The IRS is going after the little guy

[mystery-ak]

March 10, 2022
The IRS is going after the little guy
By Andrea Widburg

If you thought the IRS audited complicated, high-dollar tax returns, think again.  It turns out that the poorest among America's taxpayers are the most likely to be audited.  According to the Transactional Records Access Clearinghouse (TRAC), an organization dedicated to giving Americans information about what their federal government does and how much it costs, America's lowest income earners are five times more likely to be audited than wealthier people.

TRAC reported that the IRS audited 0.4% of the 160 million individual income tax returns it processed each year.  Most of these audits were accomplished by "correspondence audits."  This means that the IRS sends a letter to the taxpayer asking for documentation proving a specific line item in the return.  Of the 659,003 audits the IRS conducted last year, 85% of them were correspondence audits.

What's noteworthy is the targets of these very simple audits:

   

• ver half of these correspondence audits were targeted at the small proportion of workers with incomes so low they had claimed an anti-poverty earned tax credit to offset the tax otherwise due on their modest earned income. To repeat: over half — fully 54 percent — of all correspondence audits last year targeted the small proportion of returns with gross receipts of less than $25,000 claiming an earned income tax credit.

    Even taxpayers with total positive income from $200,000 to $1,000,000 had only one-third the odds of audit compared with these lowest income wage earners. A total of nearly 9 million taxpayers reported these high-income levels. Yet less than 40 thousand of their returns were audited by the IRS in FY 2021 — just 4.5 out of every 1,000 of these returns. [Citation omitted.] This contrasts sharply with 13.0 out of every 1,000 of these lowest income returns that were audited last year by the IRS.

more
https://www.americanthinker.com/blog/2022/03/the_irs_is_going_after_the_little_guy.html

[sneakypete]

Of course they are. The "little guys" don't have the money to hire high-priced law firms to represent them. It is almost always cheaper for them to just pay the fine and go back to work.

"Sitting ducks" is a phrase that comes to mind.

[Kamaji]

The IRS has always heavily audited EITC claims because the EITC is one of the few refundable credits available.

That is, if the available EITC is greater than a person's income tax liability, the difference is treated as if it were a payment made by that person and is refunded to them in cold hard cash - cash that wasn't theirs to begin with.

That is very different from auditing someone to make sure that the IRS took away enough of the money that person earned out of their own sweat and blood.

[DCPatriot]

"GOOD LUCK!!!"  ---  The Czechian 'Bad Guy' in TAKEN

[Smokin Joe]

Of course they are. The "little guys" don't have the money to hire high-priced law firms to represent them. It is almost always cheaper for them to just pay the fine and go back to work.

"Sitting ducks" is a phrase that comes to mind.

Egggzackly!

That way, some poor slob becomes just another notch in some agent's gun, and with enough of that (closed cases), the agent might move up the ladder.

You know what they say about ladder climbers...

[DCPatriot]

Of course they are. The "little guys" don't have the money to hire high-priced law firms to represent them. It is almost always cheaper for them to just pay the fine and go back to work.

"Sitting ducks" is a phrase that comes to mind.

IMHO, foreign hackers broke into the Internal Revenue Service computers. They have no idea who owes what...how much.

Furthermore, "United Tax Specialists" advertising on every air wave?  That's the IRS themselves getting stupid people to turn themselves in after dialing the 800 toll-free hotline.

"Do you have years of unfiled taxes?  Call for our "Fresh Start" program.

[Smokin Joe]

The IRS has always heavily audited EITC claims because the EITC is one of the few refundable credits available.

That is, if the available EITC is greater than a person's income tax liability, the difference is treated as if it were a payment made by that person and is refunded to them in cold hard cash - cash that wasn't theirs to begin with.

That is very different from auditing someone to make sure that the IRS took away enough of the money that person earned out of their own sweat and blood.

It is a combination of how many kids you have and what you made used to determine how much refundable credit, if any, the person gets back.

With two kids, a family of four, I believe the Cutoff for EITC is 53K. IOW, if you are married, working 40 hours a week with two kids, and making you would have to make over $25.00 an hour before you make too much to qualify. If both adults in the family work, 2080 hours (40X52) that drops to $12.74/hour each for the full 4160 hours worked before they are ineligible on the basis of income.

[Kamaji]

It is a combination of how many kids you have and what you made used to determine how much refundable credit, if any, the person gets back.

With two kids, a family of four, I believe the Cutoff for EITC is 53K. IOW, if you are married, working 40 hours a week with two kids, and making you would have to make over $25.00 an hour before you make too much to qualify. If both adults in the family work, 2080 hours (40X52) that drops to $12.74/hour each for the full 4160 hours worked before they are ineligible on the basis of income.

However it's calculated, one of the reasons it's audited is that fraudulent claims result in the fraudster getting money which was never theirs in the first place, as compared with, say, the $200k earner who overstates his charitable contributions to lower the amount of his tax bill - he's simply getting back his own money.