> 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.
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.
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.
Yes, but you might only have to do it occasionally to have it pay off. Just enough that the dozen or so people at the top would think twice, because especially with the IRS bounty system, it may not take more than o e person with cold feet to either stop the fraud, or whistle blow and make prosecution much easier.
Although it would help significantly if corporate tax returns were public as originally intended. That's a bit like open sourcing the data, and you could have a bug bounty on finding issues.
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.
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.
> 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.
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).
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?
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.
