5 ms·

This is actually ridiculous. Who pays for these mistakes? Who pays for these potential crimes? This structure of governance is failing. In the past, we could d

This is actually ridiculous. Who pays for these mistakes? Who pays for these potential crimes? This structure of governance is failing. In the past, we could do something to the “leaders” of our society — now the leadership is obfuscated.

deleted 6y ago
[deleted]
czbond 6y ago
I used to feel the same way (specifically around the Fed and Treasury and national debt) - until I realized, it's just a number on a screen. They print dollars as easily as you and I print from our local printer. The digits are all are meaningless - we're never going to pay back the amounts, or our national debt. We're just going to print and inflate, and pay back any old sums with numbers we just printed.
eli 6y ago
Just wait until you find out how much money is lost because an underfunded IRS believes it is unable to effectively audit the wealthy and so mostly doesn't bother.
- czbond 6y ago
  I would suggest the opposite. IRS realizes the only revenue they're likely to extract correctly are small business owners, and middle to upper class who don't have the time nor legal fee tolerance to fight it. They already extract so little on an |absolute value| basis from the lower 70% of Americans, that it only makes sense to focus on the top x%
  - jellicle 6y ago
    It's great that you have feelings about what the IRS does, but the previous commenter was talking about facts and the IRS's own statements on the issue. The IRS was in the news last year for stating that they have decreased audits on the wealthy because they take too much effort. The most-audited zip codes in the USA are extremely poor areas.
    - czbond 6y ago
      Yeah, Original statement was logic only. Followup was on how specific areas might be 'cash only' hotspots that diverge from the mean tax paid for occupations, revenue, or other criteria.
  - khuey 6y ago
    And yet they audit 25% of those receiving the EITC (https://www.foxbusiness.com/money/irs-audits-poor-taxpayers-easier https://www.foxbusiness.com/money/irs-audits-poor-taxpayers-...) who are all poor.
    - pc86 6y ago
      I hesitate to use this phrase but isn't it important to look at the "ROI" on those audits to determine if it's a good thing or not? Whether you're poor or not, you shouldn't be getting the EITC if you don't qualify for it. What does this subset of audits cost the IRS, and how much money is recovered from it? How does that compare to auditing someone who is high income but with a fairly straightforward W2, compared to someone with a lot of Schedule C and 1099 income? To be clear I don't think the only component of the "should we audit" formula should be expected ROI; there is also a (positive) chilling effect in general where the chance of a random audit should be just high enough to dissuade folks from fraud in the first place, but the penalties not so severe that someone is bankrupted from an honest mistake.
      - matwood 6y ago
        I wonder if the IRS even thinks about a monetary ROI. Given how often poorer people are audited, I'm guessing it's all about cases closed or numbers audited and has little to do with amounts. IMO, amounts would be the better focus.
    - czbond 6y ago
