IRS Failed to Collect $2.4 Billion in Taxes From Millionaires

[ZiprHead]

https://www.bloomberg.com/news/articles/2021-03-15/irs-failed-to-collect-2-4-billion-in-taxes-from-millionaires?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosmarkets&stream=business&sref=0KUfhQHv&fbclid=IwAR1ZPeTr2yDYJJbg8kUNW24-O2lEzWkk7mc9wvdXQx64tGx7fNlfl_2EuZc

The Internal Revenue Service has failed to collect more than $2.4 billion dollars from wealthy individuals who owe the federal government back taxes, according to a Treasury Department watchdog report.

Auditors were only able to recoup about 39% of the more than $4 billion in unpaid taxes owed by a group of rich taxpayers with an average annual income of nearly $1.6 million, the report found. The findings suggest that the IRS should place more emphasis on a taxpayer’s income when determining whether to pursue an audit case, the Treasury Inspector General for Tax Administration said in the report released Monday.

“Instead, it places more significance on other factors, such as the dollar amount of the balance due,” the report said. “With its limited resources, it is important to determine if the IRS is effectively addressing nonpayment by high-income taxpayers.”

The findings are the latest in a series of government accountability reports that recommend the IRS do more to pursue high-income taxpayers after audit rates dipped to historic lows in recent years. The dearth of examinations has prompted Democrats in Congress to pursue legislation that would mandate higher audit levels of businesses and wealthy individuals.

 

[Keith&Co.]

It's not a failure.
Someone has been deliberately defunding the IRS enforcement. They cannot afford to take rich people to court for the money.

 

[ZiprHead]

It’s Getting Worse: The IRS Now Audits Poor Americans at About the Same Rate as the Top 1%
As the agency’s ability to audit the rich crumbles, its scrutiny of the poor has held steady in recent years. Meanwhile, a new study shows that audits of poor taxpayers make them far less likely to claim credits they might be entitled to.

 

[atrib]

Poor people typically do not have teams of tax lawyers sitting around on retainer. Nor can they typically afford to spend tens or hundreds of thousands of dollars fighting the IRS in court. Which might be one reason the IRS is less than enthusiastic when it comes to collecting back taxes from the wealthy and powerful, and people like our former president feel empowered to allegedly lie on their tax forms.

 

[DBT]

How to build a fair and just society.....

 

[Trausti]

Why bother with taxation? Lack of revenue certainly hasn't stopped our drunken-sailor spending.

 

[Cheerful Charlie]

It's not a failure.
Someone has been deliberately defunding the IRS enforcement. They cannot afford to take rich people to court for the money.

This started decades ago with the smirking Texas Senator Phil Gramm. Gramm nitpicked a couple of IRS faux pas and used that as an excuse to slash IRS budgets. It was pointed out that this would soon have the effect of allowing the rich to game the system, knowing that if they had good lawyers who could play the system, the IRS would eventually have to give up dealing with them because they simply would lack the resources to deal with well heeled and recalcitrant wealthy tax dodgers. And so it has turned out. Gram just smirked, the GOP did not care. This has been the GOP game plan ever since.

 

[Cheerful Charlie]

Why bother with taxation? Lack of revenue certainly hasn't stopped our drunken-sailor spending.

When the GOP ruled the US under Bush with a GOP House and Senate, we had runaway deficits due to Bush's big tax giveaways to the rich. A continuation of Reaganomics. we had ten, count them, 10 Nobel laureates point out that these policies were bad and cause massive deficits but were ignored.

 

[TV and credit cards]

https://www.reuters.com/article/us-usa-treasury-tax-idUSKBN2B82JO

“In an October 2020 opinion piece in the New York Times, Sarin said the wealthy, including former President Donald Trump, were not paying their fair share because the Internal Revenue Service has been deprived of resources in a “partisan attack” by Republicans that has “gutted” the agency.”

Increased inheritance tax. Going after wealthy tax cheats. Good pain.

