Why the IRS audits the poor

Here are three of the week's top financial insights, gathered from around the web:

Cable's always full of surprises

Why is the cable bill always higher than advertised? asked James Willcox at Consumer Reports. Add-on fees. We asked hundreds of our members to share their cable bills with us, and "our analysis showed that company-imposed fees added more than $37 per month, or 24 percent, to the base cost of their TV package." That's nearly $450 a year. The most common add-ons are a "broadcast TV fee," which the cable companies say "defrays costs they pay to local networks, such as ABC and CBS"; a "set-top box or receiver fee" of $7 to $13; and a "regional sports surcharge fee," which can add $7 to $12 per month to your bill, even if you don't watch sports. The largest number of complaints were directed toward Comcast's Xfinity service, "but members cited a number of providers."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Why the IRS audits the poor

The IRS audits the working poor at about the same rate it does the wealthiest 1 percent, said Paul Kiel at ProPublica, but after lawmakers confronted IRS Commissioner Charles Rettig about the focus on low-income taxpayers, the agency said "it can't change anything unless it is given more money." Last year, 380,000 audits, or 39 percent of the total, were conducted on low-income taxpayers who claim the earned income tax credit. The most heavily audited county in America was Humphreys County, Mississippi, where a third of residents are below the poverty line. The IRS can use relatively low-level employees to audit those returns, whereas it "takes senior auditors hours upon hours to complete an exam" of a richer taxpayer's return. The agency says the practice is the most efficient use of available IRS examination resources. In other words, it's "just easier and cheaper to audit the poor."

Tipping on your morning coffee

Touch screens asking whether you'd like to tip $1, $2, or $3 for that latte have "been spreading like an infectious disease," said Seth Kugel at The New York Times. "I usually do tip when I order a coffee and find a screen turned toward me, but that's in part to avoid the pang of embarrassment that comes from hitting 'No tip.'" Toast, a company that sells point-of-sale systems, found that 48.5 percent of customers left tips at cafés with a digital tipping option, and 46.5 did so in fast-casual restaurants. The average tip was around 17 percent. A recent survey by CreditCards.com was similarly split: "24 percent of Americans 'always tip' baristas, and 27 percent 'never tip.'"