Abolish the IRS? Now that would be a change!

that is because you are looking at different scenarios here and how their tax returns reflect whether or not they are meeting the rules.

Let's look at the "poor" first. These tax returns are either a singular Sch. C or wage earner with one or more dependents, single, etc. What will get audited either by the TPP or the AUR is looking at ETIC, income, and additional child tax credit. An example of a return being audited in that group is a Schedule C filer with $12000 in gross receipts, no deductions, a NAICS code of 99999, which means other, and a business that suggests a hair salon of some type. Their business address is the same as the home address, an apartment, and with three kids, obtain the maximum EITC and additional child tax credit. So, TPP would get involved to see if the income is actually legit based on the round numbers.

Let's look at the "middle class" tax return. Most of these are mixed with a huge wage, or W2 earner and maybe a Schedule C, E, or F in play. The Schedule E will have pass-through income/loss from a 1120S or 1065. Or the business may be a Schedule C with a loss. There may be some itemized deductions and two kids involved. Child Tax Credit will be in play, and their tax will be at or near zero because of the loss on Schedule C. And let's say this is the second year of Schedule C. On Schedule C, gross receipts were $105,000 with expenses totaling $135,000, including depreciation being claimed. On the Schedule C expenses, there is $45000 in travel expenses, $35000 in meals, some contract labor expenses, an office expense even though the address of the business and the taxpayer are the same, and a large home office duction where 45% is claimed as a home office. Even though this is a "simple" return, the DIF score is so high that it is selected for audit and he did this on Tax Software by themselves with no accountant or other tax professional doing it. It is possible a ghost tax preparer did this, but can't be sure. Since the two significant items of Travel and meals are the main culprits, the Revenue Agent will inspect the return to determine if there is anything else. The Revenue Agent will confirm the gross receipts and as long as information returns do not exceed the income reported on the return, only a simple bank analysis would siffice for income verification. Another option here would be the business is the 1120S or 1065 with the same amount of income and expenses. That too would be looked at. The Revenue Agent would make sure that the 1040 return was filed and that there are no significant issues in mismatched information return reporting. Finally, the one filling out the return will be either H&R Block or a small CPA firm.

Another possibility is 1120, which is stand-alone. And that too can be looked at. It is a business owned by a middle-class taxpayer,. but only the business is looked and audited based on teh books. In this example, bookkeeping software is used and there may be a tax professional involved who filled out the tax return.

All of these are "simple" returns to the IRS even though some complex laws are used, like IRC 163 and 164 for instance. For the "rich," you are looking at a far different return with income, tax-exempt income, investment income and losses, Schedule E with multiple pass-through entities, a Schedule A with complex gift giving such as property or conservation easements, foreign bank accounts, multiple properties with some in LLC and some being rented with residual income, and so forth. They will even have claimed some of the lesser known tax credits on their returns such as the various general business credits at play, maybe having an unclaimed Household Employment tax at play, foreign bank accounts, foreign business interests, and a few other items. The scope is far and wide, and it does more than one Revenue Agent to thoroughly go through this type of tax return with a lot of complexity on the returns here. Their wealth is in the millions, if not tens of millions, and they have a team of lawyers and CPAs in a very large CPA Firm like Moss Adams for instance. The way the high-income group looks at these returns is that they look at everything and determine which items are significant and the rest has to be verified. This is also is where most of the noncompliance is because they are telling their CPAs that they don't want to pay the tax and are smart enough to manipulate how the books are reported in which they pay as little tax as possible. These taxpayers routinely have their CPA firms on retainer and use them with every new business venture they dive into unlike the middle class and the poor only go to tax preparers or do their taxes once a year. The rest of the year, they are just trying to survive or just to make money for their family and that is it.

 

What Vmao is talking about is the Paypal, Remit, Cashapp, and other online money transfers companies in issuing the information return if the amount is $600 or more. Who will not get that type of return is if you are using it to send money to family here or abroad and make the reason so. These have been delayed, the last i heard. But it simply means that if people are paying for your goods and services and is $600 or more, and you don't meet an exception, then you will get that information return.

But if there is an "audit" on this, it is not the average taxpayer, it is PayPal, Remit, Cashapp, etc that will get audited and possiblely penalized for not providing the information return when required per IRC 6013.

 

It is a regulation change per the requirements under IRC 6013. Has nothing to do with audits here.

 

I would say abolish income tax. It just causes our government to be bloated and pointless. Higher and pay for the most worthless frivolous nonsense.

The government isnt a philanthropist, a charity or anything like that.

I think it's power and scope should be limited to the founding.

That means all three letter agencies gone. FBI, NSA, CIA, ATF, DEA, EPA, AND I'm sure there's more I can't think of they should all be abolished these are not elected officials and have nothing to do with democracy shouldn't exist.

 

What we should do is drastically cut spending. All of these little three letter bureaucracies that are just fancy words for fascist should be eliminated. Very single one of these people was taken off the payroll how much tax money would that save if all those stupid little pet projects were put to an end how much will we not waste on that.

 

Ohh it's not for auditing purposes.

Why don't you link me to the relevant 6013 area so I can check that, since I can't seem to find it.

 

Okay.

