Thread by @propublica

Happy Tax Season!
For years, ProPublica has reported on the games rich people pay to skirt their tax liability & the IRS' inability to do anything about it. (THREAD)

2/ Congressional Republicans began slashing the IRS budget in 2011, hobbling the agency's ability to pursue fraud allegations.

3/ By 2017, the IRS enforcement staff had been cut by a third, its criminal division brought about 25% fewer cases in which tax fraud was the primary crime, and audits had been nearly halved.

4/ Additionally, current and former IRS agents told us there was a push to close audits more quickly, leading to fewer records requests and interviews, and generally less-intensive audits.

propublica.org/article/after-…

5/ By 2018, millionaires were about 80% less likely to be audited than they were in 2011, meaning America's poorest were being audited at about the same rate as the top 1%.

propublica.org/article/irs-no…

6/ Between 2010-19, the IRS went from collecting around $28 billion/year from audits (adjusting for inflation) to only $11 billion, a drop of 61%. propublica.org/article/has-th…

7/ In 2009, the IRS formed a special team to unravel the complex tax-lowering strategies of America’s ultra-wealthy. But in the face of nearly limitless wealth, and opposition from Congress, it never stood a chance.

8/ Take, for example, the story of billionaire Georg Schaeffler, whom the IRS accused of hiding $5 billion in income. It said he owed $1.2 billion in taxes & penalties.

9/ Schaeffler's attorneys denied he owed any money, arguing the IRS misunderstood the tax issues involved. They complained to top IRS officials & challenged document requests. “Mr. Schaeffler always strives to comply with the complex U.S. tax code,” a rep said in a statement.

10/ After years of delays and challenges, the IRS all but abandoned pursuit of the $1.2 billion and said it would accept "tens of millions," according to sources.

The IRS declined to comment on this story.

propublica.org/article/ultraw…

11/ The IRS has faced similar issues when it takes on big corporations, where the size of the audits is often larger & the resources rallied against the agency are often more daunting.

12/ After Microsoft shifted $39+ billion in profits to Puerto Rico, where the territorial govt. gave it a tax rate of about 0%, the IRS tried to get tough, resulting in the agency's largest audit ever.

13/ The tech giant's attorneys argued Microsoft's Puerto Rican company “was a real business with real risks and was not a tax shelter," & that the IRS violated rules by bringing in expert outside attorneys to interview witnesses. Microsoft's tax consultants declined to comment.

14/ Microsoft fought back with every tool it could muster. The Chamber of Commerce, the nation's biggest lobbyist, and tech trade groups hired attorneys to make its case to IRS leaders and lawmakers.

15/ Soon, members of Congress, both Republicans and Democrats, were decrying the IRS’ tactics and introducing legislation to stop the IRS from ever taking similar steps again.

16/ By 2019, Microsoft and its allies had succeeded in changing the law, removing or limiting tools the IRS team had used against the company. The agency declined to comment.

propublica.org/article/the-ir…

17/ Last year, we reported on the IRS' efforts to collect as much as $9 billion in taxes from Facebook, a dispute that is still unresolved.

propublica.org/article/whos-a…

18/ These are only a handful of stories from our "Gutting the IRS" series, which is all available here:

propublica.org/series/gutting…