OT Why does the IRS need $80 billion? Just look at its cafeteria.

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They have gotten hammered for so long. It really is a miracle they have been able to do what they have.

Glad to see them get some investment back into their agency.

Don't cheat on your taxes. Easy as that.
 
tlongII said:
Pay site.
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Inside the IRS ‘Pipeline’ used to process tax returns
Mailroom

The Pipeline starts with a machine (“SCAMPS”) that opens and sorts tax returns that arrived by mail.

The technology dates to the 1970s — though this particular machine was updated in the ’90s to make it Y2K-compliant. The company that once manufactured SCAMPS no longer exists; when the machine breaks down, an IRS employee fabricates replacement parts on-site. “Only one guy knows how to fix the thing,” says John Desselle, a mailroom department manager.

The newest part of the setup is this computer — it uses Windows XP, an operating system from 2001.

Irregular-sized letters are opened by IRS employees with the help of the “Nibbler,” a buzz-saw-like device.

Extraction

The next step is to sort different elements of each return (separating checks from 1040 forms, for example) and place each in separate batches.

This is done at special half-elliptical desks — called “Tingle Tables” — designed to make the manual sorting process more efficient.

Tingle Tables were once considered cutting-edge technology — in 1962, when an IRS employee named James Tingle built the first prototype in his backyard. This is the first of many, many times a return will be unstapled and restapled within these walls.

Candling

Then comes “candling.” At this stage,an employee tears open three sides of every envelope and holds it up to a special lightbox to make sure nothing was accidentally left inside. Sam Cruz, a 12-year IRS employee who works in candling, said he finds something left behind maybe two or three times for every thousand envelopes.

Payment perfection

If a check from a taxpayer is missing a crucial piece of information (such as a Social Security number), it can’t be deposited.

An employee on the “payment perfection” team researches the missing information and writes the info on (or “perfects”) the check.

Document perfection

A separate “document perfection” team combs through every single paper return with a red pen to make sure nothing is missing from the document, such as a signature or W-2.

Also, tax forms change slightly from year to year. If a taxpayer sends a previous year’s form, an IRS employee must renumber each line with a red pen so that the entries match the current year’s tax form. Otherwise, the computer system can’t process the return correctly, since only one year’s model of each form can be stored in the system at a time.

Returns with any defects are “flagged” with colored paper to indicate a problem.

Numbering

Here, returns get stamped with a unique identifying number. Before this stage, the IRS has no way to track a specific return.

That doesn’t mean taxpayers can now track their returns, though. “We need something like the Pizza Hut app, where people can log in and see they’re making your pizza, and now it’s in the oven, now it’s on its way,” says Ana B. Sanchez-Navarro, a tax examiner. “Yeah, we need that for tax returns.”

Finger armor, for employees trying to avoid paper cuts.

Data conversion

Technology to scan text into a computer has been commercially available since the 1970s and has greatly improved in the past decade. Yet at the IRS, data from paper returns is still entered manually.

That is, an IRS employee types in each number that the agency might be interested in.

If the computer accepts the return, it gets saved to the master file. At this point, any refunds that are due get generated, usually within 10 days.

But sometimes the system won’t accept the return … in which case it goes to …

Error resolution

Maybe the taxpayer made a math mistake. Or maybe an IRS employee typed in a 3 instead of a 4. The computer flags it, and an employee has to go in and fix the error.

Sometimes there was no actual error at all, but the ancient IT system can’t handle all the information in a return.

For example, maybe a taxpayer listed five dependents. Totally legal. But the IRS database, by default, does not have storage capacity for more than four. The computer reports an error, and an employee must manually add the fifth to the file.

See that green computer interface? It dates to the disco era. The system runs on COBOL, an antiquated programming language few coders still know.

Correspondence

The IRS sends out letters to taxpayers letting them know about issues with their returns — math errors, missing signatures, etc.

Taxpayers then write back (only by mail or fax, remember).

