They can recover a lot more by looking into people who report low incomes.
replies(3):
there are income taxes
and then there are taxes on income, where income in this context is a category of earning types, which has subcategories passive income and earned income. but not to be confused with capital gains tax, which is under the umbrella of income taxes, after capital gains taxes have been computed.
it is very easy to reduce income taxes (are you still following) despite high passive or earned income. so yeah they should probably look into them
I’ve had 7 figures of earned income but had negative adjusted gross income, the President even sent me a stimulus check because my reported income was so low. I just blamed the White House and Congress for not differentiating and moved on.
I would argue the same though, and I was in my post. The observation when filing with my CPAs was that the IRS knows very little especially between entity types that have their own filings
Even the CPAs generally arent the same. The ones doing retirement dont know the non profit stuff, and vice versa, the ones doing partnership forms dont know the other sections. The IRS technically has everything but its in different departments
but I can see the disincentive for the IRS, even if they disagree with one layer of deductions, another takes its place and simply doesnt carry forward. So the IRS could still wind up with nothing.