From a Canadian perspective, some tax auditors are more aggressive than others. There is a metric that analyzes recovered taxes from each auditor. There might be career implications.

If a low income earner gets a tax statement to pay $400 more, it is probably cheaper to pay the extra tax than to challenge it. The tax auditor gets a little pad on his "recovered tax" file.

If the taxpayer above cannot pay the $400, the government has ways of eventually collecting it.

My experience is that the tax auditors need to be challenged on these trivial amounts. Otherwise, the taxpayer gets a reputation as an easy can to kick.

I've been audited about 10 times in my life; three times in the past 10 years. I'm of the lower middle class. Mostly wages, but I have this side hustle that has more expenses than revenue, which means a legitimate business loss. The auditors keep poking at me. I wonder how often real small businesses (the ones who make a profit) are audited.