On May 2, the Internal Revenue Service (IRS) announced the steps it will take to address a wide disparity in audit rates between Black taxpayers and other filers.
On May 2, the Internal Revenue Service (IRS) announced the steps it will take to address a wide disparity in audit rates between Black taxpayers and other filers.
University researchers and the Treasury Department conducted a study that found IRS data-driven algorithms selected Black taxpayers for auditing at 4.7 times the rate of non-Black taxpayers. Other results revealed the agency disproportionately audited people with Earned Income Tax Credit claims—aimed at low- to moderate-income workers and families—with 21% accounted for by Black taxpayers.
They were also the focus of 43% of the audits regarding the credit.
“We have taken swift initial action to dramatically reduce the number of those audits. We have also made changes to the selection criteria for those audits,” he said, adding that discriminatory audits “degrade trust in our tax system.”
The agency is also keeping an eye on the returns of larger numbers of wealthy people and major companies. According to Fox 21 News, thanks to additional funding from the Inflation Reduction Act, the IRS can keep up with “non-compliant taxpayers use to shelter or manipulate their income to avoid taxes.”
“There is no new wave of audits coming for middle- and low-income taxpayers; that is not in our plans in any way, shape, or form,” Werfel continued.
Source: Black Enterprise
