If recent tax cuts overwhelmingly favor the rich (and they do) shouldn’t tax law enforcement also favor the rich? It does, says a report from Pro Publica.
Budget cuts have crippled the IRS enforcement efforts. A 33 percent reduction in staff has produced a sharp reduction in the number of audits of tax returns.
But while the number of audits has fallen across the board, the impact has been different for the rich and poor. For wealthy taxpayers, the story has been rosy: Not only has the audit rate been cut in half, but audits now tend to be less thorough.
It’s a different story for people who receive the Earned Income Tax Credit [a rebate available to low-income working taxpayers]: The audit rate has fallen less steeply and the experience of being audited has become more punishing. Because of a 2015 law, EITC recipients are now more likely to have their refund held, something that can be calamitous for someone living month-to-month.
IRS computers choose people to audit, but if those taxpayers respond, a person must review the documents. With fewer employees to do that, delays have mounted in a process that was already arduous, according to several attorneys who represent taxpayers through the Low Income Taxpayer Clinic program. It regularly takes more than a year to get a taxpayer’s refund released, they said, even for those who are represented.
36 percent of all audits are of poor people getting the EITC. In short, the less you make the more likely you are to receive a visit from the IRS.
(Wonder if the auditors have EVER paid a call on Republican state Rep. Mickey Gates of Hot Springs, who faces six felony charges for not paying a state income tax. At the time he was charged, he hadn’t filed a state return since 2003.)