced your net gain from $998k to $978k while auditing a significant number of innocent people.

What matters is the incremental returns from additional audits, not the average returns from existing audits. And taking into account as a cost the burden of auditing innocent people.

Re: The IRS Is Buying an AI Supercomputer from Nvidia

#73

Earlier quoted context omitted.

> The IRS is the most bang for the buck government department. Every dollar spent there nets out many more, because they're chronically under-resourced to audit the whales who can trivially hide their tax obligations. This is just a trope. Auditing big whales is often not the most efficient use of resources because their taxes are a) much more complicated, and so more expensive to audit and b) more likely to have bee…

> Auditing big whales is often not the most efficient use of resources because their taxes are a) much more complicated, and so more expensive to audit and b) more likely to have been done by a team of competent lawyers, so even though they're engaged in all kinds of shenanigans, the shenanigans are legal and there is no money to be had by auditing them. For "x" hours of work, the big whales can also potentially brin…

> For "x" hours of work, the big whales can also potentially bring in a lot more money than a bunch of small minnows.

Your article says the opposite:

> They [audits of low income people taking the EITC] are “the most efficient use of available IRS examination resources,” Rettig’s report says.

They can either hire a lot of cheap low-level examiners to quickly audit a lot of low-income people or a smaller number of expensive examiners to slowly audit big complex returns that are more likely to be correct but have more at stake. They were doing the first one because it recovers more money per enforcement dollar.

You can decide that your priority is "audit more rich people" rather than "recover the most money" but that doesn't make them the same thing, or make the first one the only or even default thing they'll do if you give them more enforcement resources.

Re: The IRS Is Buying an AI Supercomputer from Nvidia

#74
post #33

Isn't the IRS on the chopping block? I know they killed the free tax filing feature for citizen. I cannot keep track anymore. Reading through the article, it's not one or two machines but 8 Blackwell nodes, so quite some firepower for compute. Wonder what part of the audit or tax prep requires a GPU farm.

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