Document retention

Fully processed returns stick around the Austin Service Center for nine to 10 months in normal times (they’ve stayed longer during covid). Then they’re sent to Federal Records Centers to be archived for six years.
 
That is a preposterous comment by her. Of course there will be audits on folks making under 400k. File your taxes right and you won't be audited. If you are, you can substantiate what you claimed and get a no change.

But, again. This seems like GOP scare tactics. The IRS was so underfunded with hiring freezes for so long with an aging workforce, this will hopefully get then to pre-hiring freeze levels.
 
SlyPokerCat said:
That is a preposterous comment by her. Of course there will be audits on folks making under 400k. File your taxes right and you won't be audited. If you are, you can substantiate what you claimed and get a no change.

But, again. This seems like GOP scare tactics. The IRS was so underfunded with hiring freezes for so long with an aging workforce, this will hopefully get then to pre-hiring freeze levels.
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She didn't say there would be no audits under $400k. She said no additional audits, and that audit rates would not increase for people making under $400k
 
Phatguysrule said:
She didn't say there would be no audits under $400k. She said no additional audits, and that audit rates would not increase for people making under $400k
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That's preposterous. If they are fully funded and fully staffed again, of course there will be more audits. Someone making under 400k that is filing incorrectly, should be audited so they fix their behavior going forward.
 
SlyPokerDog said:
Never trust a cat to do your taxes.
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That's one thing cats are well versed in.

allegra-taxes-e1455621222219.jpg
 
SlyPokerCat said:
That's preposterous. If they are fully funded and fully staffed again, of course there will be more audits. Someone making under 400k that is filing incorrectly, should be audited so they fix their behavior going forward.
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I think that happens. I do not think we need more audits for those people. It should certainly not be a point of emphasis until we get all of the big ticket filings first.

And we're a LONG way from that.

For the sub $400k filings we just need to streamline the process so tax fraud is obvious. You'll never make money auditing people who make under $400k. Far better off making it more streamlined.
 
Phatguysrule said:
I think that happens. I do not think we need morw audits. It should certainly not be a point of emphasis until we get all of the big ticket filings first.

And we're a LONG way from that.
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There are two separate groups. One that does individuals and one that does corporations.

Corporate audits are way different on that they take an outrageous amount of time and the adjustments are more based on feelings and grey areas.

Individual audits are done with john doe and their preparer that tries to tell the IRS auditor how much they suck. Much easier to present specific reasonings.

These two tax areas are VERY different. It is not reasonable to think folks can be absolute experts in both areas.

They both need to be focused on. The amount of incorrectly filed returns from the TurboTax phenomenon is a problem.

Also, if you only focus on auditing one type of group, thats what got the IRS in hot water before and defunded. You can never operate targeting any group.
 
SlyPokerCat said:
There are two separate groups. One that does individuals and one that does corporations.

Corporate audits are way different on that they take an outrageous amount of time and the adjustments are more based on feelings and grey areas.

Individual audits are done with john doe and their preparer that tries to tell the IRS auditor how much they suck. Much easier to present specific reasonings.

These two tax areas are VERY different. It is not reasonable to think folks can be absolute experts in both areas.

They both need to be focused on. The amount of incorrectly filed returns from the TurboTax phenomenon is a problem.

Also, if you only focus on auditing one type of group, thats what got the IRS in hot water before and defunded. You can never operate targeting any group.
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For most individuals it's insane that we even need TurboTax. Just streamline it so it's not needed. The IRS already knows hkw much most people owe. Just let them log on and confirm it on the IRS website.

NONE of those people should need audited, unless they are running an illegal business.

Right there, you'd almost eliminate the need for audits under $400k.

Auditing those small amounts is just a waste of resources. As is making the tax code complicated enough that people need TurboTax.

Just fix the problem rather than throwing more people at adding to the problem.
 
Phatguysrule said:
For most individuals it's insane that we even need TurboTax. Just streamline it so it's not needed. The IRS already knows how much most people owe. Just let them log on and confirm it on the IRS website.

