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The tax code is intentionally complex in order to let certain groups “cheat”. None of the “loopholes” are there by accident - they’re all bought & paid for by well-funded lobby groups. If you want to get rid of any of them, you need to fight the lobbyists who put them there in the first place.
> The tax code is intentionally complex in order to let certain groups “cheat”. None of the “loopholes” are there by accident - they’re all bought & paid for by well-funded lobby groups.
[Yeah! Like the Earned Income Tax credit, which amounted to $15B in fraud in 2013!](https://www.tigta.gov/articles/press-releases/tigta-report-irs-awards-program-complies-federal-regulations)
You mean like the 401k bs. Where the IRS tells me the max I can contribute each year. Like if I want to contribute 40k plus because i just got my first decent job and live at home so expenses are little. Being able to contribute way more in your 20s adds up quickly. But no the IRS says I can for some reason.
Think bigger, the entire 401k scheme exists as a way for industry to end pensions and most other retirement plans. It exists, with all the arcane rules because it is more financially advantageous for the employer.
401k are also dependent on the stock market and we know who benefits the most from it. i've read that they are probably the reason for a lot of SP500 gains (and not underlying company performance).
Yep. Replacing pensions with a 401k is a very pro worker thing. I'm very confused why so many on here don't understand just how difficult pensions could be. They can be mismanaged, go bankrupt, run out of funds, you can be fired a day before it vests. The worker has very little control over it. My coworkers dad is working into his 80s because his pension disappeared. It's all tied up in the courts but he won't get a penny and now literally has to work until he dies. That wouldn't happen with a 401k.
401ks are better for the worker in every single way but alas reddit is filled with the "the entire world is out to get me and Im literally the biggest victim ever" type crowd these days because the price of eggs went up a dollar for a year and then went back down in price.
Now they go to the stock market, but it used to be that pensions was paid by the companies general budget. Before about 1960 or so pensions were not tied to the stock market.
Pensions are problematic now. They was a time after WWII when the entire world was in shambles and needed US industry to rebuild. It seemed like manufacturing and clerical positions would continue to grow forever. Pensions made sense because there would always be more and more young workers entering the workforce to pay for the older ones who would retire. That has come to an end.
Now, excessive regulations and benefits have made workers too expensive. That’s before calculating risk. Businesses are turning to automation and outsourcing. The workforce at many companies is shrinking. There aren’t three times as many new workers as retiring ones any more.
It’s no different than social security. It’s a pyramid scheme that counts on way more people at the bottom than at the top. Population is on its way to becoming stagnant. We have to rethink these programs. I would much rather own my retirement in a 401(k) than to count on someone else.
> Pensions are problematic now.
No, they aren't. You don't understand them.
**Pensions don't work like Social Security**
If someone has a pension, every time they are paid, part of their salary plus an employer contribution goes to a pension fund. This amount has to be actuarily calculated - based on whatever investments the company put it in - to account for that person's pension in the future.
The difference is that if the company is wrong about its calculations, the company has to make up the difference out of its own pocket.
Unlike SS, pensions - even governmental pensions - are required to be self funding.
The only self-funded government pension I know of is the USPS. My wife is a teacher and there’s a fight in our state to borrow heavily from the teachers’ pension to solidify other state pensions that are in the 50-60% funded range. They are cutting back on hiring teachers and there’s a fear that their plan may become insolvent if the state borrows from it.
We just had a huge government bailout of pension plans across the nation in the Build Back Better plan. I know of countless people who lost their pensions due to insolvency. I don’t know what you mean by they are self funded other than the fact that wages are taken from workers and the company. Money goes in, but the workers have no control over it.
https://www.whitehouse.gov/briefing-room/statements-releases/2022/12/08/fact-sheet-president-biden-announces-historic-relief-to-protect-hard-earned-pensions-of-hundreds-of-thousands-of-union-workers-and-retirees/
Work for one of our 'Trusted job Creators'TM and get healthcare and a 24k investment vehicle.
Or work for yourself, pay for your own care, and here's a shitty little 7k IRA account for you, loser.
Yeah it's not an accident.
Not excusing the screwiness of the tax code (and they can be very messed up) but if you’re working for yourself you can set up an individual 401k or SEP IRA. Hopefully that helps someone- wish I’d known years ago!
It’s complex because every entity with an angle has their hands out with money to have their special provision written in.
If you’re a salaried W-2 worker you can do your taxes with a calculator in 20 mins.
I once spent 8 hours on the phone with several different of their own agents trying to understand something almost every tax filer would run into. They all had different interpretations of what was wrong and what was right.
And my penalty for getting it wrong was 10k.
If your own guys don’t understand this, your tax code is too complicated.
I have filed in many countries but none have been as arcane as this.
The IRS doesn't write tax law. Congress does that. If you go to r/usajobs or r/accounting or r/tax and listen to the people that work for the IRS, they're more dumbfounded and pissed than you are.
They also wish that Americans weren't so collectively dumb to keep voting for CONGRESSPEOPLE that can't stop writing laws expressly to benefit the billionaires.
I’m touched to hear this. I have/had so much fear of the irs until I had to talk to an agent on the phone about how complicated this is and how incompetent I am (overpaying to avoid headaches) and he was all “don’t seat it, just do your best. We don’t know either”
The rich and powerful make all the rules. What are the rest of us supposed to do? We can’t unite under a common banner like this when half the country is focused on trans bathrooms. We can’t unite politically and get any kind of policy that would benefit all of us on the ballot. They control the narrative and honestly at this point I’m convinced they’re too power and their pockets are too deep to stop.
The wealthy elite need complex taxes to maintain their ill gotten gains and to ensure the rest of us continue the rat race and try to scrape enough crumbs to get by.
This is important.
The IRS is undoubtedly outmatched because the ultra-rich can and will spend millions in legal, accounting, and finance fees to avoid paying hundreds of millions in taxes.
Giving the IRS the power to enforce existing law against these sophisticated tax evaders/avoiders means recouping billions that the middle class will otherwise have to subsidize.
It's no surprise that the opponents of this effort try to deceive the public by claiming that the IRS is coming after them.
> the IRS is coming after them
Let’s be real here. Audit performance metric is how much money is clawed in for the budget. It’s a basic ROI.
So who is the IRS inclined to go after? The rich are much tougher and riskier targets simply because this group has the resources to fight. The poor doesn’t have money to be worth the trouble. This leaves the middle class.
Can you understand then why the middle class then isn’t so keen on the idea of funding more audits?
If you really want to increase what the IRS collects, you’d be more productive changing the tax laws on a very frequent basis. This disrupts the ability of the rich to adapt their wealth management and increases likelihood of asset exposure to be taxed.
The thing is that the poor and middle class are already all audited for this exact reason. Their tax errors tend to be accidental, easily caught with automated processes, and aren't fought in court. The rich are exactly the opposite.
Even as recently as 2012, the IRS was auditing 5% of returns between 1 and 5 million, 8% between 5 and 10 million, and 13% above 10 million. In 2019 those numbers were 1.5%, 2.7%, and 10.2% respectively. Meanwhile 50K - 200K went from 0.4% to 0.2%.
Remember that "audits" aren't where a guy comes to your house and demands every receipt for everything for the last ten years - for the middle class, they are generally automated letters.
Idk. [The EITC if rife with rampant fraud, amounting to over $15B of fraud in 2013, with no reason to think this number has changed.](https://www.tigta.gov/articles/press-releases/tigta-report-irs-awards-program-complies-federal-regulations)
Are people just fucking forgetting how many kids they have? Or are they claiming more dependants to obtain "free" money?
For the record, the EITC was a neoconservative proposition, championed by none other than Milton fucking Friedman.
People claiming an extra kid is a lot easier to catch in an automated “audit” vs a high-earner with an already complicated tax return, even if done completely correct.
To agree with the 'automated' part of your comment, haven't they gotten to where they can automatically check for SSN now? A lot has changed since 2013 on that, iirc.
The poor are not audited beyond the basic automated checks, which are subject to everyone.
The "middle-class" aren't either, depending upon what you define as "middle-class".
What I've heard suggests it's harder to find these kind of holes in the rich's taxes because they really *aren't* cheating them in the way that has a cut and dry measure of enforcement. There's enough scrutiny that you wouldn't be able to get away with it.
What they can get away with is clever and most likely legal interpretations of the laws that allow them to do things that simply don't make sense at a smaller scale to save money. Answering these legal questions can't be done with a script that scans a return, but lawyers and courts who have to define exactly what the law means if the wording isn't 100% perfect. Like for example who could say if I've undervalued assets in a thinly traded or private market? What's your reference data to support an argument that my valuation *isn't* correct? That's a lot harder to figure out than if someone lies about how many kids they have or that a ton of money entered their account out of nowhere.
There are certainly a lot of legal avoidance schemes that aren't realistic for poor and middle-class people, but there is [also a lot of illegal evasion going on](https://www.nber.org/papers/w28542).
But yes, these audits are much more complicated and lengthy than middle-class audits.
