If you thought the IRS picked on poorer taxpayers while ignoring the rich, you aren’t far from being right. According to a new report, the IRS audits poorer citizens than the more affluent. And now Congress is asking the IRS for some answers as to why.
“The IRS audits the working poor at about the same rate as the wealthiest 1 percent. Now, in response to questions from a U.S. senator, the IRS has acknowledged that’s true but professes it can’t change anything unless it is given more money,” ProPublica reported.
Recently ProPublica reported the disproportionate audit focus on lower-income families and this led to lawmakers questioning IRS Commissioner Charles Rettig about the discrepancy. Sen. Ron Wyden, D-Ore. Requested a plan from Rettig to fix the imbalance. To which Rettig agreed. In August, Rettig replied with a report. The reporter, however, said “the IRS has no plan and won’t have one until Congress agrees to restore the funding it slashed from the agency over the past nine years — something lawmakers have shown little inclination to do,” ProPublica reported.
Listen to GHOGH with Jamarlin Martin | Episode 65: Tunde Ogunlana Jamarlin continues his talk with Tunde Ogunlana, the CEO of Axial Family Advisors, a wealth planning firm. They discuss how QE or quantitative easing (money printing) is likely to look different in the next financial crisis in America and some tax benefits with side hustles. They also discuss why estate planning is a selfless act.
Republicans in Congress have pushed for cuts to the IRS enforcement budget. The budget is more than a quarter lower than its 2010 level.
So, since the agency has a smaller budget it is doing audits that are easier and faster, and this usually means tax records of the less wealthy.
Last year there were about 380,000 audits.
“On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam…For now, the IRS says, while it agrees auditing more wealthy taxpayers would be a good idea, without adequate funding there’s nothing it can do,” ProPublica reported.
