Over at National Review, Dominic Pino has a sarcastic post about Democratic efforts to collect unpaid taxes from rich people by amping up IRS enforcement. I don't care much about the fact that some of the estimates for revenue collection were a little crazy, but even putting that aside Pino has a point. Using the CBO estimates that were used to score the initiative, here's how we're doing:
The $1.3 billion figure comes from a Treasury Department press release today. It only goes through August, but since the fiscal year ends in four weeks I doubt it's going to change much. We're not collecting a fraction of what CBO estimated.
Of course, there are multiple possible reasons for this. The two most obvious are (a) the estimates were always fantasy, and (b) it's taken way longer to start up the program than anyone planned. Both of these are perfectly plausible. It's going to be another year or two before we really know.
I am a state auditor and I am involved in training. Thinking you could get auditors trained for these complex tax situations and get cases wrapped that quickly was wildly optimistic. I can't comment on the overall numbers for how much they want to bring in but it just takes time to train people to do this. And it's a tight job market for auditors, not many people getting accounting degrees and people who know it well enough to audit are in short supply. Significant private demand and often with less onerous travel requirements and better pay.
What tzimiskes said -- auditing is not fast. And I think IRS is pretty accommodating on payment terms, so maybe that end is sluggish too?
Are they behind? Or as Abramoff alleged, they understand the wealthy have lobbied bulletproof tax exemptions, from the best congress money can buy.
Option #3 is that the CBO estimated that threat of increased enforcement action causes people to pay their taxes in full or just cheat less, which brings in revenue that isn't captured in the statistics cited by the Treasury Department.
One would think that if Treasury could make such an assertion of greater compliance, they would have.
So these perhaps optimistic CBO projections for the benefit of the expanded auditing are an order of magnitude lower than Kevin’s definitely optimistic projections for Trump’s Tariffs?-)
I always thought the idea that more IRS agents would equal lots of money from the ultra wealthy, to be flawed.
IF you want to go after the ultra wealthy, then you need VERY skilled tax attorneys a tier one CPA's, not new IRS agents. It is very difficult to defeat, say, a Kirkland and Ellis tax partner and a PWC partner, with a couple more IRS agents.
The ultra wealthy hire folks who make a TON of money, for being extremely skilled in operating in the grey zone. The IRS just can pay anything close to what the private sector: thus, there is a big skill level difference on these complex matters.
Meaning, MOST ultra wealthy are not complete tax cheats. Rather, they are overly aggressive, basically wrong, but the ultra wealthy want to avoid prison: they retain SOME augment why one, might, see the matter their way.
"The IRS just can pay anything close to what the private sector:"
I think you meant "The IRS just can't pay anything close to what the private sector pays:"
emjayay - thank you for the correction.
Leaving aside any confirmed realization of potential gains from increased auditing of wealthy taxpayers, the IRS had been starved of funds intentionally to the detriment of the system. Most democrats support this view and most republicans dispute it. Providing estimates with any degree of plausibility aims at public support, and it seems that was achieved. Plausible reasons for a shortfall should also serve.
C'est-à-dire, by design...
Compliance with various laws is optional now. Trump and the republicans have demonstrated this conclusively. It’s over. If I fail to report $100 of interest income on my silly savings account, the IRS will be all over it. 😠 we’re all such fools.
Auditing your or definitely my (standard deduction, pretty simple) income taxes at both the state and federal level is done routinely by computer. They have all the facts already. The math is simple. They could easily just give you a figure and you could check off OK or Not OK, like it seems other countries do. It probably costs about 1¢ an audit once the system is rolling. I've gotten notices a couple months later about some purported mistake or omission after doing everything correctly (I thought) and using an online service. I just pay it.
Auditing even a "small" business not to mention some rich guy's (investor/business side or Wall Streeter) return has got to cost thousands of dollars and for a lot of them tens of thousands of dollars.
The CBO estimates are based upon prior impacts to repayment.
But we're in a situation where the IRS remains under-funded and with a Congress and Court that doesn't support their attempts to push audits.
$1.3 billion is a lot of money, this is a massive success.
Dont fall for the trap of discussing this as a failure.
According to a WaPo story about this a few months ago, they are currently only going after the low hanging fruit, rich people who haven't filed or have delinquent taxes.