I don't know their internal incentives, but I would imagine they have an incentive to get as much money as they can, balanced slightly by catching outright fraud. There's a fixed cost to auditing. Auditing people that they believe have small discrepancies in their taxes just isn't worth it.
I read there's a secret formula that screens out cases that can be considered for audit and auto-approves the refund. It's secret because if you knew it, you could obviously exploit it.
Even the numbers for lower incomes are a little misleading because fraudsters know the probability of audit and know they can exploit the system by using fake identities to file claims for relatively small amounts. Bret Johnson spoke about this in an interview with Lex Fridman [0] and said 3 days a week for 8 months out of the year he was filing a tax return every 6 minutes using fake or stolen identities. Then he spent the rest of the week driving to ATMs around the state to withdraw the returns. Fun fact, a standard briefcase can hold $150,000 in 20s. So obviously the IRS needs to go after absolute fraud as a deterrent as well as the large tax filings where the money is.
I read there's a secret formula that screens out cases that can be considered for audit and auto-approves the refund. It's secret because if you knew it, you could obviously exploit it.
Even the numbers for lower incomes are a little misleading because fraudsters know the probability of audit and know they can exploit the system by using fake identities to file claims for relatively small amounts. Bret Johnson spoke about this in an interview with Lex Fridman [0] and said 3 days a week for 8 months out of the year he was filing a tax return every 6 minutes using fake or stolen identities. Then he spent the rest of the week driving to ATMs around the state to withdraw the returns. Fun fact, a standard briefcase can hold $150,000 in 20s. So obviously the IRS needs to go after absolute fraud as a deterrent as well as the large tax filings where the money is.
[0] https://www.youtube.com/watch?v=cC1LFC0KFSw