Posted on 01/08/2023 6:04:25 PM PST by SeekAndFind
Despite $80 billion in new funding, the agency is living up to its reputation of hassling low-income taxpayers over rich people...
On Wednesday, Syracuse University's Transactional Records Access Clearinghouse (TRAC) released data provided to it by the Internal Revenue Service (IRS) on audits performed by the agency in fiscal year 2022. Despite the infusion of new funding earmarked for the IRS via last year's Inflation Reduction Act, the agency continued historic trends of hassling primarily low-income taxpayers, with relatively few millionaires and billionaires getting caught up in the audit sweep.
"The taxpayer class with unbelievably high audit rates—five and a half times virtually everyone else—were low-income wage-earners taking the earned income tax credit," reported TRAC, noting that the poorest taxpayers are "easy marks in an era when IRS increasingly relies upon correspondence audits yet doesn't have the resources to assist taxpayers or answer their questions."
In fact, "if one ignores the fiction of auditing a millionaire through simply sending a letter through the mail, the odds that millionaires received a regular audit by a revenue agent (1.1%) was actually less than the audit rate of the targeted lowest income wage-earners whose audit rate was 1.27 percent!"
The Inflation Reduction Act, passed in August 2022, directed $80 billion worth of new funding over the next decade to the IRS so it could hire 87,000 new workers, purportedly to better target millionaire and billionaire scofflaws. The Biden administration and credulous journalists claimed that this would in no way increase audits for those making under $400,000 annually—suspect assurances not provided within the text of the actual bill. This increased capacity meant only those at the top would be targeted, supporters insisted. But this ignores how the IRS's incentives work and how agencywide reform might be too heavy of a lift.
Correspondence audits—which are conducted via mail, and are the type frequently used when interacting with the poorest of taxpayers—are much easier and cheaper to conduct than other types of audits. Plus, the earned income tax credit is easy to get wrong. The nonpartisan Congressional Budget Office estimates that new hires with experience in the field will take almost three years of ramp-up time, with more junior new hires taking longer. The lag time between 2022's infusion of funding, and legitimately increased capacity, will be enormous—if the agency can even snag the best in the industry when TurboTax and H&R Block will surely be swelling their own ranks. It makes sense that, given a dearth of experienced auditors not likely to be fixed soon, the agency would rely on the easiest and least time-consuming types of audits.
But be suspicious of the idea that an infusion of cash will solve longstanding problems within the IRS. This is, after all, the agency that sent $1.1 billion in child welfare payments to the wrong people over the course of merely five months during the pandemic. It's the agency that was hacked back in 2015, resulting in the personal information of more than 700,000 taxpayers being compromised. It's the agency that has been foolishly going after Americans who hold $10,000 or more in a foreign bank since 2010, never mind the fact that many of them are middle-class expats, not folks with yachts in the Mediterranean. And it's the (leaky) agency that enabled the richest Americans' intimate financial information to be thumbed through by ProPublica readers. It will take more than a little cash to fix all this, and, as the IRS's competence and tenacity increase, so too will the tenacity of the vast infrastructure of accountants and lawyers hired by the rich to creatively minimize their tax burdens.
Though some libertarians may argue such an agency ought not to exist in the first place and cheer its relative ineptitude at going after the well-to-do, it's decidedly absurd that the agency taxpayers just fed $80 billion to has, for another year, continued its assault on the poor.
It’s about time the irs is audited and their 2’nd Amendment rights revoked.
It’s not about collecting taxes, it’s about crushing the peasants.
The IRS is not going after the rich, they have attorneys and CPA’s. The poor and middle class can’t protect themselves.
The IRS goes after the EIC, because there is enough evidence or belief that that is where the cheating happens. Maybe smaller dollars than when rich people cheat, but a lot of multi-thousand cheating incidents add up after a while. When rich people pay large fees to professionals to complete their taxes for them, there is less cheating and mistakes.
Next, some grad-student is going to look at the due diligence requirements for paid tax preparers, and publish a paper stating that it's the paid tax preparers who are the problem. Otherwise there would be no due diligence requirements!
Too bad nobody looks at the southern border this way. They might find out that illegals come into the country illegally. Then they stay in this country illegally. Who'da figured on that?
You don't think all those thousands of new IRS agents are going to be going after the Nancy Pelosi's, do you?
The reason is it’s easy to identify who is qualified for earned income. It’s a quick audit and a letter saying you owe back taxes. Very simple. I personally don’t think there should be earned income credit at all.
The “very poorest” don’t pay taxes...they get money back.
All 25 million of them!
The assumption and agenda here is the audits are because they are poor.
The earned income credit has a lot of abuse..............
We have yet to receive our refund from return filed in March. Finally were told it must have been lost, and we should file it again. That was almost a month ago, and it is not showing up in their “Where’s my refund” tracking yet.
I have changed my withholding down to 7%.
It was the lowest of low hanging fruit. Most of these returns were filed by hand, before the advent of TurboTax and other programs. All an auditor needed to do was disallow a few deductions for lack of substantiation, and voila! Greater SE income and less EIC.
Hasn't changed much over the years...those 87,000 new agents won't be unleashed on billionaires, far from it. They hire CPAs and tax attorneys with experience in dealing with the IRS...it wouldn't be cost effective.
I guess they will be coming after me
Keep an eye on this- 2 friends of mine had their taxes filed by someone else and their refund checks stolen. I think one filed for a huge refund when my friend wasn’t expecting much back and it was paid.
Poor taxpayers seldom make campaign contributions!
WWG1WGA!
Yes, we are checking every day and will call the Taxpayer Advocacy Hotline again in another week or 2.
It was maddening that they didn’t even want to try to find it for us (this was in December, 9 months later), without asking if we are at risk of being evicted or some financial tragedy. I said we did need the refund money asap, since we have now received our next property tax bill from the city.... UGGGGHH
They did admit to many thousands of returns that were sent to Ogden, UT in 2021 (year before) were just destroyed, because they didn’t have time to get to them, so I suspect that this is what happened again.
1) The rich can afford accountants who are more likely to ensure that their tax filings are accurate and follow current tax law.
2) The poor are more likely to hire cheap seasonal tax firms that bend the law and pile on deductions and credits that result in what appears to be a large refund, until, of course they get audited and have to amend and repay their inaccurate filing.
3) The poor, especially those illegally here, are more likely to commit outright fraud, claiming head of Household and Self Employment income, but only up to the point where they can realize the maximum credits. (yes Senor, I only earned $14,500 last year and have 5 children, I owe no tax, so where is my refund?)
Which group would you audit? Its not the group with professional accountants.
Aside from my hatred for the IRS, those getting earned income tax credits should be audited for fraud. Because there is a lot of it.
In fact, the earned income tax credit should be eliminated. Everyone should be paying a flat tax. Benefits paid to those in the lower half of the income level is what keeps getting Democrats in power.
The article seems to imply that it’s ok if ‘low-income’ people cheat on their taxes. I bet many of them do. You wouldn’t see a headline claiming the IRS was ‘hassling’ Donald Trump if they audited him.
The rich and middle class hire accountants, who, if competent, file tax forms properly. People pay for their services to ensure that they pay the very least taxes they can.
Exactly
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