IRS audits more poor people than rich people...because it's easier.

Discussion in 'The War Room' started by panamaican, Oct 10, 2019.

  1. panamaican

    panamaican Senior Moderator Staff Member Senior Moderator

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    https://www.foxbusiness.com/money/irs-audits-poor-taxpayers-easier
    https://www.propublica.org/article/irs-sorry-but-its-just-easier-and-cheaper-to-audit-the-poor
    https://www.dailykos.com/stories/20...-ones-admits-that-low-income-cases-are-easier

    I thought this was a fascinating piece of information in the context of the income/wealth inequality in this country.

    The title sums up the story pretty well. The IRS acknowledged that they audit more poor people than rich people because auditing poor people is easier. It's cheaper for them, takes less time, and requires less professional expertise to conduct.

    It's bass-ackwards. The biggest tax cheats have a better chance of avoiding scrutiny than the poor precisely because they are the biggest tax cheats, lol.
     
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  2. JudoThrowFiasco

    JudoThrowFiasco Charming Quark Platinum Member

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    Not sure if the US has random audits but those are always going to land more on people who don't make enough to cheat the system
     
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  3. panamaican

    panamaican Senior Moderator Staff Member Senior Moderator

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    But that's not what the IRS is saying.

    They're saying that they intentionally audit the poor more than the rich because of the cost of auditing the rich. Essentially, they use low level employees to audit simple tax returns, those filed by the poor. But because they can't afford more high level employees, they simply cannot audit the complex tax returns of the wealthy at a higher rate.

    The crux of their issue is that they need more money to hire better staff. And until that happens, the best use of their staff is to audit tax returns that align with their employee skill set - the simple tax returns filed by low income people.

    I think it's interesting because it actually contradicts some common rhetoric. I used to hear "Don't complicate the clients' tax return because it's going to invite the IRS to take a closer look." That's apparently wrong. The more complicated the return, the greater the odds that the IRS won't look deeper because they don't have the people to do so.
     
  4. HockeyBjj

    HockeyBjj Putting on the foil

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    I got audited when I was working various co-ops and internships my 3rd year of college. I got why it looked suspicious, I worked full time in 3 different states while living in 4 different states all while school showed I was a full time student and this all in the same year. I had to show job offers from each job (apparently the W2s weren't enough to prove I worked there?) and my name on the rent lease of each place I lived and my parents had to go to courthouse and sign something notorized saying I lived with them the 2 weeks over Christmas break and the 1 week after my summer internship ended before the school year started again.

    But I was like, why are you even bothering to make me prove I'm not cheating on my taxes when I'm some 21 year old who made like 30k that year?
     
  5. tonni

    tonni Silver Belt

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  6. Sohei

    Sohei Manning the air

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    Gotta get on board that oligarchy train.
     
  7. JudoThrowFiasco

    JudoThrowFiasco Charming Quark Platinum Member

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    Canada was also found to be doing the same with their targeted auditing. Cheaper and easier is just...well, cheaper and easier.

    Things are changing here as of 2018
     
  8. Lord Coke

    Lord Coke Black Belt

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    thanks for posting. I don't really know what to say to contribute but i found the article interesting.
     
  9. JudoThrowFiasco

    JudoThrowFiasco Charming Quark Platinum Member

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    You don't think the USSR prefered the cheaper and easier route? Chernobyl says hi
     
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  10. ultramanhyata

    ultramanhyata Gold Belt

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    It's tough to overcome the very American and entrenched notion that the rich actually "earned" (and therefore contributed to the growth of the economy) the monies they are attempting to hide from the IRS. Whereas something like the EITC is just a "government handout" given to lower income families. They didn't "earn" it, didn't "deserve" it in the first place and therefore its recipients should be highly policed.
     
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  11. panamaican

    panamaican Senior Moderator Staff Member Senior Moderator

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    That's good for you guys. I don't think we're going to see any changes in the near future because the IRS isn't getting more money under this administration.

    And I doubt the tax cheats in Congress are going to read this and say "Hmm, let's make our returns easier to scrutinize."
     
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  12. SammyPops

    SammyPops Gold Belt

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    This is odd, as I was under the impression that most such revenue services wanted to at lest recoup costs in any audit.
     
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  13. panamaican

    panamaican Senior Moderator Staff Member Senior Moderator

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    They do. That's why they're doing so many simple audits. They don't cost much, if anything, to conduct.

    I once did some tax work for Intuit (looking at returns and stuff for their software development, nothing fancy). The types of audits they're talking about are a simple letter asking for proof that something happened and then updating the tax return to reflect it. It's form letter stuff, very little tax analysis.
     
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  14. zebby23

    zebby23 Silver Belt

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    No wonder Donald Trump is under perpetual audit
     
  15. SleepyBoy

    SleepyBoy Silver Belt

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    I thought it was pretty common that IRS avoids auditing the wealthy and haven't seriously audited a fortune 500 in years, maybe decades.

    They usually focus on the following in this order
    Independent contractors
    Small businesses
    People that work on tips that have to be declared.

    It's beyond fucked up that our whole taxation enforcement is to only go after low hanging fruit and to just completely give up on going after the actual crux of the problem.

    The rich know that they won't be audited and adjust the strategy according.
     
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  16. AlexDB9

    AlexDB9 Double Yellow Card Double Yellow Card

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    Perfect, down with the rich comrades
     
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  17. bobgeese

    bobgeese Gold Belt

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  18. Crocop42

    Crocop42 Brown Belt

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    You just can't help it. You have a sickness.
     
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  19. zebby23

    zebby23 Silver Belt

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    I’ve been diagnosed with not wanting an incompetent criminal in office. What’s the cure?
     
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  20. Crocop42

    Crocop42 Brown Belt

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    No, youre like an old angry man commenting on Facebook mentioning Trump in every post.

    Or some kid in the Heavy's.
    "Man, todd duffee's career went downhill fast."
    "Yeah, justblike Trump's Presidency "

    The cure? Stop letting someone occupy so much of your headspace.
     
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