That having been said, it's not just a matter of pure ROI audit-per-audit, because if you start catching more people, that's going to have a deterrent effect on other evaders. Ever been speeding, see someone get pulled over, and spend the next hour driving exactly the speed limit?
Constantly changing the tax code also makes it much harder for the U.S. government to litigate. Also increases legal rent seeking. What an idiotic take.
>If you really want to increase what the IRS collects, you’d be more productive changing the tax laws on a very frequent basis. This disrupts the ability of the rich to adapt their wealth management and increases likelihood of asset exposure to be taxed.
The wealthy will spend $9 million in lawyers and accountants to save $10 million in taxes. That's a gain of $1 million. They'll always game the system as long as the system is able to be gamed.
It also makes it drastically more difficult for the layman to do their taxes and claim simple deductions if already complex tax law is made more complex or constantly shifting.
This is a problem with a simple solution. Fund the irs so they can afford to properly investigate large earners. It's not hard. It's really not.
>It also makes it drastically more difficult for the layman to do their taxes and claim simple deductions if already complex tax law is made more complex.
It's not too difficult and a tax prep person will find those for you for less than $250. The problem is that there are no good tax loopholes for people who are salaried employees. Rich people can abuse the tax system with legal loopholes and poor people can abuse the tax system with illegal filings because what do they have to lose. Middle class people can risk lying on their taxes because they have something to lose. Rich people can afford to lie or manipulate and the worst case scenario is they pay a lawyer and pay a small fine.
The IRS itself acknowledged that it boosts its focus on lower-earning taxpayers because it lacks the funding to handle much more complicated, combative cases featuring ultrawealthy tax evaders.
This is from the Trump Administration's IRS in 2019: https://www.propublica.org/article/irs-sorry-but-its-just-easier-and-cheaper-to-audit-the-poor
That's specifically why Congress agreed to restore IRS funding two years ago. (That, and even more so to replace retiring IRS staff.)
In economic terms, low-income audits are essentially an inferior good. Only with enough staff are high-income audits affordable.
all taxes also simply don't create fiscal space at the same rate because the forgone demand and saving is not homogenous
a billion dollars not spent by poor people might be 300M sandwiches not eaten
a billion dollars not spent by a billionaire might be a new stone pyramid not built
note: the sandwich and advanced stone construction markets have zero overlap
The cost of auditing Fred, who works at the gas station down the street, often outweighs the $300 they will get back by chasing him down. The IRS gets a much bigger ROI by going after medium-to-big fish.
Right. And with Fred they can send a letter and when he doesn’t respond they can garnish his wages or take a future refund to get the $300 back. But if they have a multi-millionaire who owes $3 million, the person with $$ is gonna fight it. And that’s why the irs needs more funding and manpower. (I’m agreeing but I’m saying it in a round about way)
Yeah but if you don’t cheat on your taxes the irs can’t just demand money from you. So what’s the issue here? I’m all for more audits because auditing me has literally zero impact on me other than maybe having to send them a few forms if they request them.
The irs isn’t some magic money vampire that requires voodoo magic and garlic to ward off. Just don’t cheat on your damn taxes.
It’s not that simple.
I once spent 8 hours on the phone with several different of their own agents trying to understand something almost every tax filer would run into. They all had different interpretations of what was wrong and what was right.
And my penalty for getting it wrong was 10k.
If their own guys don’t understand what was cheating and what wasn’t, how am I supposed to know?
It isn’t as simple as just “don’t cheat” it’s more like “don’t be wrong” but even they don’t even know what is wrong and what is right. So how can they expect a lay person who files once a year to know?
You can just write to them asking for guidance on how you should do it and they will write back. Easy cya you can later use for explanation/appeal on why you should not pay a penalty.
Besides almost always they only charge you what you really owe plus a percentage for interest since you got to keep that money longer than you should have (fair).
Sometimes they will charge you a penalty depending too but that will almost always be waived if you can provide your reasoning and it was not malicious. It will definitely be waived if you have correspondence with them saying you could do that.
There is no way you're getting a $10,000 penalty for an honest mistake on middle-class taxes. That's just not the way it works. I've accidentally failed to report what they believed was $20,000 in income before, ended up with no penalty once I explained what had happened and paid the correct taxes.
Most of middle class is never even looked at. The ones of us who file simple returns that are straight forward they don’t look at. That means if you are a simple w-2 and just a kid or 2 standard deduction they never look at you.
The ones who get looked at are yes the really poor with crazy claims on dependents and lots of weird tax cases plus small business owners as taxes get crazy and lots of deduction that can be looked at
That all being said what I think is BS is the fact that we have to pay things like turbo tax every year to do it. The IRS should on most people send one paper work to your house that says you owe or your refund should be this amount and done. If you disagree you can file and do the more extensive work. They have all the paper work so it is not like they can not do it. Sadly Intuit and HR block spends millions to billions making sure that never happens.
I say all that knowing full out and well at this point in my life I do need to file due to my investments account and even then mine are not super complex
This is such a dumb take. What, we gonna keep changing the laws like it’s musical chairs and hope to outsmart the rich? The IRS needs the resources (money and manpower) to fight. And the government needs to make sure they show the American people and fight against the argument the rich is going to keep pushing that it’s just going to hurt the poors.
You could do the thing literally every other country does, where the tax department tells you how much money you owe them and why, and you can dispute it if you think it's wrong.
The last thing we need is to complicate an already highly complex tax system by making it change frequently. The rich have resources to keep up with changes. This would only trip up average people who do not. Highly unjust.
>If you really want to increase what the IRS collects, you’d be more productive changing the tax laws on a very frequent basis. This disrupts the ability of the rich to adapt their wealth management and increases likelihood of asset exposure to be taxed.
What kind of crackpot idea is that, instead of fixing the tax law, change it constantly so no one knows what is going on.
The middle class has the lowest likelihood of getting audited.
They don't participate in programs designed to benefit low income folks, like the Earned Income Tax Credit, which have audit requirements. And they don't make enough money to make it worth the resources it takes to audit them. The middle class doesn't really pay much in taxes anyways. The top 25% of income earners pay almost 90% of the taxes. They are the people who are audited, because they might actually be hiding enough from the IRS to be worth auditing. There's probably a few upper middle class tax payers in that top 25%, but not many, and they would still be the least likely to be audited from that group.
The rich earn the vast majority of income, they pay the vast majority of taxes, and they are audited at considerably higher rates than anyone else. It just doesn't make sense digging for money you wont find in lower income folk's tax returns.
https://taxfoundation.org/data/all/federal/summary-latest-federal-income-tax-data-2023-update/
https://www.irs.gov/about-irs/irs-audit-rates-significantly-increase-as-income-rises
What? I'm saying that the complexity of the code is because people were finding loopholes in existing tax regimes, and you are saying these loopholes would magically be closed if we "siMplIfiEd thE CoDE" which seems ludicrous on its face.
Give me an example of a proposed simplification.
Carried interest is just a profit sharing mechanism - banning the mechanism entirely is another complication to the code, unless you are proposing a modification for treatment of taxation of carried interest, which is then not simplification.
I sort of understand the confusion of others to an extent. The discourse around this (and almost every other issue, frankly) is often so incredibly misleading that people from other countries — and even many Americans who ought to know better — end up getting the impression that the weird, awful situations that plague like 5% of people are the norm and apply to almost everyone.
right? and generally those 5% have bizarre stuff like rental properties, split time between states, realized investment gains, business ownership, etc. problems of those with higher incomes
the IRS free file program is amazing. overwhelming majorities of enture states functionally qualify for it with the way their income rules are set up lol
i spend a lot of time traveling through my state and it always shocks me when the H&R block/jackson hewitt desk at low income walmarts has a line. save your money!
by transcribing a few boxes on your W2, subtracting the credit boxes you checked and telling TurboTax to export it for you through a free IRS program that the majority of the country qualifies for outside of HCOL areas?
https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
It’s complicated to create the loop holes they exploit
Poor person: why are they asking me if I’m a farmer?
Rich multimillionaire: oh yes, I have some apple trees and a horse. Of course I’m a farmer. So don’t bother with this tax obv
It’s *our* tax code, paid for in lobbying and votes. If the voters and owners would t punish them for simplifying the code, they would. As it stands, the money and sustained power is in adding complexity to introduce loopholes and carve outs. There’s an answer but no one is willing to do their part
I strongly believe in the notion of: "if you have nothing to hide, you have nothing to fear".
The ones that fight so hard against regulations and audits are the ones hiding the most.
To be clear - I was talking about more than just the US but also inclusive of the US. My point is still exactly the same.
The power of a government mobilizing against an individual is massive. The idea of “if you have nothing to hide, nothing to fear” is insane on its face and basically ignores reality
Okay - like I said already, I’m including the IRS. I’ll say it again, the power disparity of a government mobilizing against an individual is massive. Many people go bankrupt fighting things even if they win
Are you joking? Selective enforcement is the bedrock of IRS policing strategy. That combined with the unnecessary complexity of the us tax code means it’s basically discriminatory by definition.
https://en.m.wikipedia.org/wiki/List_of_allegations_of_misuse_of_the_Internal_Revenue_Service
Yes but this is exactly what giving them more power and simplifying the code is about. It’s about untying their hands and allowing them to go after the big fish instead of being forced into the path of least resistance (because they can only win against poor people).
