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Comment by Arborealist | Hacker News Reader

They audit people who are eligible for EITC because they trivially know what most of them make / how much credit they qualify for and can have an algorithm tell them fraud is present with almost 100% accuracy.

If you want more handouts for the poor then vote for it. Don’t blame the IRS for enforcing the tax code. They should audit anyone and everyone fraudulently filing.

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I don't want "handouts for the poor" (well, I do, but I'm perfectly happy to legislate them). I _also_ don't want "I don't pay taxes, but I make over X, and the IRS only has an enforcement budget of Y, so I can probably just file a false return and not worry about it because they'll be busy with all the 'little people'" to be the calculus of people like the VCs who fund this site. They are absolutely that smart. They remind us constantly. People like them absolutely make this calculation all the time under the current regime.

People whose incomes are above a certain threshold are much more likely to be audited. There are just a lot more people who take the EITC.

We know why the IRS disproportionately audits low income people, because the IRS Commissioner said so. It’s a result of intentional budget cutting on enforcement. They don’t enough investigators, so they go with the easiest to audit, people making less than $20,000.

This is a policy decision from top to bottom.

https://www.propublica.org/article/irs-sorry-but-its-just-ea...

Your own source links to an article which says that people whose incomes are over $1 million are much more likely to be audited than EITC recipients. $500k to $1 million is when your taxes start to really get complicated.

Honestly, if that's where the cheating takes place, they should go for it. It is disingenuous to say that they get audited more than the wealthy, though. Because they don't.

It's not just the population size. Those receiving the EITC are audited at a much higher rate than any other group making less than seven figures. You are correct that the rate goes up after that.

Instead of fining mistakes/omissions which may be deliberste or unintentional, they should calculate, send out a bill and fine those who don't pay up.

That's basically what ends up happening. Over 40% of people don't respond to the initial audit notice, so what ends up happening is the adjustment is defaulted in the government's favor. See https://www.taxpayeradvocate.irs.gov/news/nta-blog-eitc-audi...

that's literally what they do though?

I've (unintentionally) fucked up my taxes like a good 30% of the time because I didn't understand something or a broker literally just missed 25% of the transactions I made in the 1099 they sent me, or w/e.

Every time without fail, some 1-3 years later the IRS sends a CP-whatever saying "yea you done fucked up, you owe $X with $Y interest ($Y is inevitably really low), because of Z missing income from your form". And then I just log on and pay and sometimes I send them a reply letter with whatever missing document, and that's it. (Since they know all this, it would be nice if they could just preemptively send me a 1040 to sign anyways, but oh well)

One year they even sent me a check when I fucked up in the other direction. No interest though lol.

The difference is, if you're making <$20k/yr and have $100 in your bank account, and the IRS sends you a $1k bill, often you panic and ignore it instead of calling and waiting for 5 hours to talk or otherwise figure out how to set up a payment plan.

And that extra $1k disappeared immediately to make other ends meet.

As a divorced parent with self-employed income my taxes can get complex. Years ago I screwed up, forgot a smaller 1099(?), IRS sent me a bill for what I owed + 8%. I stopped stressing since. I make best effort but a couple percent doesn't matter if your return is basically honest. It only hurts if you're being real "creatve"

They should also send refunds to people that overpay.

Also, people should be able to count their own time when calculating tax preparation costs.

> They should also send refunds to people that overpay.

They do. I’ve gotten checks from the IRS before, sometimes years later.

> counting their own time

This is not a good idea as my time is $1jillion/hour so the government owes me.

Seriously though, our time is factored into the standard deduction.

I've also received checks several times. I've never cashed them, though; I have no idea what the correction was for, and the little paranoid, anti-authoritarian, legally illiterate conspiracy theorist sitting on my shoulder tells me a few bucks isn't worth the risk of falling for the IRS's clever entrapment scheme--because cashing a check can in theory constitute affirmation of the correction, which could have been erroneous for all know, and thus with some handwaving constitute fraudulent affirmation.

In reality the Federal IRS is a paper tiger compared to the California Franchise Tax Board. The FTB will shoot and ask questions later, and that's more than figurative if not quite literal. The FTB once garnished a paycheck while I was in the middle of correspondence with them.

From first person anecdotes I've heard, some other state tax authorities are similarly ruthless. My father got screwed out of a significant sum (in working-class terms) when Alabama came after him on the basis of some fraudulent 1099s (inflated payment amounts) from when he was a construction contractor. He had already moved to another state and it had been many years since the fraudulently reported income, making it infeasible to fight as it would cost too much to collect enough evidence to rebut Alabama's claim. While the Cal FTB has made national headlines a few times, most state services never make national headlines, so everybody just assumes the IRS are the bad guys, when in reality I think the IRS are relative softies.

the CA FTB is the only tax agency thus far to ever send me a letter disagreeing with what I had filed. The gist of it was that I had made a multi-decimal-place error on one paycheck when requesting extra withholding, and then left it still too big by an order of magnitude after I tried to correct it (b/c the year before i had owed them ~$4k and I prefer the psychological feeling of getting a small refund) which resulted in getting a refund so large I triggered some automatic "this must be a mistake" audit.

I had slightly complicated taxes that year and actually called them and spoke to someone who helped narrow down the number of forms I needed to dig up and submit to just a single form from one employer, and confirmed that it was due to the above withholding anomaly. I sent that form and a couple months later they sent me a letter indicating that my original number was basically correct. for some reason they preferred a number that was lower by a few dollars and I really didn't care, so I happily cashed the refund check (which was for several $k (IIRC between $5-10k, which i did care about).

The next year I had to file an extra form - apparently FTB had held my refund for long enough that when they sent it back to me they also paid me interest on my refund, and I had to file for taxes on that interest...

Just to echo what the other OP said, my accountant is a wonderful person, but for the last couple years I get a second mini-refund months after my taxes have been paid.

Also, my 9 year old just read this whole thread and has this to say, "you people are just messing around and should get on with your lives" :)

Your 9 year old is a wise child.

> Also, people should be able to count their own time when calculating tax preparation costs.

After recent tax changes, there's not a lot of room for itemized deductions. The standard deduction wins in way more cases than before, becuase it was enlarged and common deductions were limited.

You may still want to itemize if only to know that you'd be better off with the standard deduction. A lot of people can guesstimate they won't benefit from itemizing, however.

I don't have a mortgage, and file jointly, so I need to find $15k of deductable expenses beyond SALT. It's not impossible, but it's also not likely. On the plus side, I no longer need to collect donation receipts.

So you are saying that in the majority of these cases the fraud is intentional and not accidental?

The point being the IRS can completely solve accidental mistakes but just telling everybody what they owe instead of forcing them to calculate it themselves.

I assume a fair bit would be people claiming deductions they aren’t actually entitled to like expenses for driving to work.

I would assume that there is at least some constant personnel or time cost per audit that the IRS incurs. I would also assume that even with recently increased funding, the IRS only the capacity to audit a small sampling of the taxpayer base.

In that case, from a revenue recovery point of view, going after the highest income / highest discrepancy taxpayers produces the greatest return on investment, with some randomness involved to keep everyone on their toes.

There’s lots of “automated audits” where a letter is just generated and sent out.

It’s like being able to spam offenders of EITC to spend 25 cents to collect a few grand with a 99.99% collection rate. Versus spending hundreds of hours on a complex audit that may or may not yield any fines and has like 25/75 win rate.

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