Wow, they used to audit 1/3rd of all filers in $10 mil/year bracket? I guess at that level, there aren't too many people with W2 form.

> For those making less than $25,000, the audit rate fell 0.02% (to .69%) from 2017 to 2018.

Frankly, for it to be significantly above 0 seems grossly inefficient. I would assume that average rate of return for public money spent on auditing a millionaire is... a fair bit higher than that spent auditing someone earning 25k.

If we stopped auditing those with AGIs less than $25,000, then all I’d have to do is take enough deductions (retirement contributions, unreimbursed business expenses, medical expenses, loss from property sales, tuition, etc) to get my AGI below $25,000 and I’d never have to worry about being audited.

Ever.

One way to significantly reduce your taxes is to lower your AGI. So if anything, the lower AGIs would be a good place to start looking for tax cheats.

What else in life works that way?

Since you can claim self-employment income without documentation, regular audits are necessary to prove actual income. It's also common for people to claim children who don't truly qualify; again, this would only be provable through actual audits.

In contrast, the average middle-class taxpayer tends to have both less built-in incentive to game the system and less flexibility (as most of their income will be documented to the IRS).

To defend the IRS a bit more: this program is in some ways an administrative model. Taxpayers don't need to prove any need to claim the credit. There aren't multiple rounds of paperwork, and, if you aren't audited, the only interfacing you have to do with the bureaucracy is in submitting your tax return, and you'll have money deposited in your bank account in a week. It may be the most effective welfare program, even accounting for audits (many of which are triggered by obvious red flags) in its ratio of benefits to "hoops needed to jump through."

Millionaires have access to lawyers and tax accountants and are more difficult to pin down.

A poor person can easily be bullied to handing everything over to the IRS -- probably with just a few mean letters.

Whereas rich people have complicated forms, requiring more man-hours and actual human eyeballs to get involved.

That's why it happens. Not sure why you disagree, these are facts.

Pretty much only form letters should be used for low income people.

The poor can’t afford to do anything but not pay tax, the rich can pay for all kinds of tricks to hide their money from the government while paying some paltry, but still seemingly legit, portion of tax.

It's critical that taxes be enforced uniformly and in every case.

That's not a strong argument against audits. I'd just take that to mean the IRS should mainly audit people or businesses based by how large the underreporting was.

I hope their internal models take into account the cost of an audit which finds nothing, both to the IRS themselves, but also to the audited and their family.

In fact, to make incentives align, maybe they should even pay those who are audited and end up owing nothing.