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That's exactly it. Rich people have the resources to fight for longer than you will hold your office. There's a really eye opening report 2 years ago from Cha

That's exactly it. Rich people have the resources to fight for longer than you will hold your office. There's a really eye opening report 2 years ago from Charles Rettig, commissioner of the IRS, where he openly states that his agency focuses audits on poorer people, because they have less resources to fight and are more likely to just pay up and move on. Most of the audit resources are targeted at people claiming the earned income tax credit.

adventured 6y ago
Edit: I provided actual data - facts - straight from the IRS. If you're going to downvote, I dare you to bring something to the table to counter reality (good luck). > where he openly states that his agency focuses audits on poorer people As incomes rise, audit % rates rise. The IRS does not focus a large share of its energy on poorer people. The people earning under $50,000 per year have a very low audit rate, and that's straight from the IRS data. Once your income climbs over $200,000 your audit rate begins to skyrocket. In terms of volume, 60% of all filers are at $50,000 or lower, so obviously even at a low % of audits they're still going to have a lot of audits. The IRS does audit people filing as having no income at a relatively high rate, because that category frequently attempts to use incorrect deductions to try to hide income. The rate of fraud is very high in that category. Here: https://www.irs.gov/pub/irs-utl/2017ntf-irsauditstriggers.pdf https://www.irs.gov/pub/irs-utl/2017ntf-irsauditstriggers.pd... "The majority of audited returns are for taxpayers who earn $500,000 a year or more, and most of them had incomes of over $1 million. These are the only income ranges that were subject to more than a 1% chance of an audit in 2018. " -- [note: the $500k+ group is the majority of audited returns despite the fact that they're a tiny share of all returns, which tells you how low the audit rate is for the poorer categories.] "According to IRS statistics, you’re safest if you report income in the neighborhood of $25,000 to $200,000. These taxpayers were audited the least in 2016." https://www.thebalance.com/top-audit-triggers-that-catch-irs-attention-4153034 https://www.thebalance.com/top-audit-triggers-that-catch-irs...
- refenestrator 6y ago
  A better characterization, from memory, was that they don't bother with the ultra-rich because it's difficult to win. 200k-1M is probably the danger zone.
  - busterarm 6y ago
    Otherwise read as "anyone who dare try to not be poor".
  - busterarm 6y ago
    39% of audits are people who claimed EITC...which only applies to low and moderate-low income workers.
- hnburnsy 6y ago
  Not sure if others but I found your comment is an unfair characterization of what Rettig said, the from him is... ' the most efficient use of available IRS examination resources' The IRS has less resources so, it is not directly targeting those with less resources like you are attributing to Rettig. The IRS is targeting the most fraudulent schemes where it can effectively recover, based in its staffing and budget level. Here is the report from the IRS on this... https://www.documentcloud.org/documents/6430680-Document-2019-9-6-Treasury-Letter-to-Wyden-RE.html https://www.documentcloud.org/documents/6430680-Document-201...
- maxerickson 6y ago
  If you are gonna get the vapors, maybe post IRS data that covers the period it has been administered by Rettig, instead of a report coming in at the tail of the previous administration? https://www.propublica.org/article/irs-now-audits-poor-americans-at-about-the-same-rate-as-the-top-1-percent https://www.propublica.org/article/irs-now-audits-poor-ameri... So that story does basically say that the EITC audits don't cost a lot, but it also doesn't say if they are worthwhile, and it says that the wealthy are getting audited less and less.
- iudqnolq 6y ago
  Here's what the OP was referring to. > 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. https://www.propublica.org/article/irs-sorry-but-its-just-easier-and-cheaper-to-audit-the-poor https://www.propublica.org/article/irs-sorry-but-its-just-ea...
  - ineedasername 6y ago
    It might be even more efficient to take on a few whales and devote enough energy to hit everyone as hard as possible, jail terms etc. That might discourage the others a bit more.
    - emodendroket 6y ago
      The problem is that these require a tremendous amount of research and expertise. You can't just throw some low-level employees at them and hope they'll figure it out.
      - luckylion 6y ago
        But it pays of big time when they've dug into it. We have the same thing in Germany where very successful auditors (their biggest hit was them investigating a major bank which lead to about 1bn euros of evaded taxes getting collected) got removed from their posts, forced into early retirement and declared insane (literally). Corrupt politicians and their rich clients considered them a nuisance and made them go away. It's quite obvious what kind of signal that sends to anyone in tax auditing: if you want to live your life peacefully, don't go after the highly criminal high-value targets.
        emodendroket 6y ago
        Yes. They’ve cut the budget of the IRS to the point where what you suggest cannot be done.
- jellicle 6y ago
  > The IRS does not focus a large share of its energy on poorer people. This is just untrue. In 2021, almost all of the IRS' enforcement energy is focused on poor people. This is continuing a trend that has gone on for 30+ years now of steadily reducing enforcement on the rich and holding it steady or increasing it on the poor, particularly aiming at anyone who claims the Earned Income Tax Credit. The IRS audits half as many people as it did just five years ago. It audits 1/5th as many people as it did in the 1970s. And these cuts have applied mainly to the top end of the income spectrum. Somehow it passed without much public notice that Trump's budgets massively slashed an already severely underfunded IRS. In fact, the IRS has now ceased reporting its audit rates of the rich and large corporations, because they're so low, so we no longer even know how low they are. https://www.propublica.org/article/has-the-irs-hit-bottom https://www.propublica.org/article/has-the-irs-hit-bottom
  - deleted 6y ago
    [deleted]
  - einpoklum 6y ago
    Thank you for this. This seems to be of quite a lot of significance, and I've not heard it mentioned even on alternative media (although, granted, I'm not from the US so I don't follow as closely as a local would).
    - emodendroket 6y ago
      Often this stuff gets tucked into wider cuts, or follows a tempest in a teacup about the IRS "targeting conservatives," or similar.
NikolaNovak 6y ago
(Any links or direct quotes?that sounds more like interpretation than a report but I'd be curious to see! Thx)
- iudqnolq 6y ago
  (not op). It's an essentially direct quote from the current head of the IRS. https://www.propublica.org/article/irs-sorry-but-its-just-easier-and-cheaper-to-audit-the-poor https://www.propublica.org/article/irs-sorry-but-its-just-ea...
Shivetya 6y ago
Sadly Congress isn't going to fix this because it requires a much simpler tax system instead of one that is filled from end to end with special carve outs and rules. When our current President subscribes to using tax law shenanigans to avoid paying taxes you can damn well bet much of the rest of Congress and high ranking state leaders will be found doing the same. One of the larger avenues of abuse is through S Corporations which let individuals shunt off income thereby avoiding certain types of taxes. It is also used by leadership of various charitable organizations to redirect money for purposes many would think fraudulent; like using them to buy homes for use by organization leadership or cover business jet ownership
- TheAdamAndChe 6y ago
  Those who know the rules of a game and can play it well are often best suited to make good changes as long as incentives align.
emodendroket 6y ago
There's been a pretty protracted effort to defund the IRS and it would seem that it's achieved its intended result.

