Current Events > IRS admits it audits poor people because auditing rich people is too expensive

(+) Yeah! (+)

The hell kind of website is boingboing.net?

The hell kind of website is boingboing.net?

The hell kind of website is boingboing.net?

The hell kind of website is boingboing.net?

Nine years ago, Republican lawmakers gutted the IRS's budget, but didn't relax its requirement to conduct random audits: in response, the IRS has shifted its focus from auditing rich people (who can afford fancy accountants to use dirty tricks to avoid paying taxes) to auditing poor people (who can't afford professional help and might make minor mistakes filling in the highly technical and complex tax forms), until today, an IRS audit is just as likely to target low-income earner whose meager pay entitles them to a tax credit is as it is to target a filer from the top one percent of US earners.

Propublica pointed this out in an excellent tax-season report last April, and Senator Ron Wyden [D-OR] took up the issue with the IRS. Now, IRS Commissioner Charles Rettig has provided a report to Senator Wyden admitting that his agency targets poor people because they can't afford to appeal the audits, making them cost-effective notches on the IRS's bedpost.

Rettig's report admits that auditing rich people would turn up more fraud and bring in more money for the US government, but says that he can't afford to do so unless Congress restores the IRS's funding. There's bipartisan support for such a measure, but with Sen Mitch McConnell blocking any Senate action, there may not be any more appropriations bills in 2019.

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 dont take too much staff time, either. They are the most efficient use of available IRS examination resources, Rettigs report says.

On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam. Whats more, the letter says, the rate of attrition is significantly higher among these more experienced examiners. As a result, the budget cuts have hit this part of the IRS particularly hard.

For now, the IRS says, while it agrees auditing more wealthy taxpayers would be a good idea, without adequate funding theres nothing it can do. Congress must fund and the IRS must hire and train appropriate numbers of [auditors] to have appropriately balanced coverage across all income levels, the report said.

Jagr_68 posted...

The hell kind of website is boingboing.net?

im curious, how old are you

How the hell have you people not heard of boingboing

This is adjusting my whole worldview. What about 538?

Guide posted...

How the hell have you people not heard of boingboing

This is adjusting my whole worldview. What about 538?

538 is everywhere. ive never once heard of boingboing

The hell kind of website is boingboing.net?

https://projects.propublica.org/graphics/eitc-audit

https://projects.propublica.org/graphics/eitc-audit

Sackgurl posted...

https://projects.propublica.org/graphics/eitc-audit

Where in The U.S. Are You Most Likely to Be Audited by the IRS?

Humphreys County, Mississippi, seems like an odd place for the IRS to go hunting for tax cheats. Its a rural county in the Mississippi Delta known for its catfish farms, and more than a third of its mostly African American residents are below the poverty line. But according to a new study, it is the most heavily audited county in America.

n a baffling twist of logic, the intense IRS focus on Humphreys County is actually because so many of its taxpayers are poor. More than half of the countys taxpayers claim the earned income tax credit, a program designed to help boost low-income workers out of poverty. As we reported last year, the IRS audits EITC recipients at higher rates than all but the richest Americans, a response to pressure from congressional Republicans to root out incorrect payments of the credit.

The study estimates that Humphreys, with a median annual household income of just $26,000, is audited at a rate 51 percent higher than Loudoun County, Virginia, which boasts a median income of $130,000, the highest in the country.

Kim M. Bloomquist, the author of the study, which was first published in the industry journal Tax Notes, served as a senior economist with the IRS research division for two decades. He decided to map the distribution of audits to illustrate the dramatic regional effects of the IRS emphasis on EITC audits. Because more than a third of all audits are of EITC recipients, the number of audits in each county is largely a reflection of how many taxpayers there claimed the credit, he found.

In counties with the highest audit rates, there were about 11 audits per 1,000 tax returns filed each year, he found, which is more than 40 percent above the national average.

The map reveals wide variations in the audit rate from place to place, but also how certain groups of Americans are disproportionately affected by the IRS policies. The five counties with the highest audit rates are all predominantly African American, rural counties in the Deep South. The audit rate is also very high in South Texas largely Hispanic counties and in counties with Native American reservations, such as in South Dakota. Primarily poor, white counties, such as those in eastern Kentucky in Appalachia, also have elevated audit rates.

The states with the lowest audit rates tend to be home to middle income, largely white populations: places like New Hampshire, Wisconsin and Minnesota. Generally, the IRS audits taxpayers with household income between $50,000 and $100,000 the least.

In an email, an IRS spokesperson said that tax returns are selected for audit without regard to race or where the taxpayer lives.

EITC audits can be punishing for taxpayers, since they routinely start with a refund being held, and can drag on for well over a year. The IRS does sponsor a program to provide free legal help to low-income taxpayers, but in Mississippi, the state with the highest audit rate in the country (according to Bloomquists estimates, the IRS audits about 11,000 returns there each year), there is only one attorney for the program.

I cover all 82 counties, said Ben Wilkerson, of North Mississippi Rural Legal Services. Out of necessity, he largely deals with his clients over the phone, counseling them on how to collect documentation to confirm their earnings or that a child lived with them for over six months of the year. We get a lot of calls from pretty much everywhere, he said.

Rep. Terri Sewell, a Democrat whose western Alabama district includes some of the counties with the highest audit rates, and who sits on the House Ways and Means Committee, which oversees the IRS, said in response to the study that taxpayers shouldnt be disproportionately targeted for claiming a certain tax credit.

Congress, she said, must ensure that the IRS initiates and executes audits in a fair and impartial manner.

In an email, an IRS spokesperson said that tax returns are selected for audit without regard to race or where the taxpayer lives.

EITC audits can be punishing for taxpayers, since they routinely start with a refund being held, and can drag on for well over a year. The IRS does sponsor a program to provide free legal help to low-income taxpayers, but in Mississippi, the state with the highest audit rate in the country (according to Bloomquists estimates, the IRS audits about 11,000 returns there each year), there is only one attorney for the program.

I cover all 82 counties, said Ben Wilkerson, of North Mississippi Rural Legal Services. Out of necessity, he largely deals with his clients over the phone, counseling them on how to collect documentation to confirm their earnings or that a child lived with them for over six months of the year. We get a lot of calls from pretty much everywhere, he said.

Rep. Terri Sewell, a Democrat whose western Alabama district includes some of the counties with the highest audit rates, and who sits on the House Ways and Means Committee, which oversees the IRS, said in response to the study that taxpayers shouldnt be disproportionately targeted for claiming a certain tax credit.

Congress, she said, must ensure that the IRS initiates and executes audits in a fair and impartial manner.