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The IRS is really obsessed with waiters and their tips. (Hey, you gotta make up for Hunter’s shortfall somewhere.)
In its Tax Gap studies, the IRS estimates that it gets 99% of what its due on regular wages, where taxes are withheld and reported to both the IRS and the taxpayer on a W-2, but just 55% of what it’s owed on tips (the same percentage it figures it collects from self-employed sole proprietors)…
Over the last three decades, the IRS has launched a series of programs that encourage employers to voluntarily calculate, report and collect taxes on a certain level of tips in exchange for protection from tip audits for themselves and their tipped employees. Except that’s not working great either. A 2018 study by the Treasury Inspector General for Tax Administration estimated that 30% of employers with tip agreements in place were underreporting. Tens of billions in annual taxes are at stake; TIGTA notes that the IRS itself estimated in 2006 that 10% of the individual tax gap comes from unreported tips.
Now the IRS wants to get in on the point-of-sale tipping action too. It hopes to modernize its data collection, and more effectively shift the burden for reporting tips to employers by using POS, time and attendance systems, and electronic payments data collected by employers.
Even while the IRS is cracking down on waiters, it’s engaging in the usual equity theater by accusing itself of racism.
Black taxpayers are audited at higher rates than other racial groups, an internal IRS investigation has confirmed.
“While there is a need for further research, our initial findings support the conclusion that black taxpayers may be audited at higher rates than would be expected given their share of the population,” IRS Commissioner Daniel Werfel told lawmakers.
In a letter to the Senate Finance Committee on Monday, Werfel said the agency would review its audit algorithms for specific anti-poverty tax credits to look for and address any racial biases.
“We are dedicating significant resources to quickly evaluating the extent to which IRS’s exam priorities and automated processes, and the data available to the IRS for use in exam selection, contribute to this disparity,” Werfel said in the letter.
Significant resources!
The actual paper this is based on has all sorts of issues with it, like not actually knowing if the people being audited are black.
the IRS does not systematically collect data on taxpayer race, either directly via tax returns or indirectly via merging tax data with administrative data on race from other agencies (Bearer-Friend, 2019). Instead, we rely on a BIFSG approach to estimate the probability that a taxpayer is Black (and non-Hispanic) based on the first name, last name, and location of the taxpayer.
So the IRS is apparently racially biased even though it doesn’t track race. If it doesn’t know if the people are black, then what is the basis for the bias? Racist algorithms, apparently.
Rather than measuring audit rates by races, this guesstimates whether someone is black based on their name and where they live, and then compares it to everyone else who is assumed to be non-black.
This isn’t how you produce any kind of reliable results.
Furthermore, it means that it isn’t comparing black people and everyone else, it compares black people who fit a certain kind of cliche, with certain kinds of statistically black names living in the ghetto. If you’re a middle-class black person living in a mixed area, you’re probably counted as non-black.
Reminds me what happened years ago in New Jersey when the State Police were accused of racism. The complaint from the democrat legislator’s was that Black drivers were ticketed for speeding on the highways and interstates considerably more than any other race. The Superintendent defended his trooper’s stating that all the tickets were issued using Radar and it was impossible for the officer to see the skin color of the drivers because they were to far away when their speed was clocked.
Hoisted by their own Petard 🙂
“Driving while black,” they called it. After that somebody did a study using radar and cameras. It turned out that not only were black drivers on those highways more likely to speed, they were also the fastest speeders. Now empirical data is racist and white supremacist.
Well, as Ibram Henry Rogers (a.k.a. Ibram X Kendi instructs us, everything is racist. So why not the IRS and its computers?
Of course, because RACISM! Where’s my victimhood?
The Internal Robbery Service is starting to unravel under Biden the Blunder
The “culprit” that leads to audits is undoubtedly “Earned Income Tax Credit”.
I’ve been aware of Al Sharpton’s antics for at least 50 years. Al used to be a fat disgusting black man. Now, Al is a disgusting skinny black man, The more things change the more they stay the same.
If you believe there’s a single federal agency that doesn’t track race, you’re as high as Hunter Biden.
When an individual or organization accuses themselves of racism, you can count on their remedy to be racist.
“…55% of what it’s owed on tips (the same percentage it figures it collects from self-employed sole proprietors)…” – yea, servers, the rich.
“Racist algorithms, apparently.” – The ones that flag people with lots of high end purchases (>$10K, currently, though the IRS/democrat party is trying to drop it to >$500) and spending without anywhere near the declared income to pay for it. Gangbangers, drug dealers, robbers, looters, burglars, shoplifters, it just might impact thug and flashmob culture more than most.
The IRS field office looking into my affairs has informed me that my file has been misplaced and a $500 per day penalty has been imposed till it’s located.