adventured 6y ago

Edit: I provided actual data - facts - straight from the IRS. If you're going to downvote, I dare you to bring something to the table to counter reality (good luck). > where he openly states that his agency focuses audits on poorer people As incomes rise, audit % rates rise. The IRS does not focus a large share of its energy on poorer people. The people earning under $50,000 per year have a very low audit rate, and that's straight from the IRS data. Once your income climbs over $200,000 your audit rate begins to skyrocket. In terms of volume, 60% of all filers are at $50,000 or lower, so obviously even at a low % of audits they're still going to have a lot of audits. The IRS does audit people filing as having no income at a relatively high rate, because that category frequently attempts to use incorrect deductions to try to hide income. The rate of fraud is very high in that category. Here: https://www.irs.gov/pub/irs-utl/2017ntf-irsauditstriggers.pdf https://www.irs.gov/pub/irs-utl/2017ntf-irsauditstriggers.pd... "The majority of audited returns are for taxpayers who earn $500,000 a year or more, and most of them had incomes of over $1 million. These are the only income ranges that were subject to more than a 1% chance of an audit in 2018. " -- [note: the $500k+ group is the majority of audited returns despite the fact that they're a tiny share of all returns, which tells you how low the audit rate is for the poorer categories.] "According to IRS statistics, you’re safest if you report income in the neighborhood of $25,000 to $200,000. These taxpayers were audited the least in 2016." https://www.thebalance.com/top-audit-triggers-that-catch-irs-attention-4153034 https://www.thebalance.com/top-audit-triggers-that-catch-irs...

