Chapter 1: What recent changes have been made to the IRS?
Tomorrow, your taxes are due in the United States. It's a task that most people generally hate, but love to complain about online.
Let me tell you something. I just paid my taxes today and never before in my life have I ever wanted to commit tax fraud as badly as I do right now.
I went and paid my taxes today. I'm going to cry. I'm going to cry. And the agency in charge of collecting these taxes, the Internal Revenue Service, isn't very popular either.
Today the IRS went into my bank account and took $700 from me. How do you actually do your taxes? The IRS literally will, like, they know exactly on the penny how much I made. They can't send me a paper with just how much I owe.
But taxes are important. Your income taxes, along with all the other money the government collects, fund most of the federal budget. These days, though, the IRS is pretty battered.
There are fewer people doing tax enforcement now. It's the very public shrinking of the IRS that we've seen over the past year.
That's our colleague Richard Rubin. He covers tax policy for The Wall Street Journal.
We know that the IRS has fewer people, particularly on auditors, revenue agents, the people who do the civil tax enforcement. There are fewer of them than there were a year ago, 15 months ago when the Trump administration took office. And with such a shrunken down IRS... People are feeling like it might be easier to get away with things than they used to. Tax lawyers saw that directly.
They saw cases get dropped. They saw cases get passed between agents. And taxpayers, you know, read the news and see that, you know, there's thousands fewer people doing enforcement at the IRS. There's clearly a perception building that it may be easier to cheat, to skirt, to cut corners than it used to be a year or two ago.
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Chapter 2: How has the reduction in IRS staff affected tax enforcement?
Back then, There was very minimal e-filing. In the 90s, people would go and like line up at the post office and they would like, you know, you'd like hand off your return to the person standing outside the post office. And there was this, you know, rush to physically mail things on April 15th.
Here's an ad that shows just how many people it took to process a paper return back then.
The IRS is currently testing for seasonal data transcribers, tax examiners, and clerks. You can receive paid training, 10% bonus for evening... And so that's the biggest like change of what the IRS looks like.
Now as opposed to then.
The other thing the IRS does is enforcement for when people maybe don't pay their taxes. The agency does this in a few different ways. Can you just walk me through what are the three things that the IRS does when it comes to enforcement?
Yeah, the three main buckets would be audits, collections, and criminal.
Audits, collections, and criminal investigations. Audits are when the IRS needs to verify documentation on a tax return, like if a business says it received a million dollars but the paperwork doesn't match, or when they check whether you actually qualified for that tax break you claimed.
You're going to be looking for some evidence of those credit card transactions and the cash that makes up the difference. You're going to be looking for documents that back up the mileage that the business owner drove, the equipment that they purchased, all those kinds of things. The audit is, did you do this right? Did you follow the law?
Collections are called in when someone owes money to the IRS. Usually, the agency starts by sending letters, but it'll also send revenue officers to businesses to collect what they owe. And then there's arguably the most exciting job in the IRS, IRS Criminal Investigations, or the IRS-CI, which employs special agents to investigate crimes like tax fraud. Here's a recruiting video from 2023.
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