You act like they're after the poor because they make more errors.

They're after the poor because they can't fight an audit and end up just accepting whatever the IRS comes up with. Just or not. I doubt they actually do commit more errors, the IRS just says they do and that's that.

>the IRS said, auditing poor taxpayers is a lot easier: The agency uses relatively low-level employees to audit returns for low-income taxpayers who claim the earned income tax credit. The audits — of which there were about 380,000 last year, accounting for 39% of the total the IRS conducted — are done by mail and don’t take too much staff time, either. They are “the most efficient use of available IRS examination resources,” Rettig’s report says.

>On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam. What’s more, the letter says, “the rate of attrition is significantly higher among these more experienced examiners.”

>When Natassia Smick, 28, filed her family’s taxes in January, she already had plans for the refund she and her husband expected to receive. Mainly, she wanted to catch up on her credit card debt. And she was pregnant with their second child, so there were plenty of extra expenses ahead.

>Since Smick, who is taking classes toward a bachelor’s degree, and her husband, a chef, together earned around $33,000 in 2017, about $2,000 of that refund would come from the earned income tax credit. It’s among the government’s largest anti-poverty programs, sending more than $60 billion every year to families like Smick’s: people who have jobs but are struggling to get by. Last year, 28 million households claimed the EITC.

>Smick, who lives outside Los Angeles, thought she’d get her refund in a month or so, as she had the year before. But no refund came. Instead, she got a letter from the IRS saying it was “conducting a thorough review” of her return. She didn’t need to do anything, it said. Smick waited as patiently as she could. She called the IRS and was told to wait some more.

>It wasn’t until four months later, in July, that she got her next letter. The IRS informed her that she was being audited. She had 30 days to provide “supporting documentation” for basically everything. As she understood it, she needed to prove that she and her husband had earned what they’d earned and that her child was her child.

>By this point, Smick was home with her baby. She set about rounding up W-2s, paycheck stubs, bank statements and birth certificates. Proving that her 4-year-old had lived at the family’s address for most of the year, as the EITC requires, was the hardest thing, but she did her best with medical records, some papers from his day care, and whatever else she could think of.

>She sent it all off and hoped for a quick resolution, but the next IRS letter quashed that hope. The IRS said it would review her response by Feb. 16, 2019 — six months away. Collectors were calling about the credit card bills. She didn’t know how she’d make it that long.

>Smick couldn’t understand why this was happening. All she had done was answer the questions on TurboTax. Isn’t it rich people who get audited? “We have nothing,” she said, “and it’s just frustrating knowing that we have nothing.”

>Low-income families are often complicated; they’re more likely to be multi-generational than more affluent filers, for instance, or to add or subtract household members from year to year. A study by the nonpartisan Tax Policy Center found that only about 48 percent of low-income households with children were married couples, while for other households it was 75 percent.

>But advocates for taxpayers say the IRS makes the situation needlessly worse. Virtually all the EITC audits are conducted by correspondence, and the computer-generated letters are far from simple. A survey by the Taxpayer Advocate Service found that more than a quarter of EITC recipients who were audited didn’t even understand that they were under audit.

>“When I first got audited, I couldn’t figure out what was going on,” said Denise Canady, 62, of West Memphis, Arkansas, who at the time was earning $8.50 an hour as a home health aide. The audit sent her on a scramble to get documents from her granddaughter’s doctor, pharmacy, hospital and school that would demonstrate that the toddler had lived at her address. “A lot of people don’t want to give you old records,” she said.

>She eventually found her way to Legal Aid of Arkansas, where an attorney helped bolster her case, but, a year after her audit began, she is still awaiting the outcome.

>“I pray and hope,” she said.

Basically the IRS sits there and says "prove it" anytime they see something they don't believe. Which is often with poorer families who hop around jobs or have complicated families.

Then they drag their feet for months and make it impossible to get in touch with them when you try and do so.

>last year only 11% of callers to the IRS help line got through to a customer service representative.

Do you need to print that out or just screenshots will do?

[removed]

> If anything I described is illegal I'd love to hear it.

Strictly, there are limits on how much and how often you can claim a loss or zero for a tax year sequentially, but that’s not picking.

The difference here is in how the item is categorized at its purchase. Although corporations, including LLCs, are legally considered individuals, the law and the tax code recognize that a person who exists only as a legal non corporeal entity doesn’t do things like watch TV for fun, and that assets purchased by an LLC are therefore generally treated as stock or tools or money making equipment and not as discretionary spending.

You could, as an individual, purchase this TV specifically as an asset, and then deprecate its value over time and modify the taxes due thereby. You would technically be required to quantify the Monterrey value extracted via use, but it’s hard to put a cash value on you watching a show (it’s much easier for something like a car, where value and deprecation are given very specific values.) Ypu would still have some restrictions though, as you’re only acting as one legal entity. Making an LLC does get around this, as would having a roommate (or even a child who files taxes) do the same thing.

You’re treating this situation as though it’s the same, but it’s not because that tax code is literally different for this specific example you’re using. Which is crazy, I’ll grant your but there it is. The garage sale guy though did not set up an LLC, so your theoretical situation does not apply to him. Not did he (presumably) file taxes with an itemized deduction and deduct against business costs, and so he owes taxes on those sales. It’s possible that he would have less of a tax burden if he did file itemized, but even if that’s that case he would still owe taxes on those sales (it’s just that the amount of those taxes would potentially be offset by prior costs).

But you shouldn’t take any advice about taxes on the internet at face value. If you have questions about taxes, you should always consult a licensed tax specialist.

Can’t argue with that.