Most people have already paid their taxes and just have to file some paperwork confirming it. Many people have overpaid and if they don't fill out that paperwork, the government gets extra money. The IRS isn't going to care much then.
If you owe a small amount of money (probably the most likely case) they are going to care, but it's just not worth their while to deal too much with it. By small amount of money, I mean like $100. At that point, they'll want you to pay it, but it might cost them more to get you to pay it than the $100. Having a staffer spend 3 hours dealing with you would probably wipe out that $100. So, they'll take measures to make you pay, but they aren't going to waste too much effort.
If you're underpaying your taxes by a good deal, they'll make your life hell if you decide to brush them off.
The IRS operates similarly to how you'd expect - some things are worth their time, others aren't. Yeah, there are always humorous stories about someone getting a bill for less than a dollar, but overall the IRS wants to spend its time chasing the money. That means going after the egregious violators who are rich because those are easy to spot and have the most benefit to them. Going after someone earning $50k who forgot to report $30 worth of interest income on one of their bank accounts just isn't worth it.
I just got audited for my 05-06 taxes over a discrepancy of less than $200 (for which they were proven wrong anyway). I was 19 at the time and made a total of about $4k that year. Its frustrating that the government will spend my tax money wasting their time (and mine) this way.
Even if it's not technically worth it, they may do some amount of going after tiny infractions in order to "send a message." Their focus on efficiency or patriotism seems to vary with administrations, and it might be too early to determine how it's going to shake out under the current administration.
I noticed a potential "loophole" in interest income this year. If it's less than $10 from a single institution, you don't need to report it. In fact, they will not even issue a 1099. I called my bank and they confirmed that I don't need to do anything.
So, in theory, you could have 100 bank accounts each with $9.99 interest and not pay any taxes.
But then again, maybe having 100 bank accounts would automatically trigger an audit.
then again, maybe having 100 bank accounts would automatically trigger an audit
Don't you have to mention your Social Security number every time you open a bank account? Yes, I think having 100 different bank accounts would get attention from some government agency, perhaps the Department of Treasury office that tracks money-laundering.
I know someone who got hit with fines for owing less than $50, so it's probably better not to take the chance (she ended up paying over $100 in penalties in addition to the money she owed).
The fear that they instill in others from the expectation that they will be audited if they cheat or mess up is worth more to them than the actual taxes collected.
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It depends.
Most people have already paid their taxes and just have to file some paperwork confirming it. Many people have overpaid and if they don't fill out that paperwork, the government gets extra money. The IRS isn't going to care much then.
If you owe a small amount of money (probably the most likely case) they are going to care, but it's just not worth their while to deal too much with it. By small amount of money, I mean like $100. At that point, they'll want you to pay it, but it might cost them more to get you to pay it than the $100. Having a staffer spend 3 hours dealing with you would probably wipe out that $100. So, they'll take measures to make you pay, but they aren't going to waste too much effort.
If you're underpaying your taxes by a good deal, they'll make your life hell if you decide to brush them off.
The IRS operates similarly to how you'd expect - some things are worth their time, others aren't. Yeah, there are always humorous stories about someone getting a bill for less than a dollar, but overall the IRS wants to spend its time chasing the money. That means going after the egregious violators who are rich because those are easy to spot and have the most benefit to them. Going after someone earning $50k who forgot to report $30 worth of interest income on one of their bank accounts just isn't worth it.
I just got audited for my 05-06 taxes over a discrepancy of less than $200 (for which they were proven wrong anyway). I was 19 at the time and made a total of about $4k that year. Its frustrating that the government will spend my tax money wasting their time (and mine) this way.
Even if it's not technically worth it, they may do some amount of going after tiny infractions in order to "send a message." Their focus on efficiency or patriotism seems to vary with administrations, and it might be too early to determine how it's going to shake out under the current administration.
Oh, definitely. Like, they aren't going to send a message over $3, but they will probably expend some effort when it gets closer to being profitable.
I noticed a potential "loophole" in interest income this year. If it's less than $10 from a single institution, you don't need to report it. In fact, they will not even issue a 1099. I called my bank and they confirmed that I don't need to do anything.
So, in theory, you could have 100 bank accounts each with $9.99 interest and not pay any taxes.
But then again, maybe having 100 bank accounts would automatically trigger an audit.
then again, maybe having 100 bank accounts would automatically trigger an audit
Don't you have to mention your Social Security number every time you open a bank account? Yes, I think having 100 different bank accounts would get attention from some government agency, perhaps the Department of Treasury office that tracks money-laundering.
$999 whole dollars! Every year!!! And not giving %25-35% to the Feds. Zomg that is so totally worth it.
Can you share the URL to the relevant part in the tax code that provides for this?
I know someone who got hit with fines for owing less than $50, so it's probably better not to take the chance (she ended up paying over $100 in penalties in addition to the money she owed).
The fear that they instill in others from the expectation that they will be audited if they cheat or mess up is worth more to them than the actual taxes collected.