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Perspectives

NYT: Black Americans Are Much More Likely to Face Tax Audits, Study Finds

By Avery B. Pardee
February 1, 2023

The headline is shocking but not surprising.  The article highlights the IRS's use of algorithms that, until now, have prioritized audits of people claiming credits like the EITC, rather than those claiming deductions or reporting business income.  Between the focus on credits and other aspects of the IRS's algorithms, the "audit rates of Black Americans that are between three and five times the rate of other taxpayers, even when comparing that group to other taxpayers who also claim the EITC."

Apparently Treasury has been aware of the disparate impact of IRS's approach, and the Biden Administration has promised a shift toward tax enforcement against high income earners and corporations--and has funded the mandate.  

The I.R.S. could instead program its algorithms to target audits toward more complicated returns with higher potential dollar value to the government if an audit found errors. In that case, the discrimination in the system would vanish, the authors concluded. * * * Department officials are in the process of increasing tax enforcement on high earners and corporations that do not pay what they owe, using money from a sprawling climate, health and tax bill Mr. Biden signed into law last summer.
www.nytimes.com/...
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