At Least 63% of 2023 IRS Audits Targeted ‘Those Making Less Than $200,000’
Sen. Warren falls flat when trying to brag about the IRS taking money from the evil wealthy people.
Sen. Elizabeth Warren (D-MA) tried to brag about the IRS stealing collecting $1 billion in back taxes from those evil wealthy people.
Well, buried in the same article…
Buried deep in the same story: Two-thirds of IRS audits initiated last year were on taxpayers making less than $200,000. https://t.co/THeAi5Akup
— Jeff Jacoby (@Jeff_Jacoby) July 11, 2024
At least two-thirds of the 2023 audits started by the IRS targeted those making less than $200,000:
Demian Brady, vice president of research for the National Taxpayers Union Foundation — says the IRS still targets non-high-wealth partnerships for audits.
“It should also be noted that nearly two-thirds of audits initiated in 2023 were on those making less than $200,000,” Brady said.
The Wall Street Journal’s editorial board brought the stat to life in April.
The IRS cannot stop going after the middle class:
The most recent data suggests the IRS is still focused on the middle class. As of last summer, 63% of new audits targeted taxpayers with income of less than $200,000. Only a small overall share reached the very highest earners, while 80% of audits covered filers earning less than $1 million. Don’t forget to save those charitable-giving receipts.
Sluggish hiring might explain the slow shift. To its credit, the IRS never claimed it would decrease its middle-class audits, only that audits on higher-earners would become a majority. A fleet of new agents were supposed to turn their sights on rich tax dodgers. But apparently the job is in scarce demand.
It’s important that the IRS never made a claim to lower audits on the middle class.
Yet, it promised to increase audits on the wealthy.
Well, when will that happen? It has a long ways to go!
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Comments
So….what’s the Republican/Democrat split on those audits? Anybody look at that?
Predictable, wealthy people employee accountants and tax attorneys to minimize the taxes they pay. They’re already prepared to deal with the irs. Your average Joe, however, isn’t prepared to deal with the IRS so he’s more likely to settle.
I am a CPA with a specialization in federal and state taxation. First point is that the number of audits is extremely small
When I first started in the business in the early 1980’s, I would typically handle 5-10 field audits a year and 5 or so office audits a year. A field audit being one that is conducted at the clients office since the company was large enough to have substantial operations. Both the field audits and office audits have dwindled significantly. Over the last 10-12 years, I have handled only 3-4 audits while at the same time, my client base has grown 4x.
There are few primary reasons for the audits of the middle class/small business vs the rich, first being that the small mom and pop business operation is much more likely to be deducting personal expenses as if they were business expenses. Secondly, most of the exam agents are not very sophisticated so you cant assign an agent to exam a transaction that the agent is not capable of understanding. The agents are generally okay on substansiation audits, but very poor on legal issues. the rich typically dont try to deduct non deductible items.
A pox on all their houses.
They lied. Are you surprised?
At this point why are we even paying taxes? The government can just print money whenever the hell it wants, and they don’t give the slightest damn about inflation anyhow.
True enough, but you’re missing a larger point. Getting you, a productive citizen, to comply. Comply with the demands of government on the producers. Bringing the productive citizen to heel.
I realize that, but it’d be nice for those in government to drop the charade and admit that the money they steal from us is completely disconnected from funding the functions of government.
Why do we need to pay taxes – all the government has to do in print money – right
Why do we need farmers when we can just buy our food at the grocery store?
The totally predictable happens again!
Of course they target those who likely can’t fight back. Accountants & attorneys get expensive fast.
It isn’t just about the cost of professionals. Even a rich person isn’t going to contest a malicious denial of a $1,000 tax item. The problem for the upper middle class is their tax items aren’t big enough to pay to fight, even if they could afford it, so they’re easy prey.
Btw off topic but for those interested: http://fox23.com/news/local/fox23-exclusive-tulsa-attorney-representing-stormy-daniels-gives-first-in-depth-local-tv-interview-since/article_172d4f50-3ee2-11ef-bb5b-930934cd9
no income tax
consumption tax only
same rate
no exceptions
game over for lefty
Great idea except you can’t switch to it, because it will tax all your savings twice. You paid income tax on it, now you have to pay “income” tax on it again when you spend it.
Richard Epstein has a way around it but it’s complicated – all earnings have to go into what amounts to an IRA like thing, and that money is taxed when withdrawn. Existing savings are not in the IRA’s so are not taxed (again). That sort of complication would be a large obstacle.
Bingo.
Everybody who put money in a “will never be taxed again” Roth IRA gets Floundered:
“You fucked up – you trusted us,”
That already happens now, albeit at different rates. Under the plan above, that double taxation would ultimately go away. Remember, an honest man doesn’t consume more than he produces
The problem is the transition. If you move the tax collection point downstream, you necessarily wind up taxing stuff already taxed in the old system twice.
A better idea at the outset would have been a flat tax. Then everybody has a stake not raising taxes instead of being able to tax the other guy.