      After reflection, my guess is it would be that in those neighborhoods they have identified a largely 'paid in cash, under-reported' behavior. For example, if nationally a person with "career x" makes $45k, yet reports $18k - it could be worth a look. There are large segments that do this (right or wrong) - and is one underlying benefit the govt believes of going all digital. I can see how from their standpoint focusing on cash audits of unsophisticated businesses setups are easier than complicated, diverse, experience heavy audits.
      - renewiltord 6y ago
  - eli 6y ago
    Interesting theory but the Treasury IG report shows the IRS doesn't even pursue hundreds of thousands of high-income individuals who do not file taxes at all. The top 1% of earners account for 70% of underreporting of income. https://www.treasury.gov/tigta/auditreports/2020reports/202030015fr.pdf https://www.treasury.gov/tigta/auditreports/2020reports/2020...
    - czbond 6y ago
      Wow - that's nuts. Thanks for posting; And here I stress out to make sure the exact amount I owe is correctly reported. Oh well, better to sleep at night soundly on that issue!
      - eli 6y ago
        Same, I spend a lot of time trying to get it right. It’s incredibly frustrating that it is so politically unpopular to fund the IRS at an appropriate level even though each dollar spent would generate more than a dollar in tax revenue.
    - vonmoltke 6y ago
      That report is very enlightening, and makes clear that the IRS is not doing their job WRT high-income non-filers. However, I don't see from its numbers how you arrived at > The top 1% of earners account for 70% of underreporting of income. since it only ever addresses non-filers and doesn't mention, from what I could see, percentile brackets for the filers it does discuss.
renewiltord 6y ago
No one should pay for it. It's within the margin of acceptability. The prime priority was to get lots of money to lots of people in the US to keep the economy going. The secondary priority was to ensure that very little money disappears into the ether. The first was met. The second was met. It's a common principle in engineering too. Cost is monotonically increasing in failure rate, and (1-failure_rate) is asymptotic in cost, so you always make systems with failure rate > 0. The actual rate you pick is dependent on the constraints you operate under. I used to think this was a non-engineer/engineer difference but in the past few years I've noticed it's a mindset that's actually independent of that. It's a risk modeling vs binary modeling difference. Everyone who has to make meaningful decisions does it to a large degree (engineers, architects, doctors, lawyers, assembly line workers in Andon). I don't think I'd ever want to work with binary-modelers.
- astura 6y ago
  The mistake isn't permanent, the IRS can still at least attempt to collect back money sent in error. Money doesn't vanish forever just because it went into someone's bank account.
  - renewiltord 6y ago
    True, true, but the money involved is so little that it's likely to result in not much regained, right? After all, the IRS doesn't usually find it worthwhile to send tax delinquency information to the state dept (which is the usual mechanism to force payment from non-resident non-citizens) for these sums. Though if I think about it, non-residents who were legitimately paying taxes are unlikely to not return the money if asked so maybe it's worth it.
pc86 6y ago
Mistakes are not always crimes. Certainly not just because it happens to be a government employee making the mistake. How exactly does an agency rushing to comply with a directive from Congress reach the level of "this structure of governance [which matches the structure in almost every other developed country in the world] is failing?"

