We can still appreciate progress. And this is progress.
Although if the IRS is gonna audit when I under pay, they technically already know how much I owe. Why not just tell me? Reckon it's since people also over pay, and there's no refunds for doing that.
They didn't stop the IRS from telling us what they know and what they expect, and if it's accurate and you don't dispute their information, you pay the bill and attest you have no other income.
I wouldn't care if I over pay. After paying someone hundreds in fees to do my taxes I don't usually get much of any money back. I'd rather let the government keep $400 than give it to a tax company that probably won't actually help me in an audit.
As it is now, the IRS has a pretty good idea of what you owe, but offers virtually no help figuring it out. If you're wrong, they can come after you with punitive fees years later. In my case, they told me my employer had sent them an updated form with a corrected date on it 2 years earlier - which my employer neglected to tell me. I never knew about the mistake and my accountant assumed it was correct too. So not only did I owe $40,000 in back taxes and interest, my request to not pay fines because it was an honest mistake was denied, and I also had to pay $6,000 in fines. Because of a mistake they knew about and didn't tell me about for 2 years, that EVEN A FUCKING PROFESSIONAL TAX ACCOUNTANT MISSED.
But no - they don't know in advance who will have additional deductions so why bother with any of it for the 90% that don't? People are already going to, and often paying for, private services that they implicitly trust to tell them what they owe. Why can't the literal authority on the matter tell you first?
It's one thing for them not to know what is owed. But surely they know what's already been paid? No amount of errors on a W-2 or 1099 or whatever will make me eligible to receive a refund of taxes I never paid.
This is a common misconception. The mission of the IRS is to collect taxes and enforce the tax code. They don't make the rules and cannot make you pay more than you legally owe. An audit can just as well prove that you paid too much tax as you paid too little. It just so happens that there are far more people looking to skirt their full tax liability then people who mistakenly overpay. I did the latter once and got a check in the mail a few months later for the overage.
An IRS audit isn’t because you underpaid the amount they think you owe — for that they usually send you a form saying, in their own special language, “hey I think you may not have included this XYZ income in your tax return, we think you owe an extra $ABC”.
Instead, it’s because they want to make sure you were truthful in what you reported, and may have some reason to believe you were not. Often, they don’t know how much you owe in this case.
I'm curious what mistake happened that you overpaid so much and the government caught it? I always assumed that the IRS relies on the tax return unless it explicitly audits you, but I think my assumption is now out of date.
This is FUD. I've interacted with the IRS over $50k and it was perfectly fine. They send me a letter with contact details and you just provide them the information.
If you do owe shit, you just go to the IRS.gov site and pay the dumb bill, and the site is perfectly functional and not a PITA to use.
I have no idea why people misrepresent the IRS so much
Errors are fine, you don't go to prison for an error. You get audited, the IRS takes a look, they tell you how much you actually owed, plus interest. I actually don't mind the additional scrutiny this will bring to dark corners of the tax code. The reality is we owe it today, and if we realize it, there may be a bigger push to simplify the tax code down (to be clear, this does not mean reduce tax burden, but just reduce complexity).
Let's take this down a level. If your friend owes you $200, and paid you back $150 because of an honest mistake, does that mean your friend no longer owes you $50 because, oops? Of course not. This is no different at the scale of the IRS.
The IRS once sent me a letter because I had slightly underpaid my taxes where they informed me of the amount I had underpaid and assessed a 10% penalty.... for a grand total of ~$8.
They weren't jerks about it but they do seem to have a weird attention to detail for certain matters.
IRS has happily kept thousands of dollars of my money when I filed incorrectly. A few years later I went to the IRS office for an unrelated matter and I asked the agent “can you look up year XXXX and see if I was owed a refund?” Agent looks up and says yup, you were owed a large refund. Too late to get it back now, but we strongly encourage you to correctly refile your taxes for that year.
So they had done my taxes and knew they owed me money and, basically, stole my money. If I owed them money they would have immediately hit me with a bill or an audit. And on top of it they wanted me to refile my taxes “correctly” after they had already done my taxes.
This “do your thing and we’ll do it, too, and we’ll see if you got it wrong” is one of the most stressful aspects of American bureaucracy.
This argument comes up a lot and it's an astounding oversimplification and gross misunderstanding of how taxes work in the US. The IRS does not know how much you owe until you file. They may have a rough approximation, but they absolutely don't know anything close enough to be able to bill you.
As a funny anecdote, I know one person who did so much wrong with his taxes for a high value personal business that he received a check from the IRS each of the 3 times he was audited after the business folded. I don't know the specifics, but apparently, his business was some sort of an anomaly and the IRS was sure that he underpaid his taxes for a number of the years the business was running. He was sort of clueless about his expenses, so when the IRS audited, they ended up finding a whole lot of expenses that he hadn't properly accounted for and when he refiled, he got a rebate check. This happened 3 times before the IRS finally accepted that his taxes were correct.
Although if the IRS is gonna audit when I under pay, they technically already know how much I owe. Why not just tell me? Reckon it's since people also over pay, and there's no refunds for doing that.
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