“Remember, an honest man doesn’t consume more than he produces”
SNAP EBT.
complications leads to more manipulation
just tax at the moments of buy or sell
no exceptions
Ah the AARP advocate has arrived.
Any change from the present system would inevitably create winner and losers in unequal proportion to the current system.
Personally I would prefer a simple flat tax on all income both wages and passive from bonds or real estate or dividends. Set it at 15% and go home. Pay it twice per year; March 30 and September 30. Paper filing only with a check written to the IRS if any owed to drive home the point of how much $ goes to gov’t. It is not a coincidence that the payment cycles are also in/around elections.
“Income tax” never made any sense to me, because it’s fundamentally a penalty on productivity.
it was as we know meant to once again be PUNITIVE
so once again the government PITTED PEOPLE AGAINST PEOPLE
so that the government could once again appear to be the Hero
The income tax gave the government an excuse to investigate/target anyone. Prior to that there had to be some pretext of criminal behavior.
Knowing the median income of those audited would be more enlightening. For all we know, the bulk of the “under $200,000” earners could be in the upper end of the $0-$200,000 bracket. The upper limit could have been cherry-picked to allow for making the situation look more egregious than it is.
The statistics reflect audits and treats them all as equal. Based on income distribution statistics, those making under $200,000 represent more than 66% of taxpayers. So the figure on face value already indicates the audits are skewed to higher earners.
One thing to consider about those 66%: the vast majority of audits consist of a letter from the IRS indicating there is a mistake, or requesting confirmatory information. For example, if you an employer reports W-2 income to you, and you leave it off your tax return, and they send you a letter, that’s an audit. But so is an IRS agent asking to see receipts on every single purchase from a small business. Those count the same, but are very different items.
Further, the single biggest item (by numbers) that the IRS audits is the earned income credit and child-based tax credits. With respect to kids, only one tax return can claim them, yet it is common for two (non-married) parents to claim the same credit. One is wrong, and the other is right. Do you really want the IRS not to follow up on these, and just allow fraud?
I’m no friend of the IRS. Believe tax rates are too high and overly complicated. Moreover, think that politics has worked its way into the IRS. With all of that said, the statistics cited here don’t really mean much.
I believe the income tax, as levied today (on individuals making a wage or salary and therefore having no income – they do not have in come from someone else’s labor) is unconstitutional, or at least people are fooled into reporting the have “taxable income” when, in fact, they don’t.
I still see the selection of a cap in any presentation of stats as specious when done in the this manner. Aside from the median income in the range, a better approach would be to show how auditing has increased within the brackets up to $200K. My point is that there are better ways to tell this story if lower income people are actually being impacted by an increase in auditing. Without more granular information, I have to presume that most of the increase took place in the upper range (say, above $150K) rather than affecting people in ranges lower than that. This may not be true, but I wouldn’t be convinced without seeing something more specific.
Exactly what we all predicted.
And that worm McCarthy funded them anyway.
Once upon a time IRS agents were cautious on pulling an audit because if it didn’t pay off it would be a waste of resources and looked upon as a career-move setback. Audits were designed to hit a pay dirt.
Now, it seems, that no longer is the case. With the additional agents, the resources are not scarce anymore and the IRS is now free to engage in politically motivated audits.
What is the point of audits on people making less than 200k?
1. It forces them to report all monies received;
2. It forces them to put resources aside, just in case;
3. It makes them think twice with PayPal, Venmo, ApplePay, etc;
4. It takes valuable labor hours away to focus on taxes;
5. It increases their cost of compliance
All of those merge at the same point: to stifle wealth accumulation and stagnate quality of life, making people more amenable to Democrat policies.
Until the digital dollar hits. Then these audits would be unnecessary as computers will lock us out of our money if we displease Washington DC
Just take the standard deduction. Nothing to audit.
“the IRS still targets non-high-wealth partnerships for audits.”
Partnerships ain’t got no standard deduction.
I was audited once. I was an E2 making about $84 a month base pay. The agent was almost as bored with the process as I was.
Fwiw – there are going to be very few additional agents, most of those 80k agents are going to be replacements for the agents retiring.
Secondly, There has been an extreme shortage of accountants for the last 20-30 years, as such, there are not enough available talent available for the IRS to hire those 80k agents (albeit, very few agents are have the skill set to work as accountants.
Throw me in the gulag, give my earnings away to some freeloading trash from Somalia and smear my legacy…but beware of the pox you shall bring upon your house.
I’ve enjoyed life and look forward to haunting.
Repeal the 16th.
It was sold on a lie, that it would only be used to tax Gilded Age millionaires (sound familiar?)
Today, we have soulless men with unlimited resources (money, firearms, etc) who have the right to access your money to seize it, to proclaim you guilty without due process. The IRS (and other federal agencies drunk on power) could very easily have been one of the grievances enumerated in the Declaration of Independence.
The federal government confiscates our labor, spends money in excess of receipts and wastes almost all of it.