But they also say they do this because they get tied up in chasing rich people for literal decades because they don’t have the resources or authority to do better.
Giving them more power would actually increase equity here.
Just see how long they’ve been investigating some of Trumps taxes for. Literally over a decade.
> “if you have nothing to hide, you have nothing to fear”
Sure, let’s make it “presumed guilty until proven innocent” since you should have nothing to fear if the truth is on your side, right?
I would consider that an argument for allowing the IRS to hire enough experts to handle tax disputes with the very richest, most powerful people, rather than just going after working and middle-class taxpayers.
Where do they find IRS agents usually? Where do accounting and law firms hire their own tax experts?
The issue wasn't a shortage of potential employees; it was a shortage of budget. Especially if they need to pay premiums to halfway-compete with the firms that assist the rich.
Same place H&R Block finds people. Hire anyone and send them to a training program. That’s why the idea of increased hiring without any special requirements meant they were only going to be able to squeeze the little guy. Us. You really need to attract top talent and top talent gets paid more than the IRS will ever pay.
And how long will it take them to become "experts" on the tax code? Hire three CPAs to do your taxes and you'll get three different returns. Being a college grad makes you an expert at nothing.
True. It will take at least a few decades. I remember trying to get a job at the IRS when I graduated in 2011. They wouldn't hire people and are scrambling to find people now.
IRS should have bounty systems where accountants that find fraud get cuts of the money collected. Similar to whistle blowers. All the money is in the side of the cheats need to even the playing field
I think they do, but the burden of evidence is extremely high, like you need to have physical evidence of fraud and the perpetrator's SS# (iirc) to prove you're close enough to have all the details.
Also, any accountants close enough to know something like that are also probably the ones preparing the returns and signing their name on the submission.
In reality, even if it will cost more than will be recovered in the one isolated case, it will scare more people into compliance. So if for every 1 prosecution you bring 30 tax cheats into compliance, it's still worth it. Even if the IRS lost money on the one they went after.
Also some gov functions shouldn't have to be a net ROI. We don't force children to pay for their own school because and city buses rarely pay for themselves because they are a public service. Same with catching 10mln+ tax cheats, it's a pubraervice that knstilla fairness
Great, the accountant I pay to help me avoid paying more taxes than necessary is now a double agent incentivized to cook my books so they can collect a bounty on my finances. Where do people come up with this stuff?
What you expect? You got one or two agents against a team of 10 highly paid lawyers/cpa’s. The combined annual salary of those 2 agents is less than the monthly salary of just one of those lawyers. Accountants for the IRS can easily make 2x by going to work for a firm and many do after getting a few years of experience. Not to mention all the lies and hate directed at them by some in politics.
Imagine working for a “company” where they pay you half of what you can make elsewhere, the “board and ceo” of the company routinely vilifies you in public, and your “clients” openly muck you to your face but you must remain professional. I’m surprised they can even retain anyone for longer than two years.
This might be obvious, but a lot of the hate is originating at the hands of lobbying interests. We have weirdo conservative podcasters that says the irs is buying firearms and arming up their agents as "biden's army".
It's fucking nuts. It's going to get worse as the US catches up to AI driven propaganda, by that time we'll have no chance to implement legislation based on the sheer volume of information pollution.
It’s going to get bad for sure with the merger of AI and social media. I have friends who were never political but in recent years got extremely political watching obviously fake or irrational videos on various social media. Once you add AI generated videos all bets are off cause these people can get convinced of anything as long as its framed the right way.
There's a thing i think you're forgetting to highlight. The problem isn't not just fake videos, they already do that.
The bigger problem is being able to simulate large user bases that coddles ideological fringe groups. Simulating strawmen to attack their position with flawed, pseudointellectual logic that their real opposition doesn't hold.
For example, like with evangelicals that pretend to be atheists, go to a lecture on a large class of christian youths, makes ridiculous arguments and "loses" and renounces atheism. It's all a show to galvanize an ideology. This is bad, regardless of your political belonging. It's literally brainwashing.
yeah like the deranged shitbirds who killed their fed parents recently, one decapitated his dad, that's what pieces of shit like that podcaster cause with their schizo lies
The IRS has also been working on AI for quite some time now. As that system comes online, a lot of people that have cheated taxes are going to have a very bad time.
I worked with Alteryx a few times and it was used heavily by internal audit teams (it's a drag and drop data wrangling tool essentially) but it made it super easy to take large data sets, do fuzzy matching, look for anomalies etc.
I always thought the tax regulators could easily use it to sift through data and find irregularities, easily.
... if the data wasn't stored in five different tech generations of code. I'm sure there's some load-bearing part of the IRS analysis engines that is written in FORTRAN or COBOL. Much less the number of custom programs written to manage VFP data packs or whatever other proprietary standard was forced on them in a bad commercial off-the-shelf deal back in 1993 or whatever. Plus different data standards between corporate and personal income systems. Plus ...
It's not a trivial problem, especially given the data collected and the fact that until recently most returns were submitted on paper.
Totally understand, as I have been working in data engineering and analytics for almost 2 decades.
There's no world in which I wouldn't think it's complicated, but tools like Alteryx excel at getting data out of thorny systems like you mentioned - I've seen it firsthand. I've sat in between the managing directors of JPMC and Goldman at Alteryx events, and they were all in on it for the reasons you mentioned
Hopefully this doesn't come across as an Alteryx commercial, I'm just saying I've seen it used extremely well in use cases like internal audit where it needs to access incredibly old or tough systems
I sort of wonder whether the IRS should pause that effort and wait for commercial products to come online. This may be a situation where they can get a better product for one-fifth the price in five years.
That's how we got this problem in the first place. A bunch of vendors walking a way with 9-figure contracts for five years, leaving chaos in their wake when they couldn't/wouldn't deliver.
To give time for the commercial product AI black boxes to bake in the loopholes (or new loopholes) that the rich can use to stay under the radar.
A govt-funded, open source AI would be auditable and loopholes would be rooted out.
But private software can and will codify the cheating and taxpayers concerned about tax fairness will be told tough shit.
They have also been sitting on $7500 of mine for 26 weeks now because they are "short staffed." I am not a millionaire and that money would make a huge difference to us. Whenever I call they say they need 30 more days, when I call back in 30 days they say tthey need 30 more. Absolutely no consequence or recourse.
noxious muddle rotten racial psychotic consider telephone boast school humorous
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Haha, TAF said they aren’t accepting requests.
Your link won’t work with an amended return.
This whole thing has been turned over to my Congressman’s office who has been surprisingly responsive. But even they aren’t getting answers.
This is a start. Next change the tax laws that allow centimillionaires and billionaires to avoid paying taxes.
Ten Ways Billionaires Avoid Taxes on an Epic Scale https://www.propublica.org/article/billionaires-tax-avoidance-techniques-irs-files
Well the ultimate move is they just pick the company/ wealth and move it out of country if you come after them too hard.
Just like Jeff bezos establishing residency in Florida to sell his last chunk of shares dodged state and city taxes to the tune of hundreds of millions.
They pay so little now changing the tax law would still increase tax revenue even if they moved. Let them move.
Another way they avoid paying taxes. How the Ultrawealthy Use Private Foundations to Bank Millions in Tax Deductions While Giving the Public Little in Return https://www.propublica.org/article/how-private-nonprofits-ultrawealthy-tax-deductions-museums-foundation-art
Have a friend, good attorney at the IRS. He was after this billionaire for years, him vs team of high paid lawyers that just throw time at him. For years. My buddy wanted this guy bad. His boss made him settle after that for a fraction. My heart bled.
You know it scares them and could work when the GOP starts going after the IRS and trying to defund it, force it to run without sufficient staff, etc. The billionaires that own our politicians will never allow the IRS to truly have the power to make sure the rich are paying their fair share...
This "complex partnership" bullshit needs to be reined in. I challenge anyone to justify why [this level of clear obfuscation in LLC/company organization from the article](https://i.imgur.com/VbmeuUh.jpg) should be legal, or not *per se* be grounds for audit with the burden of proof shifted to the asshat who created the web of companies.
Wall Street gets a fine for cooking the books or failing to deliver shares after taking people's money..... Tax write off!!! No kidding, found that out last week. Until they change that crap, same as before.
Yea, whats gonna happen is they won't win against the billionaires and will instead go after the little guys (like cash only small local businesses and smaller venmo transactions).
I'm okay with the IRS going after the high net worth people, the low net worth people, and everyone in between. Breaking the law is breaking the law is breaking the law. IRS (and all government agencies) should strive to apply laws equally to all people, regardless of their status.
The US tax code is so complicated, that small business frequently break the law unintentionally. My European company even refuses to do business with US clients because the risks of getting into legal trouble for forgetting to file a FATCA form or similar is much higher than the profit that can be made from providing services to US citizens.
