I remember reading a while ago that every $1 that goes into IRS to fund tax fraud cases yielded $1.2 in return. When that's the case, it seems like a no-brainer that it should be well-funded.
Tax Evasion is around 40 times the IRS budget and gets worse with lowered enforcement as the cost / benifit heavy favors evasion.
I think the person you're replying to means "violated the tax code in a minor and non-malicious way" whereas you mean "literally did not violate the tax code at all".
That's for a reasonably typical (and by no means aggressive tax positioned) MFJ + 2 kids return.
Considering that anyone who actually looked at the tax packet should have figured out immediately that the only fault was a mistranscription in the code, they must have wasted quite a bit of money to gain back ultimately nothing.
Thankfully I had records and an accountant, but a very stressful situation to find yourself in.
A notice is not an audit. If you're being audited, you'll know. The IRS examiner auditing you will make sure you know who he/she is, and they will be your primary contact with the agency for several months.
I owned a business that was randomly selected for an NRP audit a few years back. Spent 35 grand on CPAs and defense. After 4 months of an "up to the elbow" exam of our books, received this from the IRS:
"After our audit, we are making the following changes to your return:
"
...that was it. Nothing. No changes. Not even embarrassment or "lol just doing my job, them's the breaks kid" attitude. A total goat rodeo, the entire process. Imagine having to justify every cent on the books in OR out -- for a $2MM revenue business -- 3 years after the return was filed. Seriously impossible. Worse, just before the above letter, we were offered a settlement offer from the IRS for $20K -- to make them just go away. We declined.
Spending more, ideally, should also mean spending on simplification. Making it easier for both people and businesses to pay their due, and costlier not to. Reducing the externalities, not increasing them.
> The result is huge losses for the government. Business owners don’t pay $125 billion in taxes each year that they owe, according to I.R.S. estimates. That’s enough to fund the Departments of State, Energy and Homeland Security, with the National Aeronautics and Space Administration tossed in for good measure. Unlike wage earners who have their income separately reported to the I.R.S., business owners are often on the honor system.
You're comparing revenue on a per-producer basis to a much different number. There are support staff, programmers, benefits, buildings, etc. which all must be paid for too.
For what it's worth, this article from 2011 noting a 4:1 ROI. I'm not sure where 1.2 came from, but I was unable to find it after searching.
https://www.cbpp.org/research/federal-tax/irs-funding-cuts-c...
_ The Treasury estimates, for example, that every additional $1 invested in IRS tax enforcement beyond current levels would yield $4 in increased revenue
https://www.mckinsey.com/industries/public-sector/our-insigh...
There are evil implications should we judge the effectiveness of tax collectors purely on the basis of cost/gain. We don't want a situation where the IRS only ever goes after easy cases. The people who hide the most money have, by definition, the resources to hide it well. If you want the IRS to go after the big fish, they need the budget to do so. We don't want them resorting to drift-net tactics, only scooping up the easy/small fish.
However, you have a good point about going after big fish, because those are the ones where the gov't is losing the most money, most likely. Some drift-net tactics are OK, where you use some random spot-checking to make sure the smaller fry aren't cheating badly and scare the rest of them into being honest, but don't expend a lot of resources on it because you won't get back the money you spend. But yes, I agree, going after the big fish should be the primary strategy, even if it is much more difficult.
I take it you have never lived in a "police state". I have (middle east). Deterrence is how law works in a modern society. We cannot catch everyone and so must rely on a bit of fear. Fear of being caught it why we obey laws with which we disagree. I personally may think the speed limit on a road is ridiculously low. But that limit wasn't created by the police. I obey it because I don't want to pay a fine, not because I live in a police state. In a police state rules don't matter. I'd get the speeding ticket regardless of how fast or slow I was driving.
A real police state is one where the police both enforce and write the rules, where they are no longer under the control of legitimate government. The IRS is nowhere near that. It remains totally subservient to the elected government. Its budget comes from an external source. Allow it to self-fund and that leash is gone.
I think there's also a sense of fairness. I wouldn't like obeying a law if I knew everybody else is ignoring it and getting away with it. I'd be happier following it if I thought everybody else was. You wouldn't want to be the only bottlenose dolphin that didn't back-date your stock options.
This metric can be used only as the performance measurement not it's predictor.