Authored by Mark Gilman via The Epoch Times (emphasis ours),
Additional staffing and a post-pandemic focus on tax fraud have led to the Internal Revenue Service (IRS) and its U.S. Sentencing Commission (USSC) prosecuting 53 percent more tax offenders in the past two years, according to a December report from Scholaroo. According to its research, in a state-by-state breakdown, those attempting fraud against the IRS in the states of Pennsylvania, Rhode Island, and Wyoming had the greatest chance of getting caught.
But according to Scholaroo's research, to be in the IRS crosshairs, you must make some serious money. “The IRS suggests that approximately 75 percent of tax fraud is committed mainly by individuals in the middle-income range,” the Scholaroo data team shared in a written statement to The Epoch Times. “However, the highest incidence of evasion is observed among the wealthiest 5 percent, with an income of at least $200,000. In this elite group, taxpayers hide more than 20 percent of their income from the tax authorities.”
Scholaroo has made its mark as an online college scholarship cloud platform and has recently gotten involved in the data research business. The report comes as some taxpayers have been concerned about the purpose of the Biden administration's plan to add 30,000 IRS employees over the next two years as part of an $80 billion funding mandate from the Inflation Reduction Act passed in the summer of 2022.
Initially, the concern was that the additional IRS employees would target independent contractors and small-business owners. But Robert Nassau, a law professor and director of the Low Income Taxpayer Clinic at Syracuse University, told The Epoch Times that making less-than-honest claims on tax forms will still get you in trouble no matter your income level.
“Those independent contractors who get audited must have a stamp on their head that says audit me. It’s complete BS. The wealthier people who are going to get audited are engaged in more sophisticated planning,” he said. “Occasionally, I have seen business expense audits, and I’ll tell you some of those people frankly are idiots. They haven’t embraced the saying ‘the pigs get fat and the hog gets slaughtered.’ Obviously, you’re going to get audited if you show $41,000 in income and $75,000 in write-offs four years in a row.”
Scholaroo's U.S. Tax Evasion report, examined tax evasion behavior among Americans and found that the average loss in these crimes in fiscal year 2022 was $301,009.
According to a November press release from the IRS, its Criminal Investigation team initiated over 2,550 criminal investigations, getting a 90.6 percent conviction rate on cases accepted for prosecution. The agency continues to make statements assuring American taxpayers that audit rates will stay the same for taxpayers earning less than $400,000 annually, representing the top 2 percent of income earners. They claim that their 2,077 special agents spent 70 percent of their time investigating tax-related crimes, including tax evasion and tax fraud, in 2022, while nearly a third of their time was devoted to money laundering and drug trafficking cases.
Mark Luscombe, principal North American analyst for tax and accounting for Wolters Kluwer Tax & Accounting, says that even though the IRS is becoming more aggressive and adding to its ranks to bring down those with high-level tax crimes, the agency’s increased staffing is a far cry from what they had over a decade ago.
“If you look at the IRS criminal division headcount in 2010, it was 40,000. In 2023, it’s up from 2022, but only a total of 3,138,” he said to The Epoch Times, but added that most of the people being added now are working in customer service, not tax fraud convictions. “The IRS claims that between 2022 and 2023, they made a significant increase in having people available to answer phones, picking up calls from 15 percent of the time to 85 percent, but I think it's one thing to answer the phone and another to answer the questions taxpayers have. They’re still inexperienced and not answering the questions.”
In a Pew Research poll conducted earlier this year about how Americans feel about federal agencies, the IRS was the least popular of the 16 mentioned in the survey. More than half (51 percent) had an unfavorable opinion of the IRS and only 42 percent said they had a favorable view of the agency.
“I don't think they’re the evil empire, but they’re still trying to get the right answers. From everything you’ve read, there’s billions not being collected right now, and I feel like the American perception of the IRS’s role is just not right,” Mr. Nassau said.