For those of you cheat on your tax return...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

Perhaps you don't realize this but cheating is very common among those paying low/ no taxes. Think about all those tips or cash transactions. Think about highly-questionable benefits or child credits. That's a huge pot of money the IRS could well go after.

1) They already go after this group the most.
https://www.cbsnews.com/news/where-does-the-irs-audit-the-most-poor-rural-counties-that-are-mostly-black/

2) Refundable credits like the EITC and the CTC are the most scrutinized at the IRS, and are the easiest to audit.

3) The money from these audits is not a lot bc these people don’t have a lot. Audits of wealthier people result in more tax even with the increased costs.

1) Not true, not even by a mile (and the report in the very link you provided shows why)

2) Easiest to audit: Yes. Most scrutinized: not by a mile

3) You don't understand volume. 20 million people x $500 = $10 billion in easy-to-get tax dollars. That's more than fighting 10 billionaires to death and getting $500M from each -- which rarely ever happens to begin with.

Exactly. The % of rich people who get audited is higher than poorer wage earners, but there aren't that many rich people, comparatively. The 1% has their returns done by an accountant, which means it's on the accountant to justify the return, unless the IRS or the accountant can prove that the person being audited gave the accountant false information. It's expensive to deal with the rich person's accountant and lawyer (if things get serious). It's much easier to send computer generated letters to millions of waitresses and hair dressers and hope they each cough up a small amount of money. There's no way the bill would have scored $200 billion in extra tax revenue from compliance if they were only going after rich people and spending the money on "customer service."

In addition to people in cash businesses, the people who should be worried right now are those who did the WFH thing during covid and deducted "office" expenses. Huge audit red flag.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

Perhaps you don't realize this but cheating is very common among those paying low/ no taxes. Think about all those tips or cash transactions. Think about highly-questionable benefits or child credits. That's a huge pot of money the IRS could well go after.

1) They already go after this group the most.
https://www.cbsnews.com/news/where-does-the-irs-audit-the-most-poor-rural-counties-that-are-mostly-black/

2) Refundable credits like the EITC and the CTC are the most scrutinized at the IRS, and are the easiest to audit.

3) The money from these audits is not a lot bc these people don’t have a lot. Audits of wealthier people result in more tax even with the increased costs.

1) Not true, not even by a mile (and the report in the very link you provided shows why)

2) Easiest to audit: Yes. Most scrutinized: not by a mile

3) You don't understand volume. 20 million people x $500 = $10 billion in easy-to-get tax dollars. That's more than fighting 10 billionaires to death and getting $500M from each -- which rarely ever happens to begin with.

+1

I don't see why people don't get this. Small amounts from millions of people usually adds up to a much bigger amount than a large amount from one individual.

I see this in discussions of corporate pay. Reducing a CEO's pay by $10 million and spreading that over tens of thousands of employees does not result in a noticeable pay increase for any employee. Same principle at work as above.

(Not meant as a defense of executive management pay--current practices have many problems, but it is generally not the root of low employee pay.)

Math is not one of America's top talents.

Don't be obtuse. People get the math; they just don't like the inequity.

There's also a chilling effect of tax audits beyond the money. Auditors could randomly select a few common ways of cheating taxes among the wealthy and pour all their resources into prosecuting those types of cheat that year--rather than flagging individuals focus on anyone who has used a certain kind of process, audit a random percentage of those and look for cheating. And then publicize the heck out of it. The next year randomly select strategies again. They will reduce people's willingness to roll the die on using various strategies. The benefit is both money AND feeling like you live in more fair society when the wealthy are subject to the same scrutiny as the poor.

Same with CEO pay--sure everyone gets that the pay of 1 won't meaningfully spread to the many. It's optics and the sense of fairness. Plus there are likely cascading effects if the CEO gets less, the upper eschelon will likely also make less, until you get to a place where it's easier to bring the lower people up rather than bring the higher people down. Soon enough the compression makes it a least a little more equitable (sort of like it was in the mid 20th century.

The IRS already does this all the time. If there's a tax strategy that's being commonly used that might be marginally legal, they prosecute a high profile case, get an opinion that the strategy is, in fact, illegal (or not), and the word goes out to the accountants and they stop recommending it. The IRS doesn't need a new $80 billion to do this.

The vast majority of tax strategies that people complain about as being "inequitable" are completely legal. Warren Buffett made the famous statement about paying a lower % of taxes than his secretary, but he doesn't do that because he cheats. He does that because he has vast wealth, but very little "income." Our tax code does this to encourage investment. If you don't like it, you need to change the tax code.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

+1 op clearly has no idea what they are talking about. Banks, brokerage houses and employees report income directly to the IRS so if something doesn’t tie out, there’s a notice. It’s very hard to find ‘loopholes’.

You've never met self-employed people who deduct their whole life? Or get paid partially in cash?

Where little business is happening with cash these days so I doubt if that can't be tracked.

It's harder these days to avoid being tracked than you think. Even if you keep all your money under your mattress and pay for everything in cash, the people you're dealing with probably have a bank. You buy a car and pay cash, the seller is probably going to deposit that $$ in a bank. Same if you buy a house or pay rent. If it's over $10,000, the bank reports that transaction to the IRS. When the person who made the deposit gets audited (and they will if, for example, the car dealer is making a bunch of cash deposits), they ask where the $$ came from. When the computer spits out multiple reports of big cash transactions from someone with zero income, they audit. If they catch you making lots of smaller deposits to get around the $10k reporting threshold, that's called "structuring" and they'll nail you for that.

I think the IRS isn't entirely lying when they say they're going to use a significant portion of the money on IT. But it's not to audit rich people, it's to track more of these smaller transactions on computer and generate automatic audits for the little guys.

[Anonymous]

Anonymous wrote:Perhaps you don't realize this but it is very difficult for wage earners to cheat on their taxes in a material way. Almost all of your income is going to be reported to the IRS (i.e. W-2, 1099, etc.) so there is very little tax evasion in this income group. Brokerages track the basis for securities now so that one loophole has mostly been closed unless you've owned securities for a very long time.

The vast majority of tax evasion comes from the 1%.

This is false. IRS estimates that 36 percent of owed taxes are by the top 1 percent. That means 64 percent is by others. I am not saying that this situation is okay, far from it. But we should have our facts.