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The latest IRS changes prioritize low income over high income audit targets: https://www.google.com/amp/s/www.forbes.com/sites/rachelsandler/2019/05/21/why-are-

• rsynnott 7y ago
  This seems absolutely insane. > For those making less than $25,000, the audit rate fell 0.02% (to .69%) from 2017 to 2018. Frankly, for it to be significantly above 0 seems grossly inefficient. I would assume that average rate of return for public money spent on auditing a millionaire is... a fair bit higher than that spent auditing someone earning 25k.
  • pwinnski 7y ago
    Except that auditing involves tax return in which the IRS has suspicion that there is more income than claimed, right? So of all the people who reported income of less than $25,000, the IRS apparently believed that 0.69% of them actually had income of much, much more. Maybe millions.
    • jfengel 7y ago
      Is that the kind of thing that would show up in an audit? That is, if you're hiding millions of dollars, you're not just fudging the numbers. You've got a web of places to stash money that aren't directly connected to you. It would take a deep investigation of your finances, not just an audit.
      • Rapzid 7y ago
        I would be astonished if the IRS didn't use some sort of statistical analysis(AI) to trigger audits.
        • londons_explore 7y ago
          I hope they have third party data sources (banks, employers, stockbrokers, house/boat purchasers, etc.). By cross referencing the third party data with the contents of your return (automatically), they should be able to make a shortlist of people likely to be failing to declare something.
  • nostromo 7y ago
    I wouldn't be so sure. Millionaires have access to lawyers and tax accountants and are more difficult to pin down. A poor person can easily be bullied to handing everything over to the IRS -- probably with just a few mean letters.
  • bwing 7y ago
    The reason for this is almost exclusively the Earned Income Tax Credit. A single filer claiming two children and earning $11,000 would be eligible for a (fully refundable) credit of $4,410. While this credit distributes a ton of needed benefit to low-income working families, I'm sure you can see where there's a strong incentive to defraud the system here. Both unscrupulous individuals and tax preparers can make a substantial amount of money quickly. Since you can claim self-employment income without documentation, regular audits are necessary to prove actual income. It's also common for people to claim children who don't truly qualify; again, this would only be provable through actual audits. In contrast, the average middle-class taxpayer tends to have both less built-in incentive to game the system and less flexibility (as most of their income will be documented to the IRS). To defend the IRS a bit more: this program is in some ways an administrative model. Taxpayers don't need to prove any need to claim the credit. There aren't multiple rounds of paperwork, and, if you aren't audited, the only interfacing you have to do with the bureaucracy is in submitting your tax return, and you'll have money deposited in your bank account in a week. It may be the most effective welfare program, even accounting for audits (many of which are triggered by obvious red flags) in its ratio of benefits to "hoops needed to jump through."
  • Loughla 7y ago
    It's easier to audit low income folks. They have simple forms and simple evidence. Generally they can be done via machine [here is the source: https://www.marketplace.org/2019/04/15/study-where-irs-audits-more-and-less/ https://www.marketplace.org/2019/04/15/study-where-irs-audit...] Whereas rich people have complicated forms, requiring more man-hours and actual human eyeballs to get involved. That's why it happens. Not sure why you disagree, these are facts.
  • refurb 7y ago
    It’s not insane at all. Note that’s AGI - adjusted gross income. If we stopped auditing those with AGIs less than $25,000, then all I’d have to do is take enough deductions (retirement contributions, unreimbursed business expenses, medical expenses, loss from property sales, tuition, etc) to get my AGI below $25,000 and I’d never have to worry about being audited. Ever. One way to significantly reduce your taxes is to lower your AGI. So if anything, the lower AGIs would be a good place to start looking for tax cheats.
    • MyNameIsFred 7y ago
      That's an alarming equation. The harder you lie, the less likely you'll be called out on it. What else in life works that way?
      • doingmyting 7y ago
        The US presidency
      • clarkmoody 7y ago
        Politics ;-)
    • hobs 7y ago
      Or we could just NOT use AGI and just use total income or some other metric which doesnt allow this stupidity.
  • manigandham 7y ago
    How do you know they’re actually making less than $25K without audits?
• pcurve 7y ago
  " IRS audited 6.66% of returns from filers with more than $10 million in adjusted gross income in fiscal year 2018, down from 14.52% in 2017 and even further down from 29.3% in 2011" Wow, they used to audit 1/3rd of all filers in $10 mil/year bracket? I guess at that level, there aren't too many people with W2 form.