By Paul Kiel/ProPublica
The IRS audits the working poor at about the same rate as the wealthiest 1%.
Now, in response to questions from a U.S. senator, the IRS has acknowledged that’s true but professes it can’t change anything unless it is given more money.
ProPublica reported the disproportionate audit focus on lower-income families in April. Lawmakers confronted IRS Commissioner Charles Rettig about the emphasis, citing our stories, and Sen. Ron Wyden (D-OR), asked Rettig for a plan to fix the imbalance. Rettig readily agreed.
Last month, Rettig replied with a report, but it said the IRS has no plan and won’t have one until Congress agrees to restore the funding it slashed from the agency over the past nine years – something lawmakers have shown little inclination to do.
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 don’t take too much staff time, either. They are “the most efficient use of available IRS examination resources,” Rettig’s report says.
On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam. What’s 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 there’s 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.
Since 2011, Republicans in Congress have driven cuts to the IRS enforcement budget; it’s more than a quarter lower than its 2010 level, adjusting for inflation.
Recently, bipartisan support has emerged in both the House and Senate for increasing enforcement spending, but the proposals on the table are relatively modest and would not restore the budget to pre-cut levels.
However, even a proposed small increase might not come to pass, because it’s unclear whether Congress will actually pass any appropriations bills this year.
In response to Rettig’s letter, Wyden agreed in a statement that the IRS needs more money, “but that does not eliminate the need for the agency to begin reversing the alarming trend of plummeting audit rates of the wealthy within its current budget.”
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Previously in tax scammage:
* McDonald’s Breaks Promise To Raise Wages.
* Last Year, Amazon Paid No Federal Income Taxes. Now, It’s Trying To Kill A Local Tax That Aims To Help the Homeless.
* Trump Vowed To Punish Companies That Moved Jobs Overseas. Is Congress Rewarding Them?
* After Long Career Bailing Out Big Banks, Obama Treasury Secretary Tim Geithner Now Runs Predatory Firm That Exploits The Poor For Profit.
* Jeff Bezos Just Became The Richest Person Ever. Amazon Workers Just Marked #PrimeDay With Strikes Against Low Pay And Brutal Conditions.
* A Sweet New Century For America’s Most Privileged.
* With Nation Transfixed By Kavanaugh Monstrosity, House GOP Votes To Give Rich Another $3 Trillion In Tax Cuts.
* Deepwater Horizon Settlement Comes With $5.35 Billion Tax Windfall.
* Offshoring By 29 Companies Costs Illinois $1.2 Billion Annually.
* Government Agencies Allow Corporations To Write Off Billions In Federal Settlements.
* The Gang Of 62 Vs. The World.
* How The Maker Of TurboTax Fought Free, Simple Tax Filing.
* $1.4 Trillion: Oxfam Exposes The Great Offshore Tax Scam Of U.S. Companies.
* How Barclay’s Turned A $10 Billion Profit Into A Tax Loss.
* Wall Street Stock Loans Drain $1 Billion A Year From German Taxpayers.
* German Finance Minister Cries Foul Over Tax Avoidance Deals.
* Prosecutor Targets Commerzbank For Deals That Dodge German Taxes.
* A Schlupfloch Here, A Schlupfloch There. Now It’s Real Money.
* How Milwaukee Landlords Avoid Taxes.
* Study: 32 Illinois Fortune 500 Companies Holding At Least $147 Billion Offshore.
* Watch Out For The Coming Tax Break Trickery.
* When A ‘Tax Bonanza’ Is Actually A Huge Corporate Tax Break.
* The Hypocrisy Of Corporate Welfare: It’s Bigger Than Trump.
* Oxfam Names World’s Worst Tax Havens Fueling ‘Global Race To Bottom.’
* Offshore Tax Havens Cost Average Illinois Small Business $5,789 A Year.
* State Tax Incentives To Corporations Don’t Work.