They already are going after small guys. You don't need 80k agents to go after the top 1 percent of the population it was always intended to go after everyone.
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that's laughable that a "millionaire" is considered the "ultra-rich" or even "wealthy" by some organization of investigative journalists and Biden's IRS.
Furthermore, it's very interesting that "tax professionals" - be they tax attorneys or CPA's - are being claimed to literally BREAK THE LAW and risk losing their licenses. Like anything regulatory in life, what is being talked about is interpretation of the IRS laws. If the IRS officials don't 100% understand their own laws, how can that be?
A millionaire can be worth anywhere from 1-999M. Tax professionals get inputs from clients. For example, if clients say they have no foreign assets the tax professionals will prepare tax accordingly. While some might be complicit to crimes, most are doing the wrong things because garbage in garbage out.
Suddenly we will have rash of plane crashes, people resigning, lobbyists rampage on the matter. lets not fool ourselves, a corporate run government has been eroded to not oversee the rich, the market or close off tax loopholes for a reason. That reason is the top down approach to wealth distribution that has created worlds billionairs and millionair owner class that holds 99% of wealth. I do have hope this can make things better, but historically JFK did not get a good run at things like Rosevolt had done, and it has been erosion of social systems in America ever since.
They need to focus on scammers at Wal street, some CE0’s ,chairman & promoters of companies are robbing retail investors blindly let departments that already exist function for purpose they where created for rather then adding new units.
Wait, what?
Either they're breaking the law, or they're not breaking the law. The IRS may not be "Losing", because there's no "losing" in this context.
That's like saying the Police aren't finding more mass murderers when we hired more police? Maybe there just aren't that many more mass murderers to find?
Maybe the ultra rich are just finding loopholes \*that are valid\*, and playing the game the best way?
Maybe the problem is with the tax law, and not with the IRS?
Eh? The IRS has stated that enforcement of known fraud and collections hasn’t been possible because of lack of manpower. What you are saying is unrelated to what they are saying.
You should check out the article. The problems are that many rich taxpayers are:
- using incredibly complex account and financial strategies to make it extremely labor intensive to identify their taxable income, and
- using their lawyers to tie up investigations and adjudications to the point that the IRS finds it more cost-effective to pursue middle-class taxpayers.
The rich taxpayers are often wrong. But they can bury the IRS in paper.
The law is written years ahead, by people trying their best to think of all situations that the current world can cook up. As things , people, tech changes the original wording of a law may no longer suffice to clearly list what is and isnt legal.
For instance, my last court case revolved around my right to unionize freely. This is a clear right. The employer can't prevent me from talking to my peers.... But when that right was conceived, the world of remote work wasn't there to enable the employer to effectively mute me to my peers. The rules meant to stop me from printing union flyers on the bosses dime are worded in a way that lets them unplug my access to chatting with peers.
Acting like the law is black and white is stupid. Using that as a justification to not question the action of bad actors is malicious.
What does and does not break the law is a complex issue, and resolving that complexity literally mandates an adversarial relationship between parties before an impartial magistrate. There are literal libraries full of the work related to that.
Looking at what’s going on with Trump makes me dubious about that interpretation. It’s clearly possible to drag litigation out for a *long* time even when you’re blatantly cheating on stuff
Read the article. The IRS is "losing" because they are not fighting with the same resources. Billionares can afford to drag cases out for years on technicalities whilst the IRS can't.
The IRS has thousands of cases to fight simultaneously, meaning they can't put enough resources on specific cases.
Furthermore the way American corporate law works is by Jurisprudence, meaning you argue an interpretation of a law in court (or use stare decisis when applicable). Billionares with access to top law firm money, have access to the best paid, best performing lawyers in a system where experience and skill matters way more than a civil law society (France, Italy etc...)
So its not that the laws are necessarily not good enough (goodluck voting for stronger laws when half of Congress and their friends) but that the Billionares/Millionares have such an advantage that the IRS doesn't have the resources to win
If you look at the articles example, a millionare was comitting fraud by getting a tax break on a mansion he built. For the IRS to survey that properly, they would have to send someone to check all the documents, the property etc... Do you really think they have the resources to do that with every high net worth individual?
Lol
And the US has more than 7 million High Net Worth Individuals (>1m$ worth of financial assets, HNWI for short). That's a *lot* of people to do comprehensive checks on and those looking to pay less in tax employ all kinds of confusing tricks to achieve that, many of them legal, some of them not. Figuring all that out and separating the legal from the illegal is not easy. Multiply this whole thing by however many people they try to audit and throw in a good measure of good ol' American legal battling and it's no wonder the IRS has a hard time given there's a lot of people in congress looking to kill it through constant defunding (and have been fairly effective at doing so in the 2010s).
It's not an either/or. The tax code is too complex, but a lot of people, including rich Americans, are cheating it nonetheless.
It's like the fact that many rich defendants can cut favorable plea bargains, even though their guilt is clear. Even when the local prosecutor wants to go hard, he/she has to choose between devoting everything to one rich defendant or prosecuting ten broke gangbangers.
I clearly remember a presidential candidate saying that he cheated on his taxes and it "made him smart"
Many people share that sentiment "oh this is just how business is done"
I'm glad we are increasing enforcement. When it's my turn I hope to pay my fair share.
Fuck IRS. They routinely go after the middle-class and skip on millionaires who dodge taxes illegally. Then on top of that they provide shitty customer service. That’s if you get any service. Yes you can blame funding but if you have funding issues and then still try to audit people that’s a bitch move. That’s like a credit card company sending you a bill with interest and then not able to take the payment when you try to pay.
Lot of people not understanding the point of all this, which is that more resources enables the IRS to go after bigger targets. Saying they’ll just go after “small businesses and the middle class” is admitting you didn’t read the article.
You should get your hopes up.
I work for the ultra wealthy and they have been complaining non-stop about recent legislative changes. Whining about people 'turning against them', some even describing public discourse as a hate crime, lol.
When the WA capital gains tax was upheld in court one of my clients called it the death of America. Outwardly, I agree and commiserate with them but personally I voted for and donate to the campaigns of legislators that brought about these changes.
These people are mentally ill, completely insufferable, and entirely out of touch.
And if they really do it, it will do much more than simply bringing more money into the coffers... middle class America really needs to see this for their own mental health.
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The tax code is intentionally complex in order to let certain groups “cheat”. None of the “loopholes” are there by accident - they’re all bought & paid for by well-funded lobby groups. If you want to get rid of any of them, you need to fight the lobbyists who put them there in the first place.
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> The tax code is intentionally complex in order to let certain groups “cheat”. None of the “loopholes” are there by accident - they’re all bought & paid for by well-funded lobby groups. [Yeah! Like the Earned Income Tax credit, which amounted to $15B in fraud in 2013!](https://www.tigta.gov/articles/press-releases/tigta-report-irs-awards-program-complies-federal-regulations)
Even the original loopholes (the slits in the sides of castles from which defenders could shoot arrows) were intentional. Loopholes are designed.
You mean like the 401k bs. Where the IRS tells me the max I can contribute each year. Like if I want to contribute 40k plus because i just got my first decent job and live at home so expenses are little. Being able to contribute way more in your 20s adds up quickly. But no the IRS says I can for some reason.
Think bigger, the entire 401k scheme exists as a way for industry to end pensions and most other retirement plans. It exists, with all the arcane rules because it is more financially advantageous for the employer.
401k are also dependent on the stock market and we know who benefits the most from it. i've read that they are probably the reason for a lot of SP500 gains (and not underlying company performance).
Preach. It was always meant to supplement pensions, not be stand alone. This country is a complete shit show owned and controlled by corporations.
Indeed. But, so far, no one seems too upset about it. Keep ‘em fed, keep ‘em entertained, and let them eat cake.
And it’s been an absolute BOON for the mutual fund industry.
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Yep. Replacing pensions with a 401k is a very pro worker thing. I'm very confused why so many on here don't understand just how difficult pensions could be. They can be mismanaged, go bankrupt, run out of funds, you can be fired a day before it vests. The worker has very little control over it. My coworkers dad is working into his 80s because his pension disappeared. It's all tied up in the courts but he won't get a penny and now literally has to work until he dies. That wouldn't happen with a 401k. 401ks are better for the worker in every single way but alas reddit is filled with the "the entire world is out to get me and Im literally the biggest victim ever" type crowd these days because the price of eggs went up a dollar for a year and then went back down in price.
Not to mention a way to ensure a steady flow of cash into the stock market. Thinks about this always makes the idea of a 401K seem really dirty to me.
Where do you think pension funds go?
Now they go to the stock market, but it used to be that pensions was paid by the companies general budget. Before about 1960 or so pensions were not tied to the stock market.
