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darkapao t1_j1fkww9 wrote

I read somewhere that the IRS has a ceiling like $400k or something is not worth they're time because it's too expensive due to the lawyers. So the system has been gutted to just focus on the small guys

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FrostyFoss t1_j1fo1ok wrote

It's true.

IRS Continues Targeting Poorest Families for More Tax Audits During FY 2022

And I believe it. I mean did you see Trump's taxes?

• ⁠2015: negative income $31.7 million, taxable income $0. Paid $641,931 tax.

• ⁠2016: negative income $31.2 million, taxable income $0. Paid $750 tax.

• ⁠2017: negative income $12.8 million, taxable income $0. Paid $750 tax.

• ⁠2018: positive income $24.4 million, taxable income $22.9 million. Paid $999,466 tax.

• ⁠2019: positive income $4.44 million, taxable income $2.97 million. Paid $133,445 tax.

• ⁠2020: negative income $4.69 million, taxable income $0. Paid $0 tax. Claimed a REFUND of $5.47 million.

https://abcnews.go.com/Politics/trump-tax-return-related-documents-released-congressional-committee/story?id=95599017

https://www.cnbc.com/2022/12/21/trump-income-tax-returns-detailed-in-new-report-.html

https://www.cnbc.com/2022/12/21/only-one-trump-tax-return-as-president-got-mandatory-irs-audit-report-says.html

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Al3rtROFL t1_j1fz0qq wrote

The government lost over a million dollars on that guy

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[deleted] t1_j1gxey6 wrote

[deleted]

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FrostyFoss t1_j1gyxqx wrote

>It’s targeting people who claim the EITC

AKA the poor.

https://www.propublica.org/article/earned-income-tax-credit-irs-audit-working-poor

https://www.propublica.org/article/irs-now-audits-poor-americans-at-about-the-same-rate-as-the-top-1-percent

>According to data released by the IRS last week, millionaires in 2018 were about 80% less likely to be audited than they were in 2011.

>But poor taxpayers continue to bear the brunt of the IRS’ remaining force. As we reported last year, Americans who receive the earned income tax credit, one of the country’s largest anti-poverty programs, are audited at a higher rate than all but the richest taxpayers. The new data shows that the trend has only grown stronger.

>Audits of the rich continue to plunge while those of the poor hold steady, and the two audit rates are converging. Last year, the top 1% of taxpayers by income were audited at a rate of 1.56%. EITC recipients, who typically have annual income under $20,000, were audited at 1.41%.

>Since 2011, Audit Rates for the Wealthy Have Dropped More Steeply Than for EITC Recipients

>The median EITC recipient has annual income under $20,000. Here's the percentage drop in audit rates by annual income, from 2011 to 2018.

>Part of the reason is ease. Audits of EITC recipients are largely automated and far less complicated.

>“While the wealthy now have an open invitation to cheat, low-income taxpayers are receiving heightened scrutiny because they can be audited far more easily. All it takes is a letter instead of a team of investigators and lawyers,” said Sen. Ron Wyden, D-Ore., the ranking member of the Senate Finance Committee.

>“We have two tax systems in this country,” he said, “and nothing illustrates that better than the IRS ignoring wealthy tax cheats while penalizing low-income workers over small mistakes.”

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[deleted] t1_j1gz2q1 wrote

[deleted]

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FrostyFoss t1_j1h1fb9 wrote

You act like they're after the poor because they make more errors.

They're after the poor because they can't fight an audit and end up just accepting whatever the IRS comes up with. Just or not. I doubt they actually do commit more errors, the IRS just says they do and that's that.

>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.

>On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam. What’s more, the letter says, “the rate of attrition is significantly higher among these more experienced examiners.”


>When Natassia Smick, 28, filed her family’s taxes in January, she already had plans for the refund she and her husband expected to receive. Mainly, she wanted to catch up on her credit card debt. And she was pregnant with their second child, so there were plenty of extra expenses ahead.

