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IRS rejects plan to speed up processing, despite massive paper backlog and delayed tax refunds

Carolinian

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Last year, 51% of IRS audits were of people making under $75,000. Guess who is going to get hit even harder when they double the number of auditors?
 

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dago

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I'm guessing .........................

The IRS hiring more employees, here’s who agents may target for audits
https://www.cnbc.com/2022/08/09/with-new-agents-heres-who-the-irs-may-target-for-audits.html



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Of course, one of the best way to avoid future headaches is by keeping accurate records with detailed bookkeeping and saving all receipts.

Simple. As long as you keep good records you have nothing to fear.

Back in the 70's I was audited because of numbers that didn't jive, but they were legit. I just provided the data and everyone was happy.
When I filed that return, I figured I would get audited, because I had very little income (was laid off and married with 2 toddlers), but I had a huge deduction for property taxes and mortgage interest. I was living in Mass at the time. It was a huge red flag. How can anyone with that little income have property taxes and mortgage interest that high? Well, I did and when they sent the notice I was prepared.

As I said in an earlier post. The EIC is going to get a lot of scrutinizing. And as the article said, self-employed will also.
 
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Carolinian

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I'm guessing .........................

The IRS hiring more employees, here’s who agents may target for audits
https://www.cnbc.com/2022/08/09/with-new-agents-heres-who-the-irs-may-target-for-audits.html



.



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That article quotes a political appointee trying to keep the votes in place to pass the bill in the house. He will say what he needs to say to do that.

I spent five years of my life on the legislative team of a state government department, and I am quite familiar with the sort of statements government officials will make, especially the political appointees, to get a piece of legislation passed.
 
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PigsDad

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Last year, 51% of IRS audits were of people making under $75,000. Guess who is going to get hit even harder when they double the number of auditors?
That is a typical bogus statistic. Just doing a simple search, 53% of households had income of under $75,000, so it seems that lines up pretty good with evenly distributing audits across income levels, don't you agree?

Kurt
 

bluehende

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That is a typical bogus statistic. Just doing a simple search, 53% of households had income of under $75,000, so it seems that lines up pretty good with evenly distributing audits across income levels, don't you agree?

Kurt
Also it includes those claiming the EIC that is known to be a problem area and rightfully a focus of attention. The bottom line is don't cheat on your taxes and you will be fine. I have been audited a few times due to rental properties, home business, and a trust and have found them to be courteous and professional.
 

dago

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Also it includes those claiming the EIC that is known to be a problem area and rightfully a focus of attention. The bottom line is don't cheat on your taxes and you will be fine. I have been audited a few times due to rental properties, home business, and a trust and have found them to be courteous and professional.
I would guess that the majority of the audits in that income is indeed the EIC, and maybe the child tax credit. I too have been audited more than once and found them courteous and professional.
 

bluehende

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I would guess that the majority of the audits in that income is indeed the EIC, and maybe the child tax credit. I too have been audited more than once and found them courteous and professional.
Our reason for repeated audits was a daycare in the house my wife ran. Taking deductions for home expenses was always a red flag. The first 5 yrs we were audited 3 times. I made sure I had good documentation. My funny story is we supplied meals. That was very hard for us to quantify as we did not keep separate pantries. I admitted it was the best estimate I could do. The auditor said that they had a formula for meal costs and we would have to use that. He started laughing then told me he owed me 15 dollars. I am a good shopper. My wife had that business for 20 yrs and we were not audited after those first few years.
 

dago

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Our reason for repeated audits was a daycare in the house my wife ran. Taking deductions for home expenses was always a red flag. The first 5 yrs we were audited 3 times. I made sure I had good documentation. My funny story is we supplied meals. That was very hard for us to quantify as we did not keep separate pantries. I admitted it was the best estimate I could do. The auditor said that they had a formula for meal costs and we would have to use that. He started laughing then told me he owed me 15 dollars. I am a good shopper. My wife had that business for 20 yrs and we were not audited after those first few years.
Yes the home business and rentals is a potential red flag. I don't know why everyone is making a big fuss over this. If you do everything legitimately and keep good records it shouldn't be a problem.
 

