The IRS Admits It Doesn’t Audit the Rich Because It’s Too Hard

Yeah based on that court case I have zero confidence in the IRS' ability to audit rich people. Hell, I don't even think they understand the complex nature of the techniques being used to legally avoid taxes.

The most famous example of blatant tax dodging currently is as you pointed out - Renaissance Technologies. They are a quantitative investment company trading on the global financial markets. The IRS says it owes them around $7bn in taxes (likely a lot more) from the periods 2000 - 2015.

Rentech used a very convoluted tax optimization strategy to transform short-term trading gains into long-term returns (thereby avoiding income tax). Rather than own securities directly, Renaissance ordered their prime brokers Deutsche Bank and Barclays to buy and sell them within a portfolio of assets and they bought an option from the banks tied to the portfolio's performance.,%20updated%209-30-14).pdf

They have been battling it out in court since 2014 to no avail. Firms like these have some of the sharpest legal minds in the world analyzing their transactions.

And that's just one example. In short - IRS has no chance. The only way is to rewrite some of the rules that allow this kind of loophole to exist in the first place, which can prove to be a herculean task.

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