Tax Notes

TAX NOTES….As Max points out, tax fraud by the working poor is estimated at no more than $9 billion annually while tax fraud by the not-so-poor weighs in at about $340 billion. Nonetheless, Republicans in Congress have long insisted that the IRS focus a disproportionate amount of attention on policing requests for the Earned Income Tax Credit, a tax refund that’s available exclusively to the working poor.

Still, at least honest poor people can get their EITC refunds, right? Think again:

Tax refunds sought by hundreds of thousands of poor Americans have been frozen and their returns labeled fraudulent, blocking refunds for years to come, the Internal Revenue Service’s taxpayer advocate told Congress today.

The taxpayers, whose average income was $13,000, were not told that they were suspected of fraud, the advocate said in her annual report to Congress. The advocate, Nina Olson, said her staff sampled suspected returns and found that, at most, one in five was questionable.

….Ms. Olson said that 66 percent of those taxpayers who pressed for their refunds were found to be due all the money they sought or even more than they asked for.

They weren’t even told they were suspected of fraud. Nice. And how about the rich? How’s the IRS treating them these days? Good luck finding out:

Records showing how thoroughly the Internal Revenue Service audits big corporations and the rich, and how much it discounts the additional taxes assessed after audits, are being withheld from the public despite a 1976 court order requiring their disclosure, according to a legal motion filed last week in federal court in Seattle.

For decades, the information was given at no charge to a professor at Syracuse University, Susan B. Long, who made it available on the Internet at trac.syr.edu, with tools for people to conduct their own analyses.

….The agency has no plans to release the information, [IRS spokesman Frank] Keith said Friday. He argued that Professor Long’s latest requests went far beyond the order, covering costly detailed information that could inadvertently allow the identification of specific taxpayers.

Professor Long said that was false. “There is no change in what we have asked for, and they know it,” she said.

It’s good to be rich. Especially under a Republican administration.