NONE of those people should need audited, unless they are running an illegal business.

Right there, you'd almost eliminate the need for audits under $400k.

Auditing those small amounts is just a waste of resources. As is making the tax code complicated enough that people need TurboTax.

Just fix the problem rather than throwing more people at adding to the problem.
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Folks under 400k could be there because they filed the return themselves and took every deduction they wanted to (even if they are tvs, cars, utility expenses that are all personal).

You agree with that behavior?

The IRS has no idea what deductions someone is entitled to and if they are claiming the right deductions. They also have no way to track cash transactions.

Not a waste of resources for positions that bring a substantial return on investment.
 
SlyPokerCat said:
Folks under 400k could be there because they filed the return themselves and took every deduction they wanted to (even if they are tvs, cars, utility expenses that are all personal).

You agree with that behavior?

The IRS has no idea what deductions someone is entitled to and if they are claiming the right deductions. They also have no way to track cash transactions.

Not a waste of resources for positions that bring a substantial return on investment.
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You wouldn't have the option of taking all of those deductions unless you appealed the IRS suggested amount.

At that point you would have to justify the deductions with documentation. As long as the documentation is legit you get the deduction.

No audit needed.

Otherwise, yeah, I'm fine with that behavior. If we want to get the money that is owed to the government for taxes we need to improve the system. Not spend more mony trying to punish people for taking advantage of deductions we dangle in front of their face. That's insane.
 
Phatguysrule said:
For most individuals it's insane that we even need TurboTax. Just streamline it so it's not needed. The IRS already knows hkw much most people owe. Just let them log on and confirm it on the IRS website.

NONE of those people should need audited, unless they are running an illegal business.

Right there, you'd almost eliminate the need for audits under $400k.

Auditing those small amounts is just a waste of resources. As is making the tax code complicated enough that people need TurboTax.

Just fix the problem rather than throwing more people at adding to the problem.
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Gonna love all the working from home deductions!
 
Phatguysrule said:
You wouldn't have the option of taking all of those deductions unless you appealed the IRS suggested amount.

At that point you would have to justify the deductions with documentation. As long as the documentation is legit you get the deduction.

No audit needed.

Otherwise, yeah, I'm fine with that behavior. If we want to get the money that is owed to the government for taxes we need to improve the system. Not spend more mony trying to punish people for taking advantage of deductions we dangle in front of their face. That's insane.
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That isn't dangled in their face. People go against the rules. All the time. Because they hope to get away with it or they have no business preparing their own returns.

To accept behavior that is gaming the system and writing off their brand new jet skis they use for personal reasons is laughable.

You would still need auditors for your solution to having people claim more in deductions. That's what an audit is. Reviewing documentation. Having interviews. Requesting documents.

And you didn't respond to how the IRS tracks cash because they have all the info they apparently need.
 
SlyPokerCat said:
That isn't dangled in their face. People go against the rules. All the time. Because they hope to get away with it or they have no business preparing their own returns.

To accept behavior that is gaming the system and writing off their brand new jet skis they use for personal reasons is laughable.

You would still need auditors for your solution to having people claim more in deductions. That's what an audit is. Reviewing documentation. Having interviews. Requesting documents.

And you didn't respond to how the IRS tracks cash because they have all the info they apparently need.
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Don't make a system that encourages people to game it. Simple as that.

And auditors can't efficiently track cash either.

Nobody suggested getting rid of auditors. Just not ramping up enforcement on the middle class. It's not needed, and is a waste of resources.

If we want to improve efficiency in that sector there are much more effective ways than more audits.

Most other countries handle this far better than the US.
 
Phatguysrule said:
Don't make a system that encourages people to game it. Simple as that.

And auditors can't efficiently track cash either.
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Auditors can and often do. They aren't perfect but there are multiple methods to figure out unreported cash.

It doesn't encourage people to game it. Thats what auditors are for so that they can catch people gaming it. Individuals game it out of lack of knowledge or just because they think they can get away with it.

