The IRS plans to crack down on 1,600 millionaires to collect millions of dollars in back taxes

Oh I'm well aware of why it's a thing. It's a great system for both sides, private companies get to charge people for doing rudimentary math and the government gets more power / more employees directly beholden to it.

If they were serious about saving money they'd both go after tax cheats and streamline the IRS. They're not, they are interested in looking like they're protecting the little guy while costing that same little guy hundreds of dollars and more than a couple hours every year.

And as a bonus the Dems and Republicans can each use it to fingerpoint at each other so nobody actually looks into solving it, as you so kindly demonstrate.

 

No doubt. But when the headache is needled for over a year on something that should have been a 5 minute fax…

I love my accountant and all. But even he felt bad knowing the thing was pure idiocy.

 

This is all true. However the thread started out about an attempt to go after high end tax cheats yet some here seem to oppose that effort.

 

Not a single person has opposed going after a cheat. That is nonsense. This is what the idiots in Washington want you to believe.

Are there people trying to screw the system? Sure. But it is not a major thing. Some rich people absolutely get greedier and commit tax fraud. But very few do this. Because they know they have a great life and are blessed. What they do is take advantage of the ridiculous tax code. At the end of the day they will pay taxes they are legally required to pay. As most people are good people that don’t want to go to jail and instead pay their accountants a lot of money to make sure they are doing things right.

The issue is more on the left (right as well) do not want to address the real issue which is simplifying the code. Everyone wants the cheaters caught.

 

I don't think we'll ever see a simplified tax code. I don't see it as a left or right issue either. The people with the deep pockets don't want it. And I don't mean the rich. I mean the accounting lobby - and not just pointing the finger at CPAs and accounting firms. Don't forget about the tax prep software companies - TurboTax, TaxCut, etc. That is an entire industry built up on the fact that taxes are too complicated for the average person to figure it out. The software companies even give free access to those with lower incomes - part of a deal to keep their core business model intact.

The only person that benefits from a simplified tax code is the little guy, and nobody in Washington is representing those interests.

 

For the little company I ran we filed 2021 taxes and the return called for a $60,000 refund. After a number of months I received a form from the IRS wanting to know who I was with a bunch of questions to answer. In 30 years, I never had a form like this. I filled it out and sent it in.

A number of months later the IRS sent the same exact form and the guy now running the company filled it out and sent it in. They never sent the refund. The current manager called them, and they said the return has not yet been processed. This is the return from 2021 filed on time.

When he called the IRS person suggested just sending in the return again and start the process over. I think they just don’t want to give that large of a refund and they are stalling.

 

A family with two young children, making $120k, would pay about 5% federal income tax, or about $6000. This income is higher than the median family income with a family of 4.

 

It how would the IRS know what loopholes you plan on using?

 

IRS is fighting massive frauds for refunds and identity theft. This is commoner operating procedure.

 

There are some items in your post I want to dispel or try to explain.

1. The IRS is going after taxpayers with income of over $1m that have over $250k of back taxes. What does this mean? That means there was an assessment or dispute on prior year taxes. The taxpayers income would be subject to seizure under the tax law for unpaid taxes.

2. you noted “very few do this”. Right, 1,600 as noted in the IRS release. That’s what we are all discussing. What’s wrong with this?

3. simplifying the tax code. Remember in 2017 when Trump, Ryan, and Mnuchin held up a post card to file your taxes? That was BS.




The complexity of business transactions is exponentially growing and the tax law has to be written to cover it. Look at recent examples of crypto. Is it a currency, a commodity, or a capital asset? The tax law has to cover very complex financial transactions.

 

Trump absolutely did not simplify the code in a meaningful way. I said as much. On a side note he made it so more poor people did not pay taxes. Especially if they had kids.

That said. This thread just wreaks of envy. All for getting those who cheat the tax system. But most of this will be settled with accountants and lawyers getting paid. The tax code is too flipping complex. And that is the real issue.

 

The IRS is one of the most powerful entities in the US. At the same time it is one of the most inept entities in the US. The number of clients I assist who have ridiculous experiences with the IRS over the years is large. Complete stupidity in that organization. Maybe try to fix your staff and their inability to perform simple tasks before going after purported tax cheats?

 

the tax code is complex because business transactions are complex. Why is this myth of simplifying the tax code a thing.

 

They're incredibly backlogged. Our cpa had to file a petition on like a $1200 late fee on something from 2021. Every few months I get something in the mail saying they received it but need more time. Going on a year now

 

Most business transactions are not that complex. Sure crypto will definitely complicate things more. Don’t give businesses the reason and ability to move and make legal transactions that shelter money. Sure. Some big corporate stuff will remain complex. But at the end of the day corporations don’t pay taxes (they pass that cost to the consumer and yes are able to reduce the burden with different accounting tools). The code is way too complex. No need for it to be what it is. And both pubs and dems are the problem. This is a bipartisan issue that will not be fixed unfortunately.

 

I’m not discounting your personal experiences and truths running dental practices. Please understand that the range of complexity is wide and there have been some attempts to simplify for smaller business; however, we are grounded to a tax law that covers the most complicated to allow for as clear and concise guidance for businesses to make decisions.

 

That’s fine, but it’s been long enough now. They need to wrap it up and send the refund.

 

Maybe this is one of the reasons they have to increase hiring.

 

That might explain it. Thx.

Your mentioning a late fee reminded me that many years ago our business accountant advised me whenever I write to the IRS or any other tax agency to ask to drop a fee or penalty, I need to begin the letter with “There was never any intention to not pay the tax owed.” Those seem to be some kind of magic words, because every time the penalty was dropped.

 

Of course you want to expand govt.