The make up of the lower class, since poor people often do not file and filing is necessary often, not always, to be audited.
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What percentage of the lower class is black?
Profile of Low-Income Families (Figure 1)
Four million low-income families (or 30 percent of the total) are Hispanic, 2.9 million (22 percent) are black or African American, and about 800,000 (6 percent) are other nonwhites.
There’s an explanation for why returns claiming the EITC are more likely to trigger an audit than other tax returns. One analysis found that as many as half of returns claiming the tax credit had erroneously claimed too much, or even incorrectly claimed the credit at all, according to the conservative Heritage Foundation.
It is the frequent miscalculation of the EITC from low income folks that attracts attention. NOT THE RACE!
Besides, Hispanics make up the primary population to get audited not BLACKS as you initially allege.
The Heritage Foundation is not a reliable source. They are just a marketing company.
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It was from your CBS link that you provided.
For some reason you are intent on misrepresenting the facts to fuel a racial issue that does not exist.
Quit stirring the pot and stir up some tax dollars via a work product.
The reasons stated for the easy hit on the lower income folks is because of the frequent incorrect calculations done and easily found. That makes it a target rich zone based on how easy it is to find and correct with very little agents time involved. Whereas a complicated return (usually professionally done) takes far more time, energy and resources to vet and yields far fewer correct hits than the low income folks who mostly would not use a professional to do their taxes.
The increased IRS funding will bring in more revenue, and will reduce the Federal deficit. There is plenty of tax fraud to uncover, but convictions do not get widely reported.
— links —
Treasury Department rejects GOP claims on new IRS agents, August 18, 2022
“nearly $80 billion it’s set to receive in funding from the Inflation Reduction Act… The majority of hires will fill the positions of about 50,000 IRS employees on the verge of retirement, which will net about 20 to 30-thousand workers, not 87,000… A sizable portion of the money will go toward improving taxpayer services and modernizing antiquated, paper-based IRS operations… Congress has cut funding for the IRS for most of the past decade, leaving the agency with technology systems dating back to the 1970s” https://abcnews.go.com/Politics/treasury-department-rejects-…
“CBO estimates that a $20 billion increase to the IRS’s appropriations for enforcement activities over 10 years would raise revenues by $61 billion over that period. On net, the increase in spending on enforcement would reduce the deficit by $41 billion over the 2021–2030 period” https://www.cbo.gov/publication/56467#_idTextAnchor090
The top 10 tax fraud cases were not widely reported.
The year in review: Top news stories of 2021 month-by-month
Inauguration, insurrection, Paris Climate Agreement rejoined, container ship blocks Suez Canal, Floyd’s killer found guilty, SpaceX launch, Surfside collapse, Summer Olympics, Afghanistan falls, Texas abortion ban, Malaria vaccine, World Series, tornadoes, Covid anti-viral pill. https://www.cbsnews.com/news/the-year-in-review-top-news-sto…
I think the reality is somewhere in the middle, as it usually is.
Yellen said in her memo that the CHANCES of an audit for tax payers earning under #400,000 should not increase. Not the actual number of audits. The fact that the IRS audit budget is basically doubling means that the number of audits for households can double and still stay true to the memo.
The IRS, just like any organization will follow the path of least resistance in increasing their income. W2 households have little to fear. Small businesses should be VERY fearful. They look like easy targets because they do not have the expertise or bankrolls to fight the US government.
Anytime a government apparatus is given the mission of creating income, it creates an atmosphere that is ripe for over reach. Unfortunately, despite the best of intentions, this will not end well.
With at least 50,000 IRS employees expected to retire over the next five years, Treasury Secretary Janet Yellen has instructed the tax agency to develop a modernization plan. In a memo this week to IRS Commissioner Chuck Rettig, Yellen writes that she wants the IRS, over the next six months, to develop a plan that will outline the importance of modernizing their computer systems, as well as ensuring they maintain appropriate staffing levels. The mandate comes as the tax collection agency is set to receive nearly $80 billion over the next 10 years. According to Yellen’s memo, all of these updates are meant to help identify tax evasion schemes perpetrated by top earners. (Federal News Network)
IRS’s actual expenditures were $13.7 billion for overall operations in Fiscal Year (FY) 2021, including supplemental funding to support the IRS’s COVID-19 pandemic-related activities (Table 30XLSX).May 26, 2022
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The IRS budget is going up about $8 b per year. Not a double. Most of the new agents replace retiring agents. Yes small businesspeople need to clean up their act. Cash is going to get reported. Or else!! This is great for the US economy. It insists businesses be more viable to survive.