* GOP Tax Plan Would Give 15 Of America’s Largest Corporations A $236 Billion Tax Cut.
* Triumph Of The Oligarchs.
* Amazon Short-List Proves Something “Deeply Wrong” With America’s Race-To-The-Bottom Economy.
* Apple’s $38 Billion Tax Payment Less Than Half Of $79 Billion They Owe.
* U.S. Surpasses Cayman Islands To Become Second-Largest Tax Haven On Earth.
* Less Than Year After GOP Tax Scam, Six Biggest Banks Already Raked In $9 Billion In Extra Profits.
* After Budget Cuts, The IRS’s Work Against Tax Cheats Is Facing “Collapse.”
* $6.5 Billion: A Low-Ball Estimate Of The Walton Family’s Haul After 16 Years Of Bush, Obama And Trump Tax Giveaways.
* Illinois Could Recover $1.3 Billion Lost To Corporate Tax Loopholes.
* Whatever You Paid To Watch Netflix Last Month Was More Than It Paid In Income Taxes All Last Year: $0.
* Number Of U.S. Corporations Paying ‘Not A Dime’ In Federal Taxes Doubled In 2018.
* It’s Getting Worse: The IRS Now Audits Poor Americans At About The Same Rate As The Top 1%.
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Previously in The Paradise Papers:
* ‘Paradise Papers’ Reveal Tax Avoidance, Shady Dealings Of World’s Rich And Powerful.
* Just How Much Money Is Held Offshore? Hint: A SHIT-TON.
* Development Dreams Lost In The Offshore World.
* Keeping Offshore ‘Hush Hush,’ But Why?
* Tax Havens Are Alive With The Sound Of Music.
* Today In Tax Avoidance Of The Ultra-Wealthy.
* Go To Town With This Offshore Leaks Database.
* The Paradise Papers: The View From Africa And Asia.
* The Paradise Papers: The End Of Elusion For PokerStars.
* The Paradise Papers: An Odd Call From The Bermuda Government.
* The Paradise Papers: Nevis Is An Offshore Haven Of Opportunity
* The Paradise Papers: The Long Twilight Struggle Against Offshore Secrecy.
* The Paradise Papers: A Fair Tax System Will Be Lost Without Public Pressure.
* Item: Today In The Paradise Papers: Through Death Threats And Scare Tactics, Honduran Reporter ‘Perseveres.’
* The Paradise Papers: Journalists Flee Venezuela To Publish Investigation.
* Last Stop: Chicago.
* The Paradise Papers: ‘Africa’s Satellite’ Avoided Millions Using A Very African Tax Scheme.
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Previously in The Panama Papers:
* The Panama Papers: Remarkable Global Media Collaboration Cracks Walls Of Offshore Tax Haven Secrecy.
* The Panama Papers: Prosecutors Open Probes.
* The [Monday] Papers.
* Adventures In Tax Avoidance.
* Mossack Fonseca’s Oligarchs, Dictators And Corrupt White-Collar Businessmen.
* Jonathan Pie, TV Reporter! They’re All In It Together.
* Meet The Panama Papers Editor Who Handled 376 Reporters In 80 Countries.
* The Laundromat.
‘A widow (Meryl Streep) investigates an insurance fraud, chasing leads to a pair of Panama City law partners (Gary Oldman and Antonio Banderas) exploiting the world’s financial system. Steven Soderbergh directs.’
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Previously in carried interest, aka The Billionaire’s Loophole:
* Patriotic Millionaires Vs. Carried Interest.
* The Somewhat Surreal Politics Of A Private Equity Tax Loophole Costing Us Billions (That Obama Refused To Close Despite Pledging To Do So).
* Fact-Checking Trump & Clinton On The Billionaire’s Tax Break.
* Despite Trump Campaign Promise, Billionaires’ Tax Loophole Survives Again.
* Carried Interest Reform Is a Sham.
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Comments welcome.
Posted on October 3, 2019