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If you’ve ever seen a photo of the IRS cafeteria (stacked end to end, with tall paper tax forms piled shoulder high), you know why an IT upgrade is so desperately needed. prize. But what about all that execution money? You’ve probably heard the horror stories about his “army” of 87,000 supposedly gun-toting IRS agents trying to terrorize you and your innocent working-class neighbors.
Even the figure of 87,000 (which refers to the broader IRS employment, not just the hiring of auditors, not subtracting the number expected to retire in the next few years).But more importantly, the IRS desperately needs Strengthen enforcement, especially against wealthy tax fraudsters.
We now know that the IRS mysteriously dropped the ball in its audit of its most high-profile taxpayer, Donald Trump. Whatever happened there – it remains to be seen why government agencies have not enforced their own policies of mandatory audits of sitting presidents – Trump has unsafe or aggressive tax practices and has been accused of 2018 He’s not the only wealthy taxpayer to escape scrutiny in 2019.
Audit rates for megacorporations and billionaires have plummeted over the past decade. For example, according to Syracuse University’s Transactional Records Access Clearinghouse (TRAC), in 2012, 93% of companies with at least $20 billion in assets were audited, but in 2020, only 38%. The billionaire audit saw an even steeper decline.
This is all happening thanks to the agency’s budget being heavily cut after the tea party. It took over Congress a little over a decade ago.
Meanwhile, tax law has become more complex. The IRS has taken on more responsibility. And the wealthy remain protected by an army of accountants and tax attorneys to help them avoid or avoid their tax liability. Staff numbers are down over 40% from their recent peak in 2010.
As a result, Uncle Sam is losing his income.
A 2012 audit of these giants found an additional $10 billion in unreported taxes, TRAC found. Less than half of that ($4.1 billion) was found as a result of reduced audits in 2020.
Estimates of a country’s overall “tax gap” (the difference between all taxes legally paid and taxes actually paid) vary, but most have been around $5 trillion annually in recent years. has reached
Avoiding a tax liability is not a victimless crime. If Trump (or whoever) doesn’t pay all the taxes he legally owes, it means the rest of us who are actually honest – Leona Helmsley’s “little people” – will be forced to make up the difference with higher tax rates. Americans are now overwhelmingly tax compliant and view paying taxes as a civic duty. But the worse the IRS’s customer service gets, and the tighter some celebrities get, the more resentful the rest may be, and the more temptation to cheat.
In all fairness, Republicans have a point when they say the administration doesn’t adequately explain how to ensure that it targets the wealthy, not the working class. .
After all, some of the taxpayers with the highest audit rates include low-income wage earners who receive the earned income tax credit. This cohort is 5.5 times more likely to be audited than other cohorts because it is, as TRAC puts it, “easy scoring.”
Because, in other words, there are complicated tax returns and sophisticated lawyers. EITC petitioners are easy to track down, even though the amount of money each makes is small. Investments in agency enforcement, reporting, and IT capabilities should allow agencies to focus on higher-value targets if investments are designed wisely.
For whatever reason, Republicans have decided to stay on the side of the rich tax scam. Did. When For creating a new free file program to make it easier for people filing simple tax returns. Republicans gave the law Orwell’s name, “Family and Small Business Taxpayer Protection Act.”
Between this and efforts to root out the House Ethics Office, Republicans don’t seem to care about law and order at all.
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