Yellen is saying the “chances” of a person making under $400k being audited will not go up. That could be proportional to the number of earners under $400k. That could be if there are x number of audits of the group it will remain at x.
It does not mean if it was x it is now 130% of x going forward assuming the budget is 30% larger. It does not mean the proportion of audits of people under $400k being audited will stay in proportion with the number of people with over $400k being audited. Yellen’s point was the proportion would not stay the same. She was making sure more people over $400k would be audited.
The wrinkle is people making under $20k are way over represented in the audit column. The IRS at times wastes its resources to protect the wealthy from being audited by going after the very poor workers. This is also doing on a racist basis.
The IRS doesn’t have zero-based budgeting. The funding for the current agents will remain. The additional $8 billion/year will be for additional agents (as well as computer upgrades).
The IRS doesn’t have zero-based budgeting. The funding for the current agents will remain. The additional $8 billion/year will be for additional agents (as well as computer upgrades). — The point is not 87k agents but 37k new agents, the 50k will be replacements.
Nope. The money is not for replacements. That money is already in the IRS budget as part of the annual appropriation bill. This bill reads in Section 10301, Enhancement of Internal Revenue Service Resources:
Yellen is saying the “chances” of a person making under $400k being audited will not go up.
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How much comfort would the very many of that class, who gets audited, feel?
The only way to know the above claimed issue is true, is long after the fact. If found out to the contrary by looking at the previous 3-4 years in 2028 or so, will the IRS do a “do over” or just shrug and keep auditing.
We just gave a loaded gun to many more agents with a renewed purpose of finding $$$.
But I will add small cash businesses are at high risk of an audit.
I’m going to guess that is because of the ease of not reporting sales in a cash business.
My business had a tax auditor going through our books for a few months. He did find a single instance where we did not charge sales tax to a school who didn’t supply us with a tax exception certificate and then went belly up a couple of years before the audit took place. I think it cost us about five grand - which I would have gladly paid up-front just to keep the Inquisitor out. Of course, my businesses saw nearly zero cash sales and I was very meticulous about paperwork.
That said, I had an acquaintance (who kept his boat in the same yard as mine) who owned a pet shop. He confided to me that he could skim most of the cash because, as he put it, “fish give birth and fish die - there’s no way the IRS could keep track of his inventory”. He saw nothing wrong in his underpaying his taxes as a business policy.
Nobody likes an audit, but current news stories about a NYC based real estate corporation whose CFO just pleaded guilty to years of tax fraud, shows the importance of auditing the wealthy (both corporately and personally) as well as the middle class.
The bottom line about the shadow army, the wealthy do not want to be audited and come up with this stuff for the rest of us to protect them.
But I will add small cash businesses are at high risk of an audit.
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Even if their net income is well below 400K? Seems contrary to certain claims, eh? Any business that has cash as a component will be targeted.
Still the easy money is from the many who don’t file and should and those who do their own claims. Less man force, less time spent and more net dollars for the effort.
But hey, let’s sell lipstick on that pig and suggest we will only go after the big fish (aka the other guy).
How much comfort would the very many of that class, who gets audited, feel?
One has to temper your concern with the recognition that those who fear being audited are those who have cheated on their return.
Not to mention that the real point here is that the current budget starved IRS is not auditing high end returns because they don’t have the budget for it … high end returns requiring much more effort because of their complexity. And yet, it is known that there is a lot of cheating going on in those returns resulting in significantly reduced revenue for the government.
Seems to me that you are trying to drum up sympathy for the under $400K class as a way of objecting to the legislation when, in fact, nothing is changing for those people.
One has to temper your concern with the recognition that those who fear being audited are those who have cheated on their return.<?b>
Perhaps you have not run a business, with employees and had an full scale audit. The real fear is did all the hired bean counters do it all correctly? Do you have every receipt and can you explain each transaction? When you run a business you hire folks to do that for you, so having to jump in and “know” what everyone was thinking and why they did what they did is the real fear. You know where the buck stops unlike other folks.
Seems to me that you are trying to drum up sympathy for the under $400K class as a way of objecting to the legislation when, in fact, nothing is changing for those people.
Many times what “life seems to be”…is just your voices in your head seeking to not want to address what is actually happening.
The truth is, I am trying to give a heads up to reality that is pending, IMO! You on the other hand, are oblivious by choice because you are now a “believer”.