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Expecting any sort of consistency is a fool's errand. The left vacillating on being pro-DHS/FBI during trump abut anti-DHS/FBI during Bush. Or pro-IRS during Obama. Both sides do it, so it's not just to pick on the left. The leopard does not care whose face it is that gets eaten. I think these organizations have too much power, and that bias is secondary to this.
A solution could be transparency, but if people knew how the the algorithms worked, like what triggers an audit, they would be gamed and rendered infective.
My priors are that most cases of ‘tax fraud’ are poor, low-IQ people trying to slide one over with techniques they learned by word of mouth from other poor, low-IQ people, and not from carefully designing strategies based on available algorithmic data. I know this because I hear poor, low IQ(or at least uneducated; these are not quite the same thing, but lack of education probably severely hampers the ability to understand accounting algorithms even for those with high IQ in ways that it doesn’t necessarily effect other things) people quite openly discussing this every year in February and march. I doubt that will be strongly effected by algorithms for targeting potentially fishy returns except in the form of third hand rumours that will get them to be temporarily more honest.
See also: Sovereign citizens going to court and claiming it has no jurisdiction for some bizzare and inane reason.
Well yeah, but poor and not very well educated people doing things that would technically be tax fraud if they got caught is way more widespread than that, and also pays off often enough for most success stories to be true.
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Yeah this pretty much torpedoes the popular media/pundit narrative of how it's just rich people who try to not pay taxes
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How would they game a fraud detection algorithm? By not committing fraud?
The classic example would be the old 10,000USD deposit at a bank triggering a reporting requirement, those reports focusing attention and investigation into one's finances and also slowing things on the customers end. Depositing 5,000USD and then later depositing 5,000USD does not trigger those reports and sometime between 1970 and 1986 there may have been common advice to do just that for convenience's sake. Of course, specifically depositing money in that way with the intent to avoid that sort of detection is now a federal felony. Often times many of the detection algorithms that have to be run by people end up as straight forward rules of if-this then-that so avoiding triggering detection in the common case might not be that difficult.
"Structuring" (breaking up a deposit into smaller deposits to avoid reporting) being a crime infuriates me. This is another aspect of the war on drugs seeping into financial regulation and corrupting the rules. In another horrifying example, the IRS is trying to find someone $2.1 million for failing to file a disclosure form. https://reason.com/2023/01/23/supreme-court-declines-case-challenging-excessive-irs-penalties/ No crimes were alleged, it wasn't drug money, the IRS just wants to know if you have a foreign bank account with more than $10k in it and if you don't file the form, they can take half the money in it. It's terrible.
I'm annoyed at the reporting requirements too, but the mirror image of money laundering is tax evasion, and governments are very motivated to prevent tax evasion by any means possible, up to and including totalitarian monitoring of all money flows.
With respect to the specific requirements to report foreign accounts: the reporting requirement is clearly stated in tax instructions and up to a few years ago the IRS was remarkably lax about requiring people (with less than $50,000 in their accounts) to report on time. The form for reporting foreign accounts even included checkboxes where one could state one's "reason for reporting late": "I forgot" and "I didn't know I had to" were valid options.
Granted, I'm still a bit confused by the reporting requirements and process for large wire transfers.
Absolutely. That motivation is why any hope of a non-totalitarian end state requires strong pushback on this kind of thing. "Money laundering" is the "think of the children" of financial regulation. If one could report drug sales as "miscellaneous goods" there would be no reason to go through all of the hoops of washing the money. If all the government cared about was tax evasion, it would allow an amnesty category to report any income one didn't want to specify. Instead, the tax department has been roped into the criminal enforcement department and it makes for ridiculous regulations that shouldn't apply to 90% of the population.
You can report drug dealing as miscellaneous income. The problem is you're not allowed to deduct the costs of doing illegal business, so it's really not practical; you'd have to pay full income tax on the gross.
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bit of a tangent, but in light of MMT is this even true anymore?
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