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It is easier for the IRS to target poor people

On Behalf of | Oct 9, 2019 | Tax Audits

Georgia residents may be interested to learn that the IRS has been targeting lower income taxpayers with audits. Part of the reason why the IRS uses this strategy is because they say it is easier and something that they can accomplish using less skilled employees.

Audits that are designed to look into low-income people who claim they earned income tax credit only cost around $150. These audits are seen as an effective way to use the IRS’s resources as it only takes around five hours to carry out per return.

It can take the IRS between 61 and 251 hours to audit the return of someone who has made $10 million or more. Additionally, when auditing the return of a person who has a number of assets and investments, the IRS needs to use more experienced employees. They cannot simply shift employees who are trained to audit simpler returns over to auditing more complex ones. Another challenge the IRS faces is that auditors who have the experience to audit more complicated returns are in high demand, so they will only work for the IRS for a relatively short period of time before they move on to other opportunities.

There is a movement among some to focus on auditing wealthier individuals. This may require the IRS to evaluate trends that are seen in higher-income returns. It is easier to go after individuals for earned income tax credit violations because there are clear guidelines as to what a qualifying child means. There are residency questions, age questions and relation questions that can be easily answered.

A tax attorney may be able to represent clients who have income tax disputes. They may provide counsel and support to clients at every stage of the dispute, starting with the audit through the administrative appeal all the way to the Court of Federal Claims. An attorney may be able to work with a client who is looking for IRS and state tax debt relief.