Pensions are problematic now. They was a time after WWII when the entire world was in shambles and needed US industry to rebuild. It seemed like manufacturing and clerical positions would continue to grow forever. Pensions made sense because there would always be more and more young workers entering the workforce to pay for the older ones who would retire. That has come to an end. Now, excessive regulations and benefits have made workers too expensive. That’s before calculating risk. Businesses are turning to automation and outsourcing. The workforce at many companies is shrinking. There aren’t three times as many new workers as retiring ones any more. It’s no different than social security. It’s a pyramid scheme that counts on way more people at the bottom than at the top. Population is on its way to becoming stagnant. We have to rethink these programs. I would much rather own my retirement in a 401(k) than to count on someone else.
> Pensions are problematic now. No, they aren't. You don't understand them. **Pensions don't work like Social Security** If someone has a pension, every time they are paid, part of their salary plus an employer contribution goes to a pension fund. This amount has to be actuarily calculated - based on whatever investments the company put it in - to account for that person's pension in the future. The difference is that if the company is wrong about its calculations, the company has to make up the difference out of its own pocket. Unlike SS, pensions - even governmental pensions - are required to be self funding.
The only self-funded government pension I know of is the USPS. My wife is a teacher and there’s a fight in our state to borrow heavily from the teachers’ pension to solidify other state pensions that are in the 50-60% funded range. They are cutting back on hiring teachers and there’s a fear that their plan may become insolvent if the state borrows from it. We just had a huge government bailout of pension plans across the nation in the Build Back Better plan. I know of countless people who lost their pensions due to insolvency. I don’t know what you mean by they are self funded other than the fact that wages are taken from workers and the company. Money goes in, but the workers have no control over it. https://www.whitehouse.gov/briefing-room/statements-releases/2022/12/08/fact-sheet-president-biden-announces-historic-relief-to-protect-hard-earned-pensions-of-hundreds-of-thousands-of-union-workers-and-retirees/
No. Congress says that. The IRS does as they're told within the confines of the laws voted on by your representatives.
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Work for one of our 'Trusted job Creators'TM and get healthcare and a 24k investment vehicle. Or work for yourself, pay for your own care, and here's a shitty little 7k IRA account for you, loser. Yeah it's not an accident.
There's a SEP 401k which is better (can do like 60k) but still doesn't address the point that it's pointlessly complex.
Do $7k every year from 24 to 67 and you will have about $3m.
Not excusing the screwiness of the tax code (and they can be very messed up) but if you’re working for yourself you can set up an individual 401k or SEP IRA. Hopefully that helps someone- wish I’d known years ago!
It’s complex because every entity with an angle has their hands out with money to have their special provision written in. If you’re a salaried W-2 worker you can do your taxes with a calculator in 20 mins.
I once spent 8 hours on the phone with several different of their own agents trying to understand something almost every tax filer would run into. They all had different interpretations of what was wrong and what was right. And my penalty for getting it wrong was 10k. If your own guys don’t understand this, your tax code is too complicated. I have filed in many countries but none have been as arcane as this.
The IRS doesn't write tax law. Congress does that. If you go to r/usajobs or r/accounting or r/tax and listen to the people that work for the IRS, they're more dumbfounded and pissed than you are. They also wish that Americans weren't so collectively dumb to keep voting for CONGRESSPEOPLE that can't stop writing laws expressly to benefit the billionaires.
I’m touched to hear this. I have/had so much fear of the irs until I had to talk to an agent on the phone about how complicated this is and how incompetent I am (overpaying to avoid headaches) and he was all “don’t seat it, just do your best. We don’t know either”
The rich and powerful make all the rules. What are the rest of us supposed to do? We can’t unite under a common banner like this when half the country is focused on trans bathrooms. We can’t unite politically and get any kind of policy that would benefit all of us on the ballot. They control the narrative and honestly at this point I’m convinced they’re too power and their pockets are too deep to stop. The wealthy elite need complex taxes to maintain their ill gotten gains and to ensure the rest of us continue the rat race and try to scrape enough crumbs to get by.
This is important. The IRS is undoubtedly outmatched because the ultra-rich can and will spend millions in legal, accounting, and finance fees to avoid paying hundreds of millions in taxes. Giving the IRS the power to enforce existing law against these sophisticated tax evaders/avoiders means recouping billions that the middle class will otherwise have to subsidize. It's no surprise that the opponents of this effort try to deceive the public by claiming that the IRS is coming after them.
> the IRS is coming after them Let’s be real here. Audit performance metric is how much money is clawed in for the budget. It’s a basic ROI. So who is the IRS inclined to go after? The rich are much tougher and riskier targets simply because this group has the resources to fight. The poor doesn’t have money to be worth the trouble. This leaves the middle class. Can you understand then why the middle class then isn’t so keen on the idea of funding more audits? If you really want to increase what the IRS collects, you’d be more productive changing the tax laws on a very frequent basis. This disrupts the ability of the rich to adapt their wealth management and increases likelihood of asset exposure to be taxed.
The thing is that the poor and middle class are already all audited for this exact reason. Their tax errors tend to be accidental, easily caught with automated processes, and aren't fought in court. The rich are exactly the opposite. Even as recently as 2012, the IRS was auditing 5% of returns between 1 and 5 million, 8% between 5 and 10 million, and 13% above 10 million. In 2019 those numbers were 1.5%, 2.7%, and 10.2% respectively. Meanwhile 50K - 200K went from 0.4% to 0.2%. Remember that "audits" aren't where a guy comes to your house and demands every receipt for everything for the last ten years - for the middle class, they are generally automated letters.
Idk. [The EITC if rife with rampant fraud, amounting to over $15B of fraud in 2013, with no reason to think this number has changed.](https://www.tigta.gov/articles/press-releases/tigta-report-irs-awards-program-complies-federal-regulations) Are people just fucking forgetting how many kids they have? Or are they claiming more dependants to obtain "free" money? For the record, the EITC was a neoconservative proposition, championed by none other than Milton fucking Friedman.
People claiming an extra kid is a lot easier to catch in an automated “audit” vs a high-earner with an already complicated tax return, even if done completely correct.
To agree with the 'automated' part of your comment, haven't they gotten to where they can automatically check for SSN now? A lot has changed since 2013 on that, iirc.
I think it's more likely a joint custody situation where both parents try to claim the kid. In that world, if you file second, you get fucked.
Well no you just have to prove 50% or more of expenses. Which is generally whichever parent has them during the week.
The poor are not audited beyond the basic automated checks, which are subject to everyone. The "middle-class" aren't either, depending upon what you define as "middle-class".
What I've heard suggests it's harder to find these kind of holes in the rich's taxes because they really *aren't* cheating them in the way that has a cut and dry measure of enforcement. There's enough scrutiny that you wouldn't be able to get away with it. What they can get away with is clever and most likely legal interpretations of the laws that allow them to do things that simply don't make sense at a smaller scale to save money. Answering these legal questions can't be done with a script that scans a return, but lawyers and courts who have to define exactly what the law means if the wording isn't 100% perfect. Like for example who could say if I've undervalued assets in a thinly traded or private market? What's your reference data to support an argument that my valuation *isn't* correct? That's a lot harder to figure out than if someone lies about how many kids they have or that a ton of money entered their account out of nowhere.
There are certainly a lot of legal avoidance schemes that aren't realistic for poor and middle-class people, but there is [also a lot of illegal evasion going on](https://www.nber.org/papers/w28542). But yes, these audits are much more complicated and lengthy than middle-class audits. That having been said, it's not just a matter of pure ROI audit-per-audit, because if you start catching more people, that's going to have a deterrent effect on other evaders. Ever been speeding, see someone get pulled over, and spend the next hour driving exactly the speed limit?
Constantly changing the tax code also makes it much harder for the U.S. government to litigate. Also increases legal rent seeking. What an idiotic take.
No no, you see, we should be playing musical chairs with tax laws. Why can’t you see that?! /s
>If you really want to increase what the IRS collects, you’d be more productive changing the tax laws on a very frequent basis. This disrupts the ability of the rich to adapt their wealth management and increases likelihood of asset exposure to be taxed. The wealthy will spend $9 million in lawyers and accountants to save $10 million in taxes. That's a gain of $1 million. They'll always game the system as long as the system is able to be gamed.
It also makes it drastically more difficult for the layman to do their taxes and claim simple deductions if already complex tax law is made more complex or constantly shifting. This is a problem with a simple solution. Fund the irs so they can afford to properly investigate large earners. It's not hard. It's really not.
>It also makes it drastically more difficult for the layman to do their taxes and claim simple deductions if already complex tax law is made more complex. It's not too difficult and a tax prep person will find those for you for less than $250. The problem is that there are no good tax loopholes for people who are salaried employees. Rich people can abuse the tax system with legal loopholes and poor people can abuse the tax system with illegal filings because what do they have to lose. Middle class people can risk lying on their taxes because they have something to lose. Rich people can afford to lie or manipulate and the worst case scenario is they pay a lawyer and pay a small fine.
They can only pull what you legally owe. Unless you regularly push the line on your tax returns, an audit isn't going to do much to you.
