I guess good government is just too much to ask for:
The IRS has frozen refunds for hundreds of thousands of low-income taxpayers without telling them they’re being investigated for tax fraud or giving them a chance to defend themselves, the IRS taxpayer advocate said Tuesday.
In a blistering report to Congress, Taxpayer Advocate Nina Olson said complaints about unpaid tax refunds have soared more than 400% since 2002. Sixty-six percent of those who complained were entitled to a full refund, an investigation by her office found. An additional 14% were determined to be eligible for a partial refund, Olson says.
The issue raises “serious questions” about the protection of taxpayer rights and might constitute a violation of due process of law, Olson charged in her report.
More than three-quarters of the returns investigated were for low-income families who claimed the earned income tax credit, a program that provides tax refunds for the working poor. Delayed refunds cause a “significant hardship” for these taxpayers, the report said.
The taxpayer advocate’s office estimates up to 1.6 million refunds have been frozen over the past five years. Once a taxpayer’s refund is frozen, the IRS will automatically freeze future refund claims until the taxpayer files an undisclosed number of “legitimate” returns, the taxpayer advocate report says.
The IRS doesn’t notify taxpayers that their returns are being investigated for fraud. And even if taxpayers inquire about their refunds, IRS employees are usually barred from providing any information until six months after the taxpayer’s inquiry, Olson says.
They won’t tell you they are investigating you, they won’t give you your money back, they won’t let you defend yourself, they won’t respond for 6 months when you do try to defend yourself, and they freeze all future refunds until they decide you deserve to get them back.
The mafia has more shame than your government.
*** Update ***
More here from Ezra, who looks at this NY Times piece.
Steve
This reminds me of the old “welfare queen” debate. Yes, it’s outrageous if some poor person claims the EITC when they’re not entitled, or if they drive a nice car when they claim to need public assistance. But in the big picture, it’s a sign of messed-up priorities for the government to be spending its time chasing down those penny-ante violators. And in this case, we now see that the vast majority of people investigated for claiming the EITC were, in fact, doing nothing wrong.
Tax fraud by the rich costs us a dozen times as much as tax fraud by the poor, and you could realize the same revenue by catching one corporate tax cheat as you would by nailing a hundred people for falsely claiming the EITC. But those big corporations give big money to politicians, and you wouldn’t want to piss off Big Business by sending the message that you’re cracking down on taxes.
Doctor Gonzo
Well, tax fraud by low-income filers costs $9 billion a year, while fraud from everybody else, including high-income tax filers and corporations, costs $340 billion a year. So it’s obvious which group this administration is going to go after, right? Right?
srv
It’s all the governments money. They’re just letting you borrow it.
Mr Furious
It’s a good thing for the throwable objects in my office that I don’t have time to go read that article right now.
[grrrrrrrrrrr…fury building…]
Zifnab
But prosecuting rich people is so much harder than prosecuting poor people. Rich people can afford to hire lawyers to defend them, and judges to rule for them. Poor people just kinda sit there and suck it.
Steve
There’s a lot of truth to that. You could put away a thousand guys for possessing a baggie of pot for what it cost to prosecute one OJ trial.
Lines
Shouldn’t we have Don Surber or company here to tell us how the numbers from 2005-2006 disagree with everything in the article and that the number of poor in 2006 is drastically reduced, therefore they don’t even need that money now that they arn’t poor this year?
erez
Maybe that’s true… but, if you spend the money and resources to prosecute just a few of the wealthy, I imagine you’ll scare plenty plenty more into compliance… that, in turn, will bring in more revenue. In effect, by being more vigilant in expending the resources necessary to prosecute a few of the privileged tax evaders, the IRS will reduce the number of people willing to risk it.
Paul Wartenberg
The Republicans have been screaming for years that there’s a Class War going on. Problem is the Poor classes have been losing all the battles.
Richard Bottoms
Mmm. How long have your guys been in charge? Five years? But somehow it must be Bill Clinton’s fault anyway so why get exercised about it.
Don’t expect this administration to go after the people with the money anythime soon. Besides, they’re against faggots getting married or having domestic partnership rights so what else could be more important?
Pooh
From the LA Times story
Ok, am I the only one who wants the scoop on 2 fraudulent returns totalling $1.8 billion? You wanna talk about balls. Or am I reading the story wrong?
bill
Kevin Drum touches on this here: link
note the ny times piece on the IRS releasing figures for audits on corporations and the rich. very telling in contrast with how they are treating these people.
The Other Steve
I believe these were tax returns for Bill Gates and Warren Buffet. These were $1 billion refunds for their mortgage interest deduction. :-)
Seriously, this doesn’t surprise me. The REpublicans want to abolish the EITC, but are too cowardly to go after the bill itself… so instead they’re bottling it up in administrative overhead.
Steve
Keep in mind the difference between “returns” and “refunds.” These weren’t people who tried to evade $1.8 billion in refunds, these were people who actually claimed the government owed them a $1.8 billion refund.
Obviously, no one has $1.8 billion withheld from their paycheck. I assume that this involved corporations overpaying their estimated tax or something of the sort. On the other hand, it wouldn’t surprise me at all if this simply involved some crazy guy who submitted a return asking for $1.8 billion back from the government, and the IRS is counting it as a fraudulent return which they “detected.”
jaime
Oh those liberals and their “class warfare”. Don’t these lucky duckies know how lucky they are to be poor and not have the terrible burden of having to trickle down and keep America’s GDP motor running?
Mr.Ortiz
Wasn’t this George Bush’s stated policy during the last presidential debates? Something to the effect of “there’s no point raising taxes on the rich, because they hire accountants to find loopholes.” Follow that line of thinking and you end up at “we should steal money from the poor, because they can’t afford lawyers to get it back.”
Faux News
We go to class war with the IRS we have, not the IRS we wish we had.
Richard Bottoms
BTW, who controlls Congress & the White House. I forget???
ppGaz
Must be Andrei’s.
Alpha Omega
I think I will forget about my taxes this year and I will call this guy to defend me in court in the years to come for my forgetfullness!!!
http://www.paynoincometax.com
BlogReeder
The IRS isn’t part of the administration. If by administration you mean Bush. It’s acting on behalf of the congress. The branch of government the constitution has given the power to collect taxes. Democrats are just as responsible.
Steve
If you don’t know that the IRS is part of the Executive Branch then you need a remedial civics course.
Likewise, if you don’t know that the job of the Executive Branch is to enforce the laws then you might as well learn. It’s not some revelation that the IRS enforces the tax code, but guess what, nowhere in the tax code does it say the IRS should do any of the things this post is about.
Kimmitt
This is totally due to the fact that Michael Moore is fat.
RonB
Im not sure this is entirely fair…sure, maybe there are some shameless ‘fiscal conservatives’ who want to abolish it, but by and large, Republicans over the years have nurtured the EITC, in addition to having created it.
It’s a smart program and you will find few pols with the gall to oppose it out loud.
RonB
BTW, John, I must say I am surprised to see you upset about this. Being a libertarian, wouldn’t you be opposed to this sort of redistributive system in the first place?
BlogReeder
So I guess that blows my ruse to get you to believe Congress is in charge of the military too? Yea, I’ve had several remedial courses by helping my kids. The tone of Dr Gonzo’s post needed a crazed Bush supporter to balance it out. I thought if I worded it just right… Can’t get anything past youse guys though. Personally I’ve always thought of the IRS as part of the entrenched government. How many bureaucrats are replaced with each administration change? There are always horror stories concerning the IRS.
BIRDZILLA
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