>Since Smick, who is taking classes toward a bachelor’s degree, and her husband, a chef, together earned around $33,000 in 2017, about $2,000 of that refund would come from the earned income tax credit. It’s among the government’s largest anti-poverty programs, sending more than $60 billion every year to families like Smick’s: people who have jobs but are struggling to get by. Last year, 28 million households claimed the EITC.

>Smick, who lives outside Los Angeles, thought she’d get her refund in a month or so, as she had the year before. But no refund came. Instead, she got a letter from the IRS saying it was “conducting a thorough review” of her return. She didn’t need to do anything, it said. Smick waited as patiently as she could. She called the IRS and was told to wait some more.

>It wasn’t until four months later, in July, that she got her next letter. The IRS informed her that she was being audited. She had 30 days to provide “supporting documentation” for basically everything. As she understood it, she needed to prove that she and her husband had earned what they’d earned and that her child was her child.

>By this point, Smick was home with her baby. She set about rounding up W-2s, paycheck stubs, bank statements and birth certificates. Proving that her 4-year-old had lived at the family’s address for most of the year, as the EITC requires, was the hardest thing, but she did her best with medical records, some papers from his day care, and whatever else she could think of.

>She sent it all off and hoped for a quick resolution, but the next IRS letter quashed that hope. The IRS said it would review her response by Feb. 16, 2019 — six months away. Collectors were calling about the credit card bills. She didn’t know how she’d make it that long.

>Smick couldn’t understand why this was happening. All she had done was answer the questions on TurboTax. Isn’t it rich people who get audited? “We have nothing,” she said, “and it’s just frustrating knowing that we have nothing.”


>Low-income families are often complicated; they’re more likely to be multi-generational than more affluent filers, for instance, or to add or subtract household members from year to year. A study by the nonpartisan Tax Policy Center found that only about 48 percent of low-income households with children were married couples, while for other households it was 75 percent.

>But advocates for taxpayers say the IRS makes the situation needlessly worse. Virtually all the EITC audits are conducted by correspondence, and the computer-generated letters are far from simple. A survey by the Taxpayer Advocate Service found that more than a quarter of EITC recipients who were audited didn’t even understand that they were under audit.

>“When I first got audited, I couldn’t figure out what was going on,” said Denise Canady, 62, of West Memphis, Arkansas, who at the time was earning $8.50 an hour as a home health aide. The audit sent her on a scramble to get documents from her granddaughter’s doctor, pharmacy, hospital and school that would demonstrate that the toddler had lived at her address. “A lot of people don’t want to give you old records,” she said.

>She eventually found her way to Legal Aid of Arkansas, where an attorney helped bolster her case, but, a year after her audit began, she is still awaiting the outcome.

>“I pray and hope,” she said.

Basically the IRS sits there and says "prove it" anytime they see something they don't believe. Which is often with poorer families who hop around jobs or have complicated families.

Then they drag their feet for months and make it impossible to get in touch with them when you try and do so.

>last year only 11% of callers to the IRS help line got through to a customer service representative.

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caseyyp t1_j1imk0v wrote

Thanks for clarifying that they target low income families!

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TheWinks t1_j1gis7f wrote

It's not that it's too expensive, it's that rich people's taxes are done by professionals and questions of tax liability are going to be complex and not necessarily in the IRS's favor. On the other hand, someone that runs their own business, nets in the $10,000s to pushing into 6 figures, and does their own taxes or provides potentially erroneous information to a tax preparer is a fairly easy target. The discrepancies that the IRS's computer systems find are likely going to be in the favor of the IRS.

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calm_chowder t1_j1h4r16 wrote

Has more to do with the fact the rich can afford expensive lawyers and the IRS can't.

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TheWinks t1_j1i09v1 wrote

It's that the rich have already paid the experts for the management and preparation of their taxes, not the threat of hiring a someone to defend themselves.

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Honest_Palpitation91 t1_j1i6k1f wrote

Yep republicans spend every waking moment trying to give more back to the wealthy. All above 400k should be fully audited every year

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