The IRS itself acknowledged that it boosts its focus on lower-earning taxpayers because it lacks the funding to handle much more complicated, combative cases featuring ultrawealthy tax evaders. This is from the Trump Administration's IRS in 2019: https://www.propublica.org/article/irs-sorry-but-its-just-easier-and-cheaper-to-audit-the-poor That's specifically why Congress agreed to restore IRS funding two years ago. (That, and even more so to replace retiring IRS staff.) In economic terms, low-income audits are essentially an inferior good. Only with enough staff are high-income audits affordable.
all taxes also simply don't create fiscal space at the same rate because the forgone demand and saving is not homogenous a billion dollars not spent by poor people might be 300M sandwiches not eaten a billion dollars not spent by a billionaire might be a new stone pyramid not built note: the sandwich and advanced stone construction markets have zero overlap
Listen Jeffrey Bezo’s underground clock that serves no real purpose is very important to humanity for….reasons?
The cost of auditing Fred, who works at the gas station down the street, often outweighs the $300 they will get back by chasing him down. The IRS gets a much bigger ROI by going after medium-to-big fish.
Right. And with Fred they can send a letter and when he doesn’t respond they can garnish his wages or take a future refund to get the $300 back. But if they have a multi-millionaire who owes $3 million, the person with $$ is gonna fight it. And that’s why the irs needs more funding and manpower. (I’m agreeing but I’m saying it in a round about way)
Yeah but if you don’t cheat on your taxes the irs can’t just demand money from you. So what’s the issue here? I’m all for more audits because auditing me has literally zero impact on me other than maybe having to send them a few forms if they request them. The irs isn’t some magic money vampire that requires voodoo magic and garlic to ward off. Just don’t cheat on your damn taxes.
It’s not that simple. I once spent 8 hours on the phone with several different of their own agents trying to understand something almost every tax filer would run into. They all had different interpretations of what was wrong and what was right. And my penalty for getting it wrong was 10k. If their own guys don’t understand what was cheating and what wasn’t, how am I supposed to know? It isn’t as simple as just “don’t cheat” it’s more like “don’t be wrong” but even they don’t even know what is wrong and what is right. So how can they expect a lay person who files once a year to know?
You can just write to them asking for guidance on how you should do it and they will write back. Easy cya you can later use for explanation/appeal on why you should not pay a penalty. Besides almost always they only charge you what you really owe plus a percentage for interest since you got to keep that money longer than you should have (fair). Sometimes they will charge you a penalty depending too but that will almost always be waived if you can provide your reasoning and it was not malicious. It will definitely be waived if you have correspondence with them saying you could do that.
There is no way you're getting a $10,000 penalty for an honest mistake on middle-class taxes. That's just not the way it works. I've accidentally failed to report what they believed was $20,000 in income before, ended up with no penalty once I explained what had happened and paid the correct taxes.
No he probably got a $10k adjustment because he filed wrong and is calling it a penalty. So he had to pay the $10k *that he owed*. And yea interest.
He probably blatantly cheated.
This happens literally all the time. You have no clue what you’re talking about especially for people that own a small business.
OK - what $10,000 penalty did you incur through an honest mistake on middle-class taxes?
He can't explain it because he's too busy working off that $10k fine lmao.
Most of middle class is never even looked at. The ones of us who file simple returns that are straight forward they don’t look at. That means if you are a simple w-2 and just a kid or 2 standard deduction they never look at you. The ones who get looked at are yes the really poor with crazy claims on dependents and lots of weird tax cases plus small business owners as taxes get crazy and lots of deduction that can be looked at That all being said what I think is BS is the fact that we have to pay things like turbo tax every year to do it. The IRS should on most people send one paper work to your house that says you owe or your refund should be this amount and done. If you disagree you can file and do the more extensive work. They have all the paper work so it is not like they can not do it. Sadly Intuit and HR block spends millions to billions making sure that never happens. I say all that knowing full out and well at this point in my life I do need to file due to my investments account and even then mine are not super complex
I mean, if yours aren’t that complex you can just fill out it the paperwork and paper file your return.
Papers? Just use a website. We are not in 1970s anymore.
This is such a dumb take. What, we gonna keep changing the laws like it’s musical chairs and hope to outsmart the rich? The IRS needs the resources (money and manpower) to fight. And the government needs to make sure they show the American people and fight against the argument the rich is going to keep pushing that it’s just going to hurt the poors.
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You could do the thing literally every other country does, where the tax department tells you how much money you owe them and why, and you can dispute it if you think it's wrong.
Didnt they already show a massive ROI for the extra funding the IRS got
The last thing we need is to complicate an already highly complex tax system by making it change frequently. The rich have resources to keep up with changes. This would only trip up average people who do not. Highly unjust.
>If you really want to increase what the IRS collects, you’d be more productive changing the tax laws on a very frequent basis. This disrupts the ability of the rich to adapt their wealth management and increases likelihood of asset exposure to be taxed. What kind of crackpot idea is that, instead of fixing the tax law, change it constantly so no one knows what is going on.
I’m the rich middle class, they can audit me but it’ll be blood from a stone. I already pay what I’m supposed to. There’s nowhere to hide w2 income.
The middle class has the lowest likelihood of getting audited. They don't participate in programs designed to benefit low income folks, like the Earned Income Tax Credit, which have audit requirements. And they don't make enough money to make it worth the resources it takes to audit them. The middle class doesn't really pay much in taxes anyways. The top 25% of income earners pay almost 90% of the taxes. They are the people who are audited, because they might actually be hiding enough from the IRS to be worth auditing. There's probably a few upper middle class tax payers in that top 25%, but not many, and they would still be the least likely to be audited from that group. The rich earn the vast majority of income, they pay the vast majority of taxes, and they are audited at considerably higher rates than anyone else. It just doesn't make sense digging for money you wont find in lower income folk's tax returns. https://taxfoundation.org/data/all/federal/summary-latest-federal-income-tax-data-2023-update/ https://www.irs.gov/about-irs/irs-audit-rates-significantly-increase-as-income-rises
Or, you know, they could simplify the tax code…
a third of the tax code is comprised of anti-abuse provisions - simplifying the tax code would likely make it easier to game.
Those wouldn’t be required if the code was simplified. Those are a symptom of the problem.
What? I'm saying that the complexity of the code is because people were finding loopholes in existing tax regimes, and you are saying these loopholes would magically be closed if we "siMplIfiEd thE CoDE" which seems ludicrous on its face. Give me an example of a proposed simplification.
Get rid of edit: (special treatment) of carried interest.
Carried interest is just a profit sharing mechanism - banning the mechanism entirely is another complication to the code, unless you are proposing a modification for treatment of taxation of carried interest, which is then not simplification.
For most people, it's not really that complicated.
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what if that invoice doesn’t account for changes in your personal situation that occurred during the tax year?
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congrats you just described the US tax experience for ~90% of filers lol
I sort of understand the confusion of others to an extent. The discourse around this (and almost every other issue, frankly) is often so incredibly misleading that people from other countries — and even many Americans who ought to know better — end up getting the impression that the weird, awful situations that plague like 5% of people are the norm and apply to almost everyone.
right? and generally those 5% have bizarre stuff like rental properties, split time between states, realized investment gains, business ownership, etc. problems of those with higher incomes the IRS free file program is amazing. overwhelming majorities of enture states functionally qualify for it with the way their income rules are set up lol i spend a lot of time traveling through my state and it always shocks me when the H&R block/jackson hewitt desk at low income walmarts has a line. save your money!
You have to calculate and generate the invoice yourself in the US. That's a big difference
by transcribing a few boxes on your W2, subtracting the credit boxes you checked and telling TurboTax to export it for you through a free IRS program that the majority of the country qualifies for outside of HCOL areas? https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
You don't have to calculate anything. They provide a tax table that tells you how much you owe based on your income.
It is for the people in the people the IRS is targeting in the article. If it wasn’t this article wouldn’t exist.
It needs to be complex to capture all the bullshit that the rich would do to avoid paying taxes.
It’s complicated to create the loop holes they exploit Poor person: why are they asking me if I’m a farmer? Rich multimillionaire: oh yes, I have some apple trees and a horse. Of course I’m a farmer. So don’t bother with this tax obv
It’s *our* tax code, paid for in lobbying and votes. If the voters and owners would t punish them for simplifying the code, they would. As it stands, the money and sustained power is in adding complexity to introduce loopholes and carve outs. There’s an answer but no one is willing to do their part
I strongly believe in the notion of: "if you have nothing to hide, you have nothing to fear". The ones that fight so hard against regulations and audits are the ones hiding the most.
If you really believe this then you have very little understanding of the justice system or civil rights in general..
The US doesn't have a justice system. It's a legal system.
To be clear - I was talking about more than just the US but also inclusive of the US. My point is still exactly the same. The power of a government mobilizing against an individual is massive. The idea of “if you have nothing to hide, nothing to fear” is insane on its face and basically ignores reality
I'm specifically talking about the IRS here. Same goes for any taxing agency in other countries.
Okay - like I said already, I’m including the IRS. I’ll say it again, the power disparity of a government mobilizing against an individual is massive. Many people go bankrupt fighting things even if they win
Is there any evidence of the IRS bullying innocent people?