Carolinian

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That is a typical bogus statistic. Just doing a simple search, 53% of households had income of under $75,000, so it seems that lines up pretty good with evenly distributing audits across income levels, don't you agree?

Kurt

I would agree that the IRS is going to use these new auditors to go after everybody, not just the rich as some claim.

It is also somewhat troubling for the IRS in its jobs postings to make a "key requirement" carrying a gun and being ready to use deadly force:

 

bluehende

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I would agree that the IRS is going to use these new auditors to go after everybody, not just the rich as some claim.

It is also somewhat troubling for the IRS in its jobs postings to make a "key requirement" carrying a gun and being ready to use deadly force:

After yesterday it is understandable.
 

Timeshare Von

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This does seem to be cause for optimism. We filed 3/15 by paper (WI state & Federal) . . . got the state refund within a month. Still waiting on the IRS, so maybe we'll have it by October 1st. Not sure how much our little $1,000 refund might get, but a little bit would be nice.

Last night I checked "Where's my refund?" and see it's now in the review process! So it looks like our refund will be under 6 months after all. YIPPEE!:cheer:
 

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I would agree that the IRS is going to use these new auditors to go after everybody who cheats on their taxes, not just the rich as some claim.
I finished your statement for you. You must have been distracted by the knock at your door. ;)
 

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I would agree that the IRS is going to use these new auditors to go after everybody, not just the rich as some claim.

It is also somewhat troubling for the IRS in its jobs postings to make a "key requirement" carrying a gun and being ready to use deadly force:


Our new I.R.S.

$80 billion in mandatory appropriations and just a little perspective. Nearly six times the annual budget, about $12.6 billion, of the current IRS.

About $45.6 billion for enforcement purposes which is more than 57 percent, almost 60 percent of this $80 billion is for enforcement purposes.

About $25.3 billion is for operations support.

Only $4.8 billion for business systems and bringing themselves into the 21st century so they can communicate with taxpayers.

$3.2 billion for taxpayer services, or 4 percent.


The Wall Street Journal makes it clear that's a legitimate concern for the middle class, writing, "The Joint Committee on Taxation, says that from 78% to 90% of the money raised from under-reported income would likely come from those making less than $200,000 a year. Only 4% to 9% would come from those making more than $500,000."

 

PigsDad

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The Wall Street Journal makes it clear that's a legitimate concern for the middle class, writing, "The Joint Committee on Taxation, says that from 78% to 90% of the money raised from under-reported income would likely come from those making less than $200,000 a year. Only 4% to 9% would come from those making more than $500,000."
Again, another possible bogus statistic. You first need to ask if these percentages generally match up with the percentage of taxes that these groups don't pay or underpay the taxes that they owe. The more well off tend to use accountants to prepare their taxes -- I think it is a very good possibility that accountants make fewer mistakes and are less likely to prepare returns where there is blatant fraud (their profession careers are on the line, after all).

And we all have to remember the IRS is not stealing anything -- they are enforcing the existing tax laws and attempting to make people pay what they owe. Only someone who is a tax cheat would not see it that way, IMO. I think there is a good possibility that the extra money we are going to spend on this agency will be less than the extra money that they recover from the tax cheats in this country.

Kurt
 

bluehende

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Again, another possible bogus statistic. You first need to ask if these percentages generally match up with the percentage of taxes that these groups don't pay or underpay the taxes that they owe. The more well off tend to use accountants to prepare their taxes -- I think it is a very good possibility that accountants make fewer mistakes and are less likely to prepare returns where there is blatant fraud (their profession careers are on the line, after all).

And we all have to remember the IRS is not stealing anything -- they are enforcing the existing tax laws and attempting to make people pay what they owe. Only someone who is a tax cheat would not see it that way, IMO. I think there is a good possibility that the extra money we are going to spend on this agency will be less than the extra money that they recover from the tax cheats in this country.

Kurt
I agree that most if not nearly all accountants would not do anything obviously against the tax code. I believe the cheating comes in from what is given to the accountants.
 

