Joe Biden’s Internal Revenue Service is spending more resources targeting the lower half of the tax base for audits, according to a new st...
Joe Biden’s Internal Revenue Service is spending more resources targeting the lower half of the tax base for audits, according to a new study.
According to the Transactional Records Access Clearinghouse, 307,000 of the 660,000 audits conducted by the IRS last year targeted taxpayers who claimed the Earned Income Tax Credit intended to give relief to those on the lower rungs of the agency’s tax brackets.
In its Tuesday report, TRAC noted that the IRS targeted those making less than $30,000 in income at five times the rate of higher tax brackets.
The group added that “over 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 … gross receipts of less than $25,000.”
The group added that “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.” The richer citizens were audited at a rate of 4.5 out of every 1,000 returns, compared to 13.0 out of every 1,000 returns of lowest-income earners.
The group found that far fewer millionaires were audited, too. “IRS recorded 617,505 millionaire returns filed that were available to be audited in FY 2021. With only 13,725 millionaire audits last year, more than 600,000 millionaire returns were NOT audited,” TRAC wrote.
A major issue is that the IRS has a dearth of auditors and investigators trained for the deeper, more far-reaching investigations needed to look into the finances of top earners. The audits of the poorer taxpayers are easier to perform because there are fewer deductions and fewer IRS rules apply to their finances.
“Does it make sense from either an equity or revenue standpoint to focus IRS’s limited firepower on the poorest taxpayers among us – those with incomes so low they have filed returns claiming an anti-poverty earned income tax credit? This question alone raises profound issues,” the authors of the report wrote.
The group added that this is not exactly a new development and that it has been building for years.
“This unfortunate situation faced today by this lowest income segment of taxpayers is not new. History is just repeating itself. More than twenty years ago, TRAC similarly reported that ‘low income taxpayers now stand a greater chance of being audited than higher income taxpayers,” TRAC wrote.
The IRS continues to spin into disarray under Biden, too. Just last month, the agency announced that it was going to start a program that would require facial recognition and biometric data to access online data. But those plans were scaled back when a backlash formed.
In October of last year, the Democrats also floated a proposal that would force banks to tell the IRS when an account holder had $10,000 or more in his account annually. The Wall Street Journal blasted the move as an attempt to trigger automatic audits of more Americans.
Others insisted that the proposal would have forced banks to report on account holders who spent as little as $600 in one transaction.
Treasury Secretary Janet Yellen praised the plan and insisted that it was a means to attack the rich.
“Today’s new proposal reflects the Administration’s strong belief that we should zero in on those at the top of the income scale who don’t pay the taxes they owe, while protecting American workers by setting the bank account threshold at $10,000 and providing an exemption for wage earners like teachers and firefighters,” Yellen said in a statement. “We will continue to work with leaders in Congress to enact this important measure to level the playing field for workers and small businesses, and raise revenue to build our economy back better.”
But the news even caused a small wave of bank runs as customers moved to pull money from their banks and credit unions to escape the IRS surveillance on their spending habits.
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