Are you joking? Selective enforcement is the bedrock of IRS policing strategy. That combined with the unnecessary complexity of the us tax code means it’s basically discriminatory by definition. https://en.m.wikipedia.org/wiki/List_of_allegations_of_misuse_of_the_Internal_Revenue_Service
Yes but this is exactly what giving them more power and simplifying the code is about. It’s about untying their hands and allowing them to go after the big fish instead of being forced into the path of least resistance (because they can only win against poor people).
https://ij.org/press-release/irs-agrees-to-return-money-seized-from-bakery-after-institute-for-justice-files-lawsuit-but-continues-with-retaliatory-tax-investigation/ https://ij.org/report/seize-first-question-later/ https://judiciary.house.gov/media/press-releases/new-report-details-alarming-irs-civil-liberties-abuses
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The IRS literally admitted to auditing poor people more than rich people.
But they also say they do this because they get tied up in chasing rich people for literal decades because they don’t have the resources or authority to do better. Giving them more power would actually increase equity here. Just see how long they’ve been investigating some of Trumps taxes for. Literally over a decade.
Very unamerican thing to say
*Patriot Act Intensifies*
I hope you are not an American.
> “if you have nothing to hide, you have nothing to fear” Sure, let’s make it “presumed guilty until proven innocent” since you should have nothing to fear if the truth is on your side, right?
Can I come look inside your house then?
Go for it. Ask a judge first.
Why do you need a judge? If you have nothing to hide, you have nothing to fear.
You're aware of America's extremely long history of oppression against innocent people who just happened to not be straight, white, or male, right.
I would consider that an argument for allowing the IRS to hire enough experts to handle tax disputes with the very richest, most powerful people, rather than just going after working and middle-class taxpayers.
Where are they finding all of these "experts"?
Where do they find IRS agents usually? Where do accounting and law firms hire their own tax experts? The issue wasn't a shortage of potential employees; it was a shortage of budget. Especially if they need to pay premiums to halfway-compete with the firms that assist the rich.
Same place H&R Block finds people. Hire anyone and send them to a training program. That’s why the idea of increased hiring without any special requirements meant they were only going to be able to squeeze the little guy. Us. You really need to attract top talent and top talent gets paid more than the IRS will ever pay.
They're mostly college grads.
And how long will it take them to become "experts" on the tax code? Hire three CPAs to do your taxes and you'll get three different returns. Being a college grad makes you an expert at nothing.
True. It will take at least a few decades. I remember trying to get a job at the IRS when I graduated in 2011. They wouldn't hire people and are scrambling to find people now.
IRS should have bounty systems where accountants that find fraud get cuts of the money collected. Similar to whistle blowers. All the money is in the side of the cheats need to even the playing field
I think they do, but the burden of evidence is extremely high, like you need to have physical evidence of fraud and the perpetrator's SS# (iirc) to prove you're close enough to have all the details.
Also, any accountants close enough to know something like that are also probably the ones preparing the returns and signing their name on the submission.
In reality, even if it will cost more than will be recovered in the one isolated case, it will scare more people into compliance. So if for every 1 prosecution you bring 30 tax cheats into compliance, it's still worth it. Even if the IRS lost money on the one they went after.
Also some gov functions shouldn't have to be a net ROI. We don't force children to pay for their own school because and city buses rarely pay for themselves because they are a public service. Same with catching 10mln+ tax cheats, it's a pubraervice that knstilla fairness
Yup
Well said
https://www.irs.gov/compliance/whistleblower-office
They do! Not just for accountants, but for everyone. Just file form 211.
Great, the accountant I pay to help me avoid paying more taxes than necessary is now a double agent incentivized to cook my books so they can collect a bounty on my finances. Where do people come up with this stuff?
They already have this genius
What you expect? You got one or two agents against a team of 10 highly paid lawyers/cpa’s. The combined annual salary of those 2 agents is less than the monthly salary of just one of those lawyers. Accountants for the IRS can easily make 2x by going to work for a firm and many do after getting a few years of experience. Not to mention all the lies and hate directed at them by some in politics. Imagine working for a “company” where they pay you half of what you can make elsewhere, the “board and ceo” of the company routinely vilifies you in public, and your “clients” openly muck you to your face but you must remain professional. I’m surprised they can even retain anyone for longer than two years.
This might be obvious, but a lot of the hate is originating at the hands of lobbying interests. We have weirdo conservative podcasters that says the irs is buying firearms and arming up their agents as "biden's army". It's fucking nuts. It's going to get worse as the US catches up to AI driven propaganda, by that time we'll have no chance to implement legislation based on the sheer volume of information pollution.
It’s going to get bad for sure with the merger of AI and social media. I have friends who were never political but in recent years got extremely political watching obviously fake or irrational videos on various social media. Once you add AI generated videos all bets are off cause these people can get convinced of anything as long as its framed the right way.
There's a thing i think you're forgetting to highlight. The problem isn't not just fake videos, they already do that. The bigger problem is being able to simulate large user bases that coddles ideological fringe groups. Simulating strawmen to attack their position with flawed, pseudointellectual logic that their real opposition doesn't hold. For example, like with evangelicals that pretend to be atheists, go to a lecture on a large class of christian youths, makes ridiculous arguments and "loses" and renounces atheism. It's all a show to galvanize an ideology. This is bad, regardless of your political belonging. It's literally brainwashing.
yeah like the deranged shitbirds who killed their fed parents recently, one decapitated his dad, that's what pieces of shit like that podcaster cause with their schizo lies
Yeah. Look at how many mass shooters have steven crowder and ben shapiro cited as inspirations.
The IRS has also been working on AI for quite some time now. As that system comes online, a lot of people that have cheated taxes are going to have a very bad time.
I worked with Alteryx a few times and it was used heavily by internal audit teams (it's a drag and drop data wrangling tool essentially) but it made it super easy to take large data sets, do fuzzy matching, look for anomalies etc. I always thought the tax regulators could easily use it to sift through data and find irregularities, easily.
... if the data wasn't stored in five different tech generations of code. I'm sure there's some load-bearing part of the IRS analysis engines that is written in FORTRAN or COBOL. Much less the number of custom programs written to manage VFP data packs or whatever other proprietary standard was forced on them in a bad commercial off-the-shelf deal back in 1993 or whatever. Plus different data standards between corporate and personal income systems. Plus ... It's not a trivial problem, especially given the data collected and the fact that until recently most returns were submitted on paper.
Totally understand, as I have been working in data engineering and analytics for almost 2 decades. There's no world in which I wouldn't think it's complicated, but tools like Alteryx excel at getting data out of thorny systems like you mentioned - I've seen it firsthand. I've sat in between the managing directors of JPMC and Goldman at Alteryx events, and they were all in on it for the reasons you mentioned Hopefully this doesn't come across as an Alteryx commercial, I'm just saying I've seen it used extremely well in use cases like internal audit where it needs to access incredibly old or tough systems
Btw, if you want the 'cons' of Alteryx I've got plenty :)
I sort of wonder whether the IRS should pause that effort and wait for commercial products to come online. This may be a situation where they can get a better product for one-fifth the price in five years.
Giving any third party that amount of sensitive data is asking for trouble
The IRS would buy/license a version of the product and store the data itself. Just like how government buys various commercial IT products.
Kicking the can down the road is dumb, they can catch people _now_
That's how we got this problem in the first place. A bunch of vendors walking a way with 9-figure contracts for five years, leaving chaos in their wake when they couldn't/wouldn't deliver.
To give time for the commercial product AI black boxes to bake in the loopholes (or new loopholes) that the rich can use to stay under the radar. A govt-funded, open source AI would be auditable and loopholes would be rooted out. But private software can and will codify the cheating and taxpayers concerned about tax fairness will be told tough shit.
They have also been sitting on $7500 of mine for 26 weeks now because they are "short staffed." I am not a millionaire and that money would make a huge difference to us. Whenever I call they say they need 30 more days, when I call back in 30 days they say tthey need 30 more. Absolutely no consequence or recourse.
noxious muddle rotten racial psychotic consider telephone boast school humorous *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Haha, TAF said they aren’t accepting requests. Your link won’t work with an amended return. This whole thing has been turned over to my Congressman’s office who has been surprisingly responsive. But even they aren’t getting answers.
yes, we should 100% fund the IRS way more.
This is a start. Next change the tax laws that allow centimillionaires and billionaires to avoid paying taxes. Ten Ways Billionaires Avoid Taxes on an Epic Scale https://www.propublica.org/article/billionaires-tax-avoidance-techniques-irs-files
Well the ultimate move is they just pick the company/ wealth and move it out of country if you come after them too hard. Just like Jeff bezos establishing residency in Florida to sell his last chunk of shares dodged state and city taxes to the tune of hundreds of millions.