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Again, another possible bogus statistic. You first need to ask if these percentages generally match up with the percentage of taxes that these groups don't pay or underpay the taxes that they owe. The more well off tend to use accountants to prepare their taxes -- I think it is a very good possibility that accountants make fewer mistakes and are less likely to prepare returns where there is blatant fraud (their profession careers are on the line, after all).

And we all have to remember the IRS is not stealing anything -- they are enforcing the existing tax laws and attempting to make people pay what they owe. Only someone who is a tax cheat would not see it that way, IMO. I think there is a good possibility that the extra money we are going to spend on this agency will be less than the extra money that they recover from the tax cheats in this country.

Kurt
the tax code is riddle with loopholes that opens it up to fraud. If you are honest and everything is legit, you have nothing to worry about. This whole thing is designed to catch the cheaters. It's really nothing new. The IRS isn't out to try to get more money from you, just trying to get what is due. At the same time, the honest taxpayer is looking to pay ONLY what they are supposed to pay, nothing more than what they are required.

The way the tax code is structured, everyone loops to see where they can exploit the loopholes.
A simpler tax code would help, but that is probably not practical.
 

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the tax code is riddle with loopholes that opens it up to fraud. If you are honest and everything is legit, you have nothing to worry about. This whole thing is designed to catch the cheaters. It's really nothing new. The IRS isn't out to try to get more money from you, just trying to get what is due. At the same time, the honest taxpayer is looking to pay ONLY what they are supposed to pay, nothing more than what they are required.

The way the tax code is structured, everyone loops to see where they can exploit the loopholes.
A simpler tax code would help, but that is probably not practical.
I generally agree with your post, but we also have to remember that utilizing tax loopholes is not fraud. If a loophole exists and you use it to reduce your taxes, that is perfectly legal. It is up to Congress to close those loopholes if we don't want people to use them.

Using loopholes ≠ cheating.

Kurt
 

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I generally agree with your post, but we also have to remember that utilizing tax loopholes is not fraud. If a loophole exists and you use it to reduce your taxes, that is perfectly legal. It is up to Congress to close those loopholes if we don't want people to use them.

Using loopholes ≠ cheating.

Kurt
I totally agree. I try to take advantage of any loophole I can as long as it's legal. There are legal ways to do this. What I was trying to say is people try to find illegal ways to get around the rules. some of the credits and deductions are open to fraud and congress and the IRS is aware of this. And those are the one's that the IRS should be trying to catch.
Same thing goes for Medicare. Lots of fraud going on there.
 

dago

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I generally agree with your post, but we also have to remember that utilizing tax loopholes is not fraud. If a loophole exists and you use it to reduce your taxes, that is perfectly legal. It is up to Congress to close those loopholes if we don't want people to use them.

Using loopholes ≠ cheating.

Kurt
Congress has closed many loopholes.
I can remember back in the day when people use to name there dog or cat as a dependent. Congress finally caught on and now each dependent must have a SS number. I had a difficult time getting a SS number for all my dogs. LOL.
 

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"Specifically, I direct that any additional resources—including any new personnel or auditors that are hired—shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels," Yellen wrote in the letter to Rettig. "This means that, contrary to the misinformation from opponents of this legislation, small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited."

Enforcement resources, Yellen said, will instead "focus on high-end noncompliance."

 

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"Specifically, I direct that any additional resources—including any new personnel or auditors that are hired—shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels," Yellen wrote in the letter to Rettig. "This means that, contrary to the misinformation from opponents of this legislation, small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited."

Enforcement resources, Yellen said, will instead "focus on high-end noncompliance."

If that is true, they sure don't need 87000 additional employees to conduct audits only for $400k+ incomes. They need to focus first on processing the 17 million returns that are sitting in their offices.
 

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Congress has closed many loopholes.
I can remember back in the day when people use to name there dog or cat as a dependent. Congress finally caught on and now each dependent must have a SS number. I had a difficult time getting a SS number for all my dogs. LOL.
That is not a loophole, that is fraud, plain and simple. Loopholes are legal ways of avoiding taxes; claiming your pets as dependents was never legal, even before the requirement for a SS for all dependents.

Kurt
 
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