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So, let's do the math: on link #2 "Civil Penalties Assessed" for 2015 for Individuals there were 31,808,876. Since there are only 3.7 million households making

So, let's do the math: on link #2 "Civil Penalties Assessed" for 2015 for Individuals there were 31,808,876. Since there are only 3.7 million households making over 250,000 per year (https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...) even if 100% of wealthy individuals had enforcement actions, they would only account for ~10% of enforcement actions. So that is one data point. If you go back to link 1 "Examination Coverage" you will see that the highest percentage of examinations amongst low/middle income people is for people with 0-25K income, which would coincide with precisely with the Earned Income Credit. These examination percentages are also highly misleading because for simple low income tax fraud, like I am talking about, it is mostly detected by computers and they only "examine" it after they already know there is an irregularity.

gamblor956 9y ago
You're both right. The bulk of enforcement actions, on the basis of volume of actions, is against low-income individuals because they are the most likely to underreport income (especially under-the-table compensation received as cash). However, the bulk of enforcement penalties is against the wealthy, because they are the most likely to engage in large-scale tax evasion. Though within this category, it's actually the mid-tier wealthy, generally small business owners, who are most penalized, as they are the most aggressive in claiming deductions and credits to which they are not actually entitled. The ultra-wealthy will claim whatever deductions/credits their tax advisors say they can, but it's not worth it to them to be aggressive since the savings is usually insignificant compared to the potential penalties, or the cost of litigating a tax action.

gamblor956 9y ago

You're both right. The bulk of enforcement actions, on the basis of volume of actions, is against low-income individuals because they are the most likely to underreport income (especially under-the-table compensation received as cash). However, the bulk of enforcement penalties is against the wealthy, because they are the most likely to engage in large-scale tax evasion. Though within this category, it's actually the mid-tier wealthy, generally small business owners, who are most penalized, as they are the most aggressive in claiming deductions and credits to which they are not actually entitled. The ultra-wealthy will claim whatever deductions/credits their tax advisors say they can, but it's not worth it to them to be aggressive since the savings is usually insignificant compared to the potential penalties, or the cost of litigating a tax action.