IRS: Sorry, but It’s Just Easier and Cheaper to Audit the Poor — ProPublica

[Guinness]

IRS: Sorry, but It’s Just Easier and Cheaper to Audit the Poor

Congress asked the IRS to report on why it audits the poor more than the affluent. Its response is that it doesn’t have enough money and people to audit the wealthy properly. So it’s not going to.

www.propublica.org

That and a Congressman is less likely to take a call from a poor person.

 

[Zzyzx_Road]

The rich often have very complicated tax returns that require a lot of man-hours to analyze. Could probably go after dozens of middle class and lower class tax returns in the time it takes to do that one rich person’s return. Not to mention the expertise required to understand the return in the first place so it’s not just a matter of labor available, it’s also the expertise available.

Even those not in the 1% can have moderately complex returns. Anyone who receives income on a 1099 form has to file Schedule C. Anyone who trades stocks has to file Schedule D. Anyone who is a landlord has to file Schedule E. Anyone who owns an interest in an MLP for which a Schedule K-1 is sent has multiple forms to fill out. And don’t forget about all the supporting forms that go with these Schedules. By themselves, the Schedules aren’t that complex, there is just a lot of items to fill in. Then there are the state returns. No wonder TurboTax and H&R Block sell so much tax return software.

 

[Felicia1]

This is the major reason Republicans have fought so hard to starve the IRS. Anything to benefit the rich over the poor.

 

[Zzyzx_Road]

This is the major reason Republicans have fought so hard to starve the IRS. Anything to benefit the rich over the poor.

Democrats do this too. They’ve got their own billionaire donors to keep happy.

 

[Felicia1]

In the context of the IRS it’s all Republicans, as mentioned in the article.

 

[Guinness]

This is the major reason Republicans have fought so hard to starve the IRS. Anything to benefit the rich over the poor.

More resources would just allow the IRS to audit more poor people. The IRS isn’t going to audit someone who has a Congressman’s personal number on speed dial no matter how many resources you give them.

 

[Felicia1]

The IRS isn’t going to audit someone who has a Congressman’s personal number on speed dial no matter how many resources you give them.

The only reason they won’t is because when they formed a special task force to go after ultra-wealthy tax cheats (in other words, every ultra-wealthy person) Republicans stepped in and started gutting the agency.

The IRS Tried to Take on the Ultrawealthy. It Didn’t Go Well.

Ten years ago, the tax agency formed a special team to unravel the complex tax-lowering strategies of the nation’s wealthiest people. But with big money — and Congress — arrayed against the team, it never had a chance.

www.propublica.org

How the IRS Was Gutted

An eight-year campaign to slash the agency’s budget has left it understaffed, hamstrung and operating with archaic equipment. The result: billions less to fund the government. That’s good news for corporations and the wealthy.

www.propublica.org

 

[TheLittleLady]

Huh, I’ve contacted my Senator, my Representatives, both State and National. They have never once asked to see my W2 before taking the call.

 

[signit]

From the article:

On the one hand, the IRS said, auditing poor taxpayers is a lot easier: The agency uses relatively low-level employees to audit returns for low-income taxpayers who claim the earned income tax credit. The audits — of which there were about 380,000 last year, accounting for 39% of the total the IRS conducted — are done by mail and don’t take too much staff time, either. They are “the most efficient use of available IRS examination resources,” Rettig’s report says.

I think this is key.

Compassionate Catholic here who supports helping the poor, but the EITC has been a source of overpayment (and possibly fraud):

from the IRS

IRS estimates that between 21 percent to 26 percent of EITC claims are paid in error. Some of the errors are unintentional caused by the complexity of the law, but some of the claims are intentional disregard of the law.

So maybe that’s it; it seems that they’re targeting “the poor” and not “the rich” because they know the EITC is where a lot of the fraud is.

Another article, explaining why the IRS holds refunds until February 15 for taxpayers claiming the EITC:

article

The extra review the IRS gives returns with these tax credits aims to give the agency more time to detect and halt tax refund fraud. Tax fraudsters know how simple it is to file a fake return with no income, claim the EITC and ACTC, and receive a big check from the Treasury. So these credits have been a hot target for fraud.