deleted 6y ago

[deleted]

czbond 6y ago

I used to feel the same way (specifically around the Fed and Treasury and national debt) - until I realized, it's just a number on a screen. They print dollars as easily as you and I print from our local printer. The digits are all are meaningless - we're never going to pay back the amounts, or our national debt. We're just going to print and inflate, and pay back any old sums with numbers we just printed.

eli 6y ago

Just wait until you find out how much money is lost because an underfunded IRS believes it is unable to effectively audit the wealthy and so mostly doesn't bother.

czbond 6y ago
I would suggest the opposite. IRS realizes the only revenue they're likely to extract correctly are small business owners, and middle to upper class who don't have the time nor legal fee tolerance to fight it. They already extract so little on an |absolute value| basis from the lower 70% of Americans, that it only makes sense to focus on the top x%
- jellicle 6y ago
  It's great that you have feelings about what the IRS does, but the previous commenter was talking about facts and the IRS's own statements on the issue. The IRS was in the news last year for stating that they have decreased audits on the wealthy because they take too much effort. The most-audited zip codes in the USA are extremely poor areas.
  - czbond 6y ago
    Yeah, Original statement was logic only. Followup was on how specific areas might be 'cash only' hotspots that diverge from the mean tax paid for occupations, revenue, or other criteria.
- khuey 6y ago
  And yet they audit 25% of those receiving the EITC (https://www.foxbusiness.com/money/irs-audits-poor-taxpayers-easier https://www.foxbusiness.com/money/irs-audits-poor-taxpayers-...) who are all poor.
  - pc86 6y ago
    I hesitate to use this phrase but isn't it important to look at the "ROI" on those audits to determine if it's a good thing or not? Whether you're poor or not, you shouldn't be getting the EITC if you don't qualify for it. What does this subset of audits cost the IRS, and how much money is recovered from it? How does that compare to auditing someone who is high income but with a fairly straightforward W2, compared to someone with a lot of Schedule C and 1099 income? To be clear I don't think the only component of the "should we audit" formula should be expected ROI; there is also a (positive) chilling effect in general where the chance of a random audit should be just high enough to dissuade folks from fraud in the first place, but the penalties not so severe that someone is bankrupted from an honest mistake.
    - matwood 6y ago
      I wonder if the IRS even thinks about a monetary ROI. Given how often poorer people are audited, I'm guessing it's all about cases closed or numbers audited and has little to do with amounts. IMO, amounts would be the better focus.
  - czbond 6y ago
    After reflection, my guess is it would be that in those neighborhoods they have identified a largely 'paid in cash, under-reported' behavior. For example, if nationally a person with "career x" makes $45k, yet reports $18k - it could be worth a look. There are large segments that do this (right or wrong) - and is one underlying benefit the govt believes of going all digital. I can see how from their standpoint focusing on cash audits of unsophisticated businesses setups are easier than complicated, diverse, experience heavy audits.
    - renewiltord 6y ago
- eli 6y ago
  Interesting theory but the Treasury IG report shows the IRS doesn't even pursue hundreds of thousands of high-income individuals who do not file taxes at all. The top 1% of earners account for 70% of underreporting of income. https://www.treasury.gov/tigta/auditreports/2020reports/202030015fr.pdf https://www.treasury.gov/tigta/auditreports/2020reports/2020...
  - czbond 6y ago
    Wow - that's nuts. Thanks for posting; And here I stress out to make sure the exact amount I owe is correctly reported. Oh well, better to sleep at night soundly on that issue!
    - eli 6y ago
      Same, I spend a lot of time trying to get it right. It’s incredibly frustrating that it is so politically unpopular to fund the IRS at an appropriate level even though each dollar spent would generate more than a dollar in tax revenue.
  - vonmoltke 6y ago
    That report is very enlightening, and makes clear that the IRS is not doing their job WRT high-income non-filers. However, I don't see from its numbers how you arrived at > The top 1% of earners account for 70% of underreporting of income. since it only ever addresses non-filers and doesn't mention, from what I could see, percentile brackets for the filers it does discuss.

renewiltord 6y ago

No one should pay for it. It's within the margin of acceptability. The prime priority was to get lots of money to lots of people in the US to keep the economy going. The secondary priority was to ensure that very little money disappears into the ether. The first was met. The second was met. It's a common principle in engineering too. Cost is monotonically increasing in failure rate, and (1-failure_rate) is asymptotic in cost, so you always make systems with failure rate > 0. The actual rate you pick is dependent on the constraints you operate under. I used to think this was a non-engineer/engineer difference but in the past few years I've noticed it's a mindset that's actually independent of that. It's a risk modeling vs binary modeling difference. Everyone who has to make meaningful decisions does it to a large degree (engineers, architects, doctors, lawyers, assembly line workers in Andon). I don't think I'd ever want to work with binary-modelers.

astura 6y ago
The mistake isn't permanent, the IRS can still at least attempt to collect back money sent in error. Money doesn't vanish forever just because it went into someone's bank account.
- renewiltord 6y ago
  True, true, but the money involved is so little that it's likely to result in not much regained, right? After all, the IRS doesn't usually find it worthwhile to send tax delinquency information to the state dept (which is the usual mechanism to force payment from non-resident non-citizens) for these sums. Though if I think about it, non-residents who were legitimately paying taxes are unlikely to not return the money if asked so maybe it's worth it.

pc86 6y ago

Mistakes are not always crimes. Certainly not just because it happens to be a government employee making the mistake. How exactly does an agency rushing to comply with a directive from Congress reach the level of "this structure of governance [which matches the structure in almost every other developed country in the world] is failing?"