Here are the code and regulations.

https://www.law.cornell.edu/uscode/text/26/6011

https://www.law.cornell.edu/cfr/text/26/1.6011-1

https://www.law.cornell.edu/cfr/text/26/1.6041-1

https://www.law.cornell.edu/uscode/text/26/6041

https://www.irs.gov/newsroom/irs-an...or-third-party-payment-platforms-forms-1099-k

 

I think conservatives who are in Congress should do the same thing in their own personal lives, then I would be on board. let's say 25% of all expenditures based on 2022 spending of their personal lives. Is that a go including you?

 

It's not a tax increase if the consumption tax doesn't target essential goods like food and rent. The poor will be able to pay almost no tax and the rich will have to pay the tax they should be because the tax deductions that solely benefits them will be gone.

 

Just kidding, I know that's not true.

It's entirely for auditing purposes, and I have no idea what imaginary area of 6013 your talking about.

It's for 1099-K submissions, which is all about auditing your income.

https://www.taxpayeradvocate.irs.go...a transition,beginning before January 1, 2023.

Companies such as Venmo, PayPal, and Cash App, known as Third-Party Settlement Organizations (TPSOs), are required to provide annual Forms 1099-K to the IRS and taxpayers. In March 2021, Congress modified the requirements for reporting these transactions by lowering the minimum reporting threshold to any amount over $600 for one or more transactions beginning in 2022. Prior to the change, companies were required to report transactions for a payee if (1) they exceeded $20,000 and (2) the number of transactions with that payee exceeded 200

 

To keep the revenues the same and to be "tax neutral," then the rate would increase to something like 50%. The 17% that the current bill is proposing is wishful thinking unless they want to eliminate about 3/4 of current government expenditures. Second, in the past proposals, it was 23% with the exception of meat, bread, milk, eggs, and flour. Investments, such as stocks, bonds, and savings accounts would also be exempt, but not checking accounts or wages or nonemployee compensation. What would be considered is things like farm aid, for instance.

 

this is a strange comment. I don't know what personal lives have to do with government wasting money.

If I had 85,000 in debt I would agree. But since I'm smarter than the government with money they need to fix it first.

 

We should probably end about 499/500ths of government spending remember the Pentagon just lost trillions of dollars that they can't account for.

How much does that blunder or corruption cost the average person.

If we divide a national by every man woman and child in the country that's 85,000 a person. So the government is so stupid and so reckless with money that a baby born 3 weeks ago it's an 85,000 worth of debt.

 

It is not for auditing, it is for reporting. People who receive information returns usually report information returns on their tax returns if they receive such information returns by mail or by electronic means. If the person does not receive the information returns, then it is highly likely that the AUR will catch it and send a letter.

You have no idea what you know here. YOu are using politics to speculate on something you know nothing about. And doing your tax return on tax software is not my idea for someone who knows the code. The links I provided proved the regulation change. But that change is delayed, most likely these companies are still needing time. It happened when the 1099-K was first instituted during a Republican-held Congress and Obama was President.

 

So who would you start first, defense or DHS?

 

LoL that doesn't say what you want it to, and the first couple links mean nothing.

Prior to the change, TPSO's like Paypal only reported transactions to the IRS that were A) Over 20,000 AND B) More than 200 transactions.

Now Paypal will report ALL transactions on a 1099-K over $600 to the IRS.

What other possible reason would they have other than making sure they can't audit your yard sale to make sure it was reported?

 

Oh it's not for auditing, it's for reporting.

How do they decide if they're going to audit you.

We've already established that it's the low income earners they audit the most.

 

The biggest debt people have is mortgage debt. The second biggest is credit card debt. Then we have varous loans from personal to car to business/farm. Until personal lives get better at financing and not have debt, the government will always have debt. It was that way from day one and even before when the Continental Congress owed money and refused to pay for food and clothes and arms. If it wasn't for the belief in the rebellion and not the almighty guinea, we became in debt while we fought our revolutionary war.

So, in other words, it is either do as I do and follow me, or not at all.

 

The first couple of links deal with the requirements to file information returns. Information returns are 1099 and W2s, among others. There are various 1099 forms.

the second deal specifically with the $600 threshold.

Finally, you are not understanding how the code works and how it applies.

 

That has to be one of the weakest excuses for government incompetence I have ever seen.

Maybe a certain percentage of them should be shooting heroin and homeless while we're at it.

 

Oh I'm understanding it perfectly.

They changed TPSO's from $20k and 200 transactions to $600 for one transaction so they could make sure they squeeze all the juice out of poor people.

 

Various ways. For in-person audits, it is all based on the DIF score. The DIF score is a score based on 200 plus factors. Higher the score, the higher the chance you may be audited.

AUR is an information return mismatch. Basically, it has to be sent if the tax increase or decrease is $200 or more threshold.

there are program audits, but those happen every other year or so and is to update the programming on how the DIF score is calculated.

Most CPAs who do taxes or are involved in taxes or audits know this. It is kinda of an open secret in the industry.

 

then why did we increase the debt by $8 trillion during one term of the Trump Administration? Remember, in 2017, it was greater than $900 Billion and the same in 2018, and about $750Billion in 2019. In 2020, it was close to $4 trillion, mostly because of Covid.

Debt is not the problem here, debt management is. Even in business, debt is always constant and how a business manages that debt is would define how well the business does in the future. So, if you want to apply business rules to government, then you are not going to get rid of debt. You have to think long term, not short term for political gain. That is absolutely rediculous.

 

Funny how all that high speed math ends in this.

All those high earners in major cities must have perfect returns every year.

 

To be quite honest, the worse tax evaders are the lawyers, at least in my experience.