refenestrator 6y ago
A better characterization, from memory, was that they don't bother with the ultra-rich because it's difficult to win. 200k-1M is probably the danger zone.
- busterarm 6y ago
  Otherwise read as "anyone who dare try to not be poor".
- busterarm 6y ago
  39% of audits are people who claimed EITC...which only applies to low and moderate-low income workers.
hnburnsy 6y ago
Not sure if others but I found your comment is an unfair characterization of what Rettig said, the from him is... ' the most efficient use of available IRS examination resources' The IRS has less resources so, it is not directly targeting those with less resources like you are attributing to Rettig. The IRS is targeting the most fraudulent schemes where it can effectively recover, based in its staffing and budget level. Here is the report from the IRS on this... https://www.documentcloud.org/documents/6430680-Document-2019-9-6-Treasury-Letter-to-Wyden-RE.html https://www.documentcloud.org/documents/6430680-Document-201...
maxerickson 6y ago
If you are gonna get the vapors, maybe post IRS data that covers the period it has been administered by Rettig, instead of a report coming in at the tail of the previous administration? https://www.propublica.org/article/irs-now-audits-poor-americans-at-about-the-same-rate-as-the-top-1-percent https://www.propublica.org/article/irs-now-audits-poor-ameri... So that story does basically say that the EITC audits don't cost a lot, but it also doesn't say if they are worthwhile, and it says that the wealthy are getting audited less and less.
iudqnolq 6y ago
Here's what the OP was referring to. > 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. https://www.propublica.org/article/irs-sorry-but-its-just-easier-and-cheaper-to-audit-the-poor https://www.propublica.org/article/irs-sorry-but-its-just-ea...
- ineedasername 6y ago
  It might be even more efficient to take on a few whales and devote enough energy to hit everyone as hard as possible, jail terms etc. That might discourage the others a bit more.
  - emodendroket 6y ago
    The problem is that these require a tremendous amount of research and expertise. You can't just throw some low-level employees at them and hope they'll figure it out.
    - luckylion 6y ago
      But it pays of big time when they've dug into it. We have the same thing in Germany where very successful auditors (their biggest hit was them investigating a major bank which lead to about 1bn euros of evaded taxes getting collected) got removed from their posts, forced into early retirement and declared insane (literally). Corrupt politicians and their rich clients considered them a nuisance and made them go away. It's quite obvious what kind of signal that sends to anyone in tax auditing: if you want to live your life peacefully, don't go after the highly criminal high-value targets.
      - emodendroket 6y ago
        Yes. They’ve cut the budget of the IRS to the point where what you suggest cannot be done.
jellicle 6y ago
> The IRS does not focus a large share of its energy on poorer people. This is just untrue. In 2021, almost all of the IRS' enforcement energy is focused on poor people. This is continuing a trend that has gone on for 30+ years now of steadily reducing enforcement on the rich and holding it steady or increasing it on the poor, particularly aiming at anyone who claims the Earned Income Tax Credit. The IRS audits half as many people as it did just five years ago. It audits 1/5th as many people as it did in the 1970s. And these cuts have applied mainly to the top end of the income spectrum. Somehow it passed without much public notice that Trump's budgets massively slashed an already severely underfunded IRS. In fact, the IRS has now ceased reporting its audit rates of the rich and large corporations, because they're so low, so we no longer even know how low they are. https://www.propublica.org/article/has-the-irs-hit-bottom https://www.propublica.org/article/has-the-irs-hit-bottom
- deleted 6y ago
  [deleted]
- einpoklum 6y ago
  Thank you for this. This seems to be of quite a lot of significance, and I've not heard it mentioned even on alternative media (although, granted, I'm not from the US so I don't follow as closely as a local would).
  - emodendroket 6y ago
    Often this stuff gets tucked into wider cuts, or follows a tempest in a teacup about the IRS "targeting conservatives," or similar.

NikolaNovak 6y ago

(Any links or direct quotes?that sounds more like interpretation than a report but I'd be curious to see! Thx)

iudqnolq 6y ago
(not op). It's an essentially direct quote from the current head of the IRS. https://www.propublica.org/article/irs-sorry-but-its-just-easier-and-cheaper-to-audit-the-poor https://www.propublica.org/article/irs-sorry-but-its-just-ea...

Shivetya 6y ago

Sadly Congress isn't going to fix this because it requires a much simpler tax system instead of one that is filled from end to end with special carve outs and rules. When our current President subscribes to using tax law shenanigans to avoid paying taxes you can damn well bet much of the rest of Congress and high ranking state leaders will be found doing the same. One of the larger avenues of abuse is through S Corporations which let individuals shunt off income thereby avoiding certain types of taxes. It is also used by leadership of various charitable organizations to redirect money for purposes many would think fraudulent; like using them to buy homes for use by organization leadership or cover business jet ownership

TheAdamAndChe 6y ago
Those who know the rules of a game and can play it well are often best suited to make good changes as long as incentives align.

emodendroket 6y ago

There's been a pretty protracted effort to defund the IRS and it would seem that it's achieved its intended result.