Later On

A blog written for those whose interests more or less match mine.

Has the IRS Hit Bottom?

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Paul Kiel reports in ProPublica:

It’s been almost 10 years since Republicans, riding the Tea Party wave, took control of the House of Representatives and started hacking at the IRS’ enforcement budget. Down it went, some years the cuts were steep, some not, as Republican lawmakers laughed off dire warnings about the consequences of letting tax cheats run free.

For the past couple years, ProPublica has been cataloging the descent of the IRS. We’ve watched as audits of the rich and the largest corporations have plummeted and become less aggressive, while audits of poor taxpayers have remained comparatively high.

This week, the IRS released its annual disclosure of enforcement statistics. Every year, it’s an opportunity to measure how effectively the U.S. government has sabotaged its own ability to enforce its tax laws. This year’s report, along with other data ProPublica has collected on the state of the IRS, is full of evidence that the IRS has hit a passel of historic lows.

Overall, 2019 brought the lowest audit rate in generations. ProPublica searched back to the 1950s and could not find a lower audit rate of individual returns. The story is similar for corporate audits. The largest corporations, those with assets over $20 billion, used to be audited every year. Last year, only about half were audited.

Fewer audits has meant less revenue, particularly from big businesses that pay the biggest tax bills. In 2010, the IRS collected around $28 billion from audits (adjusting for inflation). In 2019, it collected $11 billion. That’s a drop of 61%.

And then there are collections — in which the issue isn’t auditing taxpayers, but collecting what they’ve agreed to pay. One clear measure is how often the IRS simply lets tax debts evaporate because it doesn’t have the personnel to pursue them before the 10-year statute of limitations runs out. This used to happen only rarely, according to internal agency reports. But in 2019, the IRS let $6.7 billion in tax debt expire, an increase of over 1,000% from 2010. (This was actually an improvement from the peak of 2017.)

In this year’s release, the IRS has decided to muck up one measure of its performance that has drawn the most heat from lawmakers. In past years, members of Congress have pointed to our coverage and pressured IRS Commissioner Charles Rettig to increase audits of the rich. One of Rettig’s responses (other than that auditing the poor was simply much easier) has been to argue that the traditional way of measuring audit rates didn’t adequately capture all the IRS’ activities.

This week, the IRS announced that it had reformed the way it reports audit rates. The reason, it explained in a note online, is that the metrics the IRS traditionally used don’t apply anymore. In the past, the IRS was able to audit tax returns the year after they’re filed. But now, with an enforcement staff that has been slashed by 36% since 2010, it’s no longer able to do so. Things have, to say the least, slowed down.

So, while last year we were able to tell you just how far the audit rate for taxpayers with incomes above $10 million had fallen, this year, we can’t. The IRS no longer reports how many audits closed each year for that income bracket and several others. The IRS now says it takes at least three years to render any sort of verdict on just how few among the ultrarich were audited. . .

Continue reading. There’s much more, including some clear charts that show how the US is failing.

Obviously, if the government is inadequately funded, it will do an inadequate job, and that’s the GOP goal: poor government, which results in more power to corporations and the wealthy.

Written by LeisureGuy

30 June 2020 at 3:59 pm

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