Without a 16th, there’s no need for IRS agents harassing citizens that are simply putting food on their tables and roofs over their heads.
Enough is enough.
Correct. Put it back on the individual states to finance the feds. State legislatures will be loath to stand before their voters and tell them they are coming after their money.
“The 16th Amendment gave the Congress no new powers of taxation.”
Stanton v Baltic Mining Co, 1916
Anyone who thinks repealing the 16th Amendment would solve our problems with the income tax doesn’t understand that it was passed to address a problem (identified by SCOTUS in Pollock v Farmers’ Loan & Trust) of an indirect tax being levied and collected in a manner that made it indistinguishable from a direct tax, therefore requiring apportionment as a direct tax (which the court admitted it wasn’t).
Following the ratification of the 16th Amendment, SCOTUS said (in Stanton and in Brushaber v Union Pacific RR) a tax on income is an indirect tax, and that it can’t be unconstitutional for lacking apportionment no matter how much it might look like a direct tax. That’s all. Congress has always had the authority to levy both direct and indirect taxes. Direct taxes are on things and indirect taxes are on events, activities, and occupations, with the measure of the liability being the profit derived from them. There are innumerable types of taxes that can be imagined in both classes of tax. The income tax is but one form of indirect tax, and did not require an amendment for its levying (Congress had levied a tax on income earlier, and it was never declared unconstitutional as an indirect tax).
BTW, most law school texts mischaracterize both Stanton and Brushaber, claiming that the amendment granted Congress a new power of taxation, in direct contradiction to what SCOTUS actually said (see the quote above). Whenever I get my hands on a compendium of important SCOTUS decisions, I always look up Brushaber and Stanton. Invariably if they are mentioned at all, the authors lie about the cases. They understand most law students don’t have the time to actually read the individual cases and will accept as gospel that which they read in their texts. This is why we have three or more generations of attorneys who understand neither the Congress’ authority to levy taxes, the 16 Amendment, nor the income tax.
“At least two-thirds of the 2023 audits started by the IRS targeted those making less than $200,000”
For the same reason that Dillinger robbed banks, not mansions.
It’s also why Robin Hood took from the tax collectors and gave it back to the citizens. He never took money from the rich, he took it back from the government.
The rich WERE the nobility collecting those taxes, so in those days it was the same thing.
Exactly. Anyone telling you about ‘tax the rich’ is full of crap. The rich don’t have the money to pay ALL the taxes, heck they already pay most of the federal income taxes. Top roughly 30% of federal tax filers pay damn near 90% the bottom 50% pay zero or get refundable credits (IOW the govt pays them) the remaining 20% of filers pay the shortfall.
Why do y’all think we have all the ads for ‘Do you owe the IRS’ tax mitigation services? B/C lots of ordinary folks don’t file at all sometimes for years on end till they get an audit. Like it or not we have a tax structure passed by Congress and until we replace it folks gotta file and pay what the table shows they owe. The audits are a part of this. Personally I would prefer a flat tax and maybe a VAT on top IF both had fixed rates and were imposed as a Constitutional amendment to prevent Congress from tinkering. Make them apply to all income from any source and to all retail sales no exemptions as part of the amendment.
Most non-rich are audited because the numbers don’t match, or they engaged in fraud. Those are easy-to-audit circumstances that don’t involved a lot of ambiguity. They raise a fair amount of money, because people think they will get away with it.
A small subset are targeted and abusive. I care about that group a lot. However, saying we won’t audit people who make obvious mistakes or fraud just because they fall under a given threshold would be rather foolish public policy.
How does Warren know that all of those millionaires are cheats? Audits catch mistakes and audits can bring up differing opinions on tax codes. During all of this bashing of greedy corporations and greedy rich people, they never proposed to lower tax burdens for the middle and lower income people, just that wages should be raised and rent should be lowered. And is Liz a greedy millionaire? Maybe she needs to be audited. It’s so tiresome watching these government leeches constantly trying to pit citizen against citizen.
“”How does Warren know that all of those millionaires are cheats?””
Projection.
Correct. Liawatha has a net worth of nearly $12 million. When will she be audited?
And by the way, how much more in taxes are these new IRS agents? Billions a year?
$3 billion for new agents, and they collect only $1 billion?
Those 87,000 new agents aren’t going after the rich.
Vile, miserable twit, Fauxcahontas’s boast is farcical. The Dhimmi-crats are profligately spending trillions, like drunken sailors. $1 billion isn’t even a rounding error. It doesn’t even come close to recouping the $90 billion spent on hiring thousands of new IRS employees.
This is Soviet Union apparatchik-level propaganda and stupidity.
This is ALWAYS what happens. The small timers are easier targets because they don’t have the lawyer protection.
The same reason police go after the law abiding instead of hardened criminals – it’s easier.
Or the reason I ALWAYS got the special treatment from the TSA when I was active duty. They assumed we would comply and not give them any trouble – and they fill their “quota.”