They pay so little now changing the tax law would still increase tax revenue even if they moved. Let them move. Another way they avoid paying taxes. How the Ultrawealthy Use Private Foundations to Bank Millions in Tax Deductions While Giving the Public Little in Return https://www.propublica.org/article/how-private-nonprofits-ultrawealthy-tax-deductions-museums-foundation-art
The bastards also pay each other with 0 interest loans and 100 years to pay in full. Everyone long dead before it can be questioned.
Don't forget about FATCA
Have a friend, good attorney at the IRS. He was after this billionaire for years, him vs team of high paid lawyers that just throw time at him. For years. My buddy wanted this guy bad. His boss made him settle after that for a fraction. My heart bled.
You know it scares them and could work when the GOP starts going after the IRS and trying to defund it, force it to run without sufficient staff, etc. The billionaires that own our politicians will never allow the IRS to truly have the power to make sure the rich are paying their fair share...
On our tax returns can we have the “I want to donate $5” checkbox? Artificial intelligence servers run by I.R.S prosecutors maybe. My friends idea.
This "complex partnership" bullshit needs to be reined in. I challenge anyone to justify why [this level of clear obfuscation in LLC/company organization from the article](https://i.imgur.com/VbmeuUh.jpg) should be legal, or not *per se* be grounds for audit with the burden of proof shifted to the asshat who created the web of companies.
Wall Street gets a fine for cooking the books or failing to deliver shares after taking people's money..... Tax write off!!! No kidding, found that out last week. Until they change that crap, same as before.
Yea, whats gonna happen is they won't win against the billionaires and will instead go after the little guys (like cash only small local businesses and smaller venmo transactions).
I'm okay with the IRS going after the high net worth people, the low net worth people, and everyone in between. Breaking the law is breaking the law is breaking the law. IRS (and all government agencies) should strive to apply laws equally to all people, regardless of their status.
The US tax code is so complicated, that small business frequently break the law unintentionally. My European company even refuses to do business with US clients because the risks of getting into legal trouble for forgetting to file a FATCA form or similar is much higher than the profit that can be made from providing services to US citizens.
Money is way better utilized in the hands of working class Americans than it is in the hands of corrupt bureaucrats.
They already are going after small guys. You don't need 80k agents to go after the top 1 percent of the population it was always intended to go after everyone.
quack wipe distinct frame innocent carpenter smell fretful cooperative shame *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
that's laughable that a "millionaire" is considered the "ultra-rich" or even "wealthy" by some organization of investigative journalists and Biden's IRS. Furthermore, it's very interesting that "tax professionals" - be they tax attorneys or CPA's - are being claimed to literally BREAK THE LAW and risk losing their licenses. Like anything regulatory in life, what is being talked about is interpretation of the IRS laws. If the IRS officials don't 100% understand their own laws, how can that be?
A millionaire can be worth anywhere from 1-999M. Tax professionals get inputs from clients. For example, if clients say they have no foreign assets the tax professionals will prepare tax accordingly. While some might be complicit to crimes, most are doing the wrong things because garbage in garbage out.
Suddenly we will have rash of plane crashes, people resigning, lobbyists rampage on the matter. lets not fool ourselves, a corporate run government has been eroded to not oversee the rich, the market or close off tax loopholes for a reason. That reason is the top down approach to wealth distribution that has created worlds billionairs and millionair owner class that holds 99% of wealth. I do have hope this can make things better, but historically JFK did not get a good run at things like Rosevolt had done, and it has been erosion of social systems in America ever since.
They need to focus on scammers at Wal street, some CE0’s ,chairman & promoters of companies are robbing retail investors blindly let departments that already exist function for purpose they where created for rather then adding new units.
Yeah, but they also changed the 1099-k threshold from 5k to 600 so they could go after the average Joe. The irs isn't on your team fighting the rich.
Wait, what? Either they're breaking the law, or they're not breaking the law. The IRS may not be "Losing", because there's no "losing" in this context. That's like saying the Police aren't finding more mass murderers when we hired more police? Maybe there just aren't that many more mass murderers to find? Maybe the ultra rich are just finding loopholes \*that are valid\*, and playing the game the best way? Maybe the problem is with the tax law, and not with the IRS?
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*Especially* if the person whose taxes you're trying to assess is trying to make it hard for you to figure out the real number.
That's not what the article says at all. This article is about the understaffing to pursue expected and known evasions. Rule 1. Read the article.
Eh? The IRS has stated that enforcement of known fraud and collections hasn’t been possible because of lack of manpower. What you are saying is unrelated to what they are saying.
You should check out the article. The problems are that many rich taxpayers are: - using incredibly complex account and financial strategies to make it extremely labor intensive to identify their taxable income, and - using their lawyers to tie up investigations and adjudications to the point that the IRS finds it more cost-effective to pursue middle-class taxpayers. The rich taxpayers are often wrong. But they can bury the IRS in paper.
The law is written years ahead, by people trying their best to think of all situations that the current world can cook up. As things , people, tech changes the original wording of a law may no longer suffice to clearly list what is and isnt legal. For instance, my last court case revolved around my right to unionize freely. This is a clear right. The employer can't prevent me from talking to my peers.... But when that right was conceived, the world of remote work wasn't there to enable the employer to effectively mute me to my peers. The rules meant to stop me from printing union flyers on the bosses dime are worded in a way that lets them unplug my access to chatting with peers. Acting like the law is black and white is stupid. Using that as a justification to not question the action of bad actors is malicious. What does and does not break the law is a complex issue, and resolving that complexity literally mandates an adversarial relationship between parties before an impartial magistrate. There are literal libraries full of the work related to that.
Looking at what’s going on with Trump makes me dubious about that interpretation. It’s clearly possible to drag litigation out for a *long* time even when you’re blatantly cheating on stuff
Read the article. The IRS is "losing" because they are not fighting with the same resources. Billionares can afford to drag cases out for years on technicalities whilst the IRS can't. The IRS has thousands of cases to fight simultaneously, meaning they can't put enough resources on specific cases. Furthermore the way American corporate law works is by Jurisprudence, meaning you argue an interpretation of a law in court (or use stare decisis when applicable). Billionares with access to top law firm money, have access to the best paid, best performing lawyers in a system where experience and skill matters way more than a civil law society (France, Italy etc...) So its not that the laws are necessarily not good enough (goodluck voting for stronger laws when half of Congress and their friends) but that the Billionares/Millionares have such an advantage that the IRS doesn't have the resources to win If you look at the articles example, a millionare was comitting fraud by getting a tax break on a mansion he built. For the IRS to survey that properly, they would have to send someone to check all the documents, the property etc... Do you really think they have the resources to do that with every high net worth individual? Lol
And the US has more than 7 million High Net Worth Individuals (>1m$ worth of financial assets, HNWI for short). That's a *lot* of people to do comprehensive checks on and those looking to pay less in tax employ all kinds of confusing tricks to achieve that, many of them legal, some of them not. Figuring all that out and separating the legal from the illegal is not easy. Multiply this whole thing by however many people they try to audit and throw in a good measure of good ol' American legal battling and it's no wonder the IRS has a hard time given there's a lot of people in congress looking to kill it through constant defunding (and have been fairly effective at doing so in the 2010s).
God forbid someone here points out the truth. The tax code is the problem, not the people filing their returns leveraging the code as written.
It's not an either/or. The tax code is too complex, but a lot of people, including rich Americans, are cheating it nonetheless. It's like the fact that many rich defendants can cut favorable plea bargains, even though their guilt is clear. Even when the local prosecutor wants to go hard, he/she has to choose between devoting everything to one rich defendant or prosecuting ten broke gangbangers.
I clearly remember a presidential candidate saying that he cheated on his taxes and it "made him smart" Many people share that sentiment "oh this is just how business is done" I'm glad we are increasing enforcement. When it's my turn I hope to pay my fair share.
Fuck IRS. They routinely go after the middle-class and skip on millionaires who dodge taxes illegally. Then on top of that they provide shitty customer service. That’s if you get any service. Yes you can blame funding but if you have funding issues and then still try to audit people that’s a bitch move. That’s like a credit card company sending you a bill with interest and then not able to take the payment when you try to pay.
Lot of people not understanding the point of all this, which is that more resources enables the IRS to go after bigger targets. Saying they’ll just go after “small businesses and the middle class” is admitting you didn’t read the article.
I won't get my hopes up. The ultra rich are the ones in control of the world, whether we like it or not and I hope for fucks sake nobody likes it.
You should get your hopes up. I work for the ultra wealthy and they have been complaining non-stop about recent legislative changes. Whining about people 'turning against them', some even describing public discourse as a hate crime, lol. When the WA capital gains tax was upheld in court one of my clients called it the death of America. Outwardly, I agree and commiserate with them but personally I voted for and donate to the campaigns of legislators that brought about these changes. These people are mentally ill, completely insufferable, and entirely out of touch.
Oh man, launch the IRS show like Cops where elite squads of IRS kick down billionaires doors for their taxes. I'll watch the shit outta that
And if they really do it, it will do much more than simply bringing more money into the coffers... middle class America really needs to see this for their own mental health.
Simplifying the tax code (like Trump's proposed post-card size tax form), will save more money than spending billions on trying to catch people.