 

[southernhybrid]

It’s Getting Worse: The IRS Now Audits Poor Americans at About the Same Rate as the Top 1%
As the agency’s ability to audit the rich crumbles, its scrutiny of the poor has held steady in recent years. Meanwhile, a new study shows that audits of poor taxpayers make them far less likely to claim credits they might be entitled to.

Yes. This has been true for years. I have a friend who used to work as a waitress, but she was audited about 10 years ago. because she had claimed the EITC. Her income was very low at the time. I guess that's why your link says that it's very easy for the IRS to audit people who claim the EITC. So, are these types of audits due to laziness on the part of the IRS auditors, are people who receive the EITC audited due to political pressure? It does make one wonder.

The IRS does need to be better funded, so those most likely to cheat can be audited more often.

 

[Loren Pechtel]

Two things come to mind about this:

1) Why should income matter rather than the amount due? The IRS should be pursuing the cases where there's a lot of money to be had--and that's rich people. But if a rich person makes a small mistake is it somehow more wrong than when a not-rich person makes the same mistake?

2) IRS "audit" data is problematic because it lumps things of very different levels.

When the 1099 says $76 and you errantly type $67 and the computer kicks it out it's an "audit". They come asking for taxes on the unreported $76, you amend and pay taxes on the $9, end of story. The majority of "audits" are things like this--the numbers don't match, the taxpayer figures out what's messed up, fixes it and that's that. Poor people are more likely to be doing taxes by hand and thus more likely to have math errors that trigger an "audit".

When the IRS auditor is utterly determined to find a problem with my father's returns (the idea that for those two years his taxes were legitimately pretty close to zero was unacceptable to him, he was determined to find something wrong--my father expected trouble and kept very detailed records) and kept going over and over, challenging every little detail (you really expect a receipt from a street vendor who is probably illiterate and certainly had no language in common???) until he basically made up something that my father decided to let slide to get the mess over with (the check was written in late December, it was cashed in early January. The auditor insisted it was misdated.) That's also an audit.

Until you distinguish the scope you can't really compare the number of audits.

What I think the IRS really should be focusing on is the people in a position to manipulate the numbers more. Look at the suspected frauds of His Flatulence--a lot of it stems from cases where he was on both sides of the transaction. Those need the scrutiny of an eagle eye. The average Joe has little room to cheat other than working under the table.

 

[ZiprHead]

Two things come to mind about this:

1) Why should income matter rather than the amount due? The IRS should be pursuing the cases where there's a lot of money to be had--and that's rich people. But if a rich person makes a small mistake is it somehow more wrong than when a not-rich person makes the same mistake?

2) IRS "audit" data is problematic because it lumps things of very different levels.

When the 1099 says $76 and you errantly type $67 and the computer kicks it out it's an "audit". They come asking for taxes on the unreported $76, you amend and pay taxes on the $9, end of story. The majority of "audits" are things like this--the numbers don't match, the taxpayer figures out what's messed up, fixes it and that's that. Poor people are more likely to be doing taxes by hand and thus more likely to have math errors that trigger an "audit".

When the IRS auditor is utterly determined to find a problem with my father's returns (the idea that for those two years his taxes were legitimately pretty close to zero was unacceptable to him, he was determined to find something wrong--my father expected trouble and kept very detailed records) and kept going over and over, challenging every little detail (you really expect a receipt from a street vendor who is probably illiterate and certainly had no language in common???) until he basically made up something that my father decided to let slide to get the mess over with (the check was written in late December, it was cashed in early January. The auditor insisted it was misdated.) That's also an audit.

Until you distinguish the scope you can't really compare the number of audits.

What I think the IRS really should be focusing on is the people in a position to manipulate the numbers more. Look at the suspected frauds of His Flatulence--a lot of it stems from cases where he was on both sides of the transaction. Those need the scrutiny of an eagle eye. The average Joe has little room to cheat other than working under the table.

Jesus, you can come up with some doozies.

 

[DBT]

Wealth being dependent on social and economic structures, the majority contributing to the wellbeing of society.....should there not routinely be a fairer distribution of wealth than what we have? Would those at the top be miserable as millionaires rather than billionaires? Would they suffer greatly, feeling deprived of luxury? Can't buy another yacht, boo, hoo?