24 Comments
Aug 16, 2022Liked by Handwaving Freakoutery

I've been doing taxes seasonally for a few years now. We desperately need more folks at the IRS as you simply cannot get through to a human being anymore. Congress also needs to stop fiddling with the tax code every year. The Trump administration made things so much more convoluted for businesses especially. These tax cuts are scheduled to sunset in 2025 and the industry is waiting with bated breath to see if they are made permanent.

Given all these constant tax code changes and inability to resolve tax issues in a timely way due to chronic underfunding of the IRS, the tax preparation industry is struggling to recruit and retain employees. As a result, many high-maintenance clients get dropped by their accounting firms every year. This also ends up being an equity issue as the lower income folks cannot find representation when the IRS comes knocking. Then you have the bottom-feeder fly-by-night tax prep operations luring naive or willfully blind folks with tax refund advances for shoddy or even fraudulent work. A LOT of the IRS cases are outright fraud committed not necessarily by the taxpayer - they are just rubes sucked in to the idea of fast, easy money by charlatans who file false returns on their behalf. There is also plenty of fraud committed by taxpayers themselves and I have had to turn away potential clients who wanted me to fib to the IRS on their behalf. Its a jungle out there!

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Aug 16, 2022Liked by Handwaving Freakoutery

Tax enforcement of EITC and Law enforcement of Drugs is the same racket. Easy targets, easy prosecution and the staffers rack up the stats and have evidence of "doing their jobs". Good policing and good tax enforcement, going after the REAL criminals, is incredibly difficult and a lot of times yields nothing.

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Now *that* is a fascinating critique of the IRS-expansion, using the Left's own purported commitment to "antiracism." Add to that, these 87k new IRS agents are supposed to be armed and willing to use deadly force, making them essentially police, and now you have the "defund the police" Left hiring a bunch of new police, which, based on your analysis, will most likely be disproportionately used against black people and other POC. It's almost like the Left doesn't actually believe their own principles, but merely uses them as a pretext for pursuing some secretive and possibly nefarious agenda that completely undermines those very principles they claim to care so much about.

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Sep 16, 2022·edited Sep 16, 2022

Ah. " and target wealthier folks who are actually cheating". I would think numerically, at least, the most common act of cheating is getting paid under the table or not reporting cash payments and tips.

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Adding 87,000 government employees means more union dues, which are then donated to DEMONcRAT campaigns 🤔

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I find it very, very plausible that the reason that audits disproportionately target "low earners" is that many "low earners" aren't actually "low earners" at all - they're people committing tax fraud in ways that throw up red flags, which draw audits.

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In 2019, the EITC cost $70B. Odd that cancelling it would save about what IRA adds to the IRS budget.

If the system improvements are even marginally effective, they will identify a host of audit targets using AI generated "potentials". They have enough information to make the target search more realistic about which EITC fact patterns are worthy of audit. Imagine an info merge of IRS data, Equifax, LexisNexis, ad nauseam. Throw in cash destruction and voila--instant and constant taxation. Ain't government grand?

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The upgrades to better computing systems seem quite necessary. Of course, the canard of COBAL is reflective of an odd bias in that COBAL while less popular than modern languages is well suited to financial work in spite of age. But if it's like most large scale automation projects in the government it will be mismanaged by micro-managers who create moving target requirements and never talk with users. I do hope that groups like Obama's Digital Soldiers can be made useful. Nominally the IRS, like the NIH will not bow to any outsides who might be better. Just one of my rants for your consideration.

As noted in an earlier comment, somehow the complexities of the IRS regulations need simplification and that might require some of those new hires who might see it afresh.

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In those charts, the "audits poor people five times more often than everyone else" rate is 13/1000 ... but the "few audited" among millionaires rate is 13725/617505, 22.2/1000, 70% higher.

Admittedly, that's not as high as the ratio I'd have expected, and I appreciate the explanatory information, but it's not quite "the millionaires aren't being audited" either.

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