Finance

IRS Agents Are The Ideal Kind Of Law Enforcement: They Target The Rich And Don’t Shoot Black People

Rich people who underreport their income account for the vast majority of the taxes that are owed but unpaid in America.

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lot of money bagsFirst, let me hopefully preempt some hate mail here and emphasize I’m not anti-cop. My only brother is a cop, and even though we don’t agree on everything, I love the bastard. We need police officers to enforce our laws. It’s a tough job and, overall, cops do a lot of good things.

That being said, one can be pro law enforcement and still be against law enforcement disproportionately targeting minorities and arbitrarily shooting people. Nuance: it’s a good thing.

You know what kind of cops you don’t really have to worry about that sort of thing with, though? IRS agents. Although the Internal Revenue Service does arm some of its officials (specifically about 2,100 of them), it’s very rare for an IRS agent to shoot at anyone.

The most recent instance I was able to find of an IRS agent actually shooting someone was in 2010. That incident didn’t even have anything to do with enforcing tax obligations. It seems the agent was getting into her car to head to work when she was confronted by two would-be robbers, one of whom was pointing a 12-gauge shotgun at her. Rather than being victimized, she pulled out her .40 cal and shot both of them. What a champ (it’s fine, they both survived)!

So hey, one of the big problems with law enforcement in general over the years — that many of them seem to have an itchy trigger finger and especially so around minority suspects — doesn’t really seem to be a problem for IRS agents.

But what about their actual law enforcement obligations? Does the IRS discriminate in tax enforcement?

The IRS does not track the race of people it audits. However, it seems that past audit rates have been higher in predominantly minority counties as compared to predominately white ones. This is probably because of a holdover focus on misapplication of the earned-income tax credit, meaning poorer families (those earning less than $25,000) have recently faced a higher audit risk than anyone else.

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Yet, just looking at audit risk based on the raw number of audits is extremely misleading. An “audit” of someone who perhaps wrongfully claimed the EITC or miscalculated the proper EITC amount is not going to be an extensive undertaking. For people with a low income, and one source of income, a single IRS agent could churn through multiple, perhaps dozens, of such cases every day and determine whether EITC figures are right. It makes sense that by volume many more such cases would (and should) be processed. Also let’s keep in mind that there are way more poor people than rich people to begin with. The top 1% is, ya know, 1% of us.

Looking at things by dollar value probably makes a lot more sense because it takes months and a small army of agents to audit an individual like, say, Donald Trump. When you have a complicated business structure specifically designed to keep the IRS from collecting the appropriate amount of taxes and when the IRS is facing off against a bunch of expensive hired goons (lawyers and accountants), it makes sense that any one such audit would take a lot more time and effort than a number of smaller dollar-value audits. Given that there are fewer rich people to start with, that processing their audits takes much more time, and that much more is at stake in terms of dollar value in any given case, you should expect fewer audits of very rich people in numerical terms.

Rich people who underreport their income account for the vast majority of the taxes that are owed but unpaid in America. Most of the stepped-up IRS funding that was included in the Inflation Reduction Act is earmarked to specifically target rich tax cheats who are costing the U.S. an estimated $600 billion per year. The Treasury Department expects that the $80 billion in new funding for the IRS will allow the agency to recover at least two-thirds of what is going unpaid as enforcement capabilities are built up over the next 10 years. Sounds like a good investment to me.

You know what people like even less than having to pay their taxes? Having to pay their taxes while seeing way richer people cheat to avoid paying taxes. The GOP’s recent attacks against the IRS are going to play well with the looniest segments of their base, but I don’t see this gaining much traction with normal taxpayers who probably don’t sympathize all that much with major tax cheats regardless of income level.

Who says working for the IRS is a thankless job? They’re law enforcement officials who generally don’t shoot anyone and are increasingly focused on the big fish. Give ‘em a hand, people.

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Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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