If you want to scrap deductions altogether good luck. Not. Gonna. Happen.
 
SlyPokerCat said:
Auditors can and often do. They aren't perfect but there are multiple methods to figure out unreported cash.

It doesn't encourage people to game it. Thats what auditors are for so that they can catch people gaming it. Individuals game it out of lack of knowledge or just because they think they can get away with it.

If you want to scrap deductions altogether good luck. Not. Gonna. Happen.
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Yeah, nobody suggesting cutting back on audits or getting rid of deductions.

There is a place that we need to increase audits, and it's not on the poor (who are audited about 10x more than everybody else, and SHOULD be audited less), and it's not even the middle class (who are having enough trouble staying middle class as it is). There has been a very clear drop off on audits of millionaires and above, and THAT'S where the audit focus needs to be.

figure3.png


The gains made by auditing millionaires more should be put toward making tax filing for the poor as easy as approving the amount of their return. A simple web page that shows your income and what you are projected to get back based on what you've earned thus far would do it, and would eliminate the need to almost EVER audit the poor.
 
You guys sure do seem to love your large, establishment government agencies don't you? Because they just care so deeply about you.
 
Phatguysrule said:
Yeah, nobody suggesting cutting back on audits or getting rid of deductions.

There is a place that we need to increase audits, and it's not on the poor (who are audited about 10x more than everybody else, and SHOULD be audited less), and it's not even the middle class (who are having enough trouble staying middle class as it is). There has been a very clear drop off on audits of millionaires and above, and THAT'S where the audit focus needs to be.

figure3.png


The gains made by auditing millionaires more should be put toward making tax filing for the poor as easy as approving the amount of their return. A simple web page that shows your income and what you are projected to get back based on what you've earned thus far would do it, and would eliminate the need to almost EVER audit the poor.
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The IRS has been hammered for a decade with hiring freezes. That would contribute to your graph. They have had numerous folks with major knowledge retiring.

People with 400k are not "the poor." Neither are people with 100k.

Contrary to what you may believe, you can't just audit someone and come up with a bill. They have to have filed incorrectly/claimed erroneous deductions/under reported income. Many high income folks have their own audits done on their records. Are they wrong sometimes? Absolutely. Is there a tax gap of money they could find? Absolutely. Do individuals who file TurboTax mess up? Absolutely. There are scores provided to returns that spit out based on the likelihood it needs review. It is often updated based on review feedback.
 
SlyPokerCat said:
The IRS has been hammered for a decade with hiring freezes. That would contribute to your graph. They have had numerous folks with major knowledge retiring.

People with 400k are not "the poor."
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Didn't claim they were. Not sure why you're going there.

SlyPokerCat said:
Neither are people with 100k.
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Again, I didn't say they were, and I don't know why you said this.

SlyPokerCat said:
Contrary to what you may believe, you can't just audit someone and come up with a bill. They have to have filed incorrectly/claimed erroneous deductions/under reported income. Many high income folks have their own audits done on their records. Are they wrong sometimes? Absolutely. Is there a tax gap of money they could find? Absolutely. Do individuals who file TurboTax mess up? Absolutely. There are scores provided to returns that spit out based on the likelihood it needs review. It is often updated based on review feedback.
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Not sure what this has to do with anything I said.
 
You audit enough middle class people to put some fear into all the rest that they might get audited if they cheat. You don't audit middle-class people for the money, because on average, it probably costs more to do the audit than the amount of taxes recovered.

You audit rich people to get the money. And also to put the fear into the rest of the rich people.

barfo
 
Phatguysrule said:
Didn't claim they were. Not sure why you're going there.

Again, I didn't say they were, and I don't know why you said this.


Not sure what this has to do with anything I said.
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Auditing more millionaires just because I want to audit more millionaires doesn't fix the problem.

There is almost zero reason to audit someone that is a millionaire that has one w-2 for 2 million dollars. And thats all their return is.

There are plenty of reasons to audit someone who had 200k in taxable income, but they claimed $5 million in expenses that look off.
 
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