IRS Chief Admits Black Taxpayers More Likely To Face Audits
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The Internal Revenue Service has revealed that Black taxpayers are more likely to be subjected to financial investigations.
According to The New York Times, IRS Commissioner Daniel Werfel sent a letter to the US Senate with research indicating the disparity between Black taxpayers and other non-Black Americans, which he calls “concerning.”
“Let me start by stressing that the IRS is committed to enforcing tax laws in a manner that is fair and impartial,” Werfel wrote to Senator Ron Wyden of Oregon, the Democratic chairman of the Senate Finance Committee. “When evidence of unfair treatment is presented, we must take immediate actions to address it. It is also important to reiterate that we do not and will not consider race as part of our case selection and audit processes. Nevertheless, a recent study estimated, using imputed race values, that Black taxpayers are audited at three to five times the rate of non-Black taxpayers.”
“As soon as I was confirmed,” the letter continued, “I met with the IRS team that has been studying this issue. Their research is ongoing, and additional time is needed to yield a robust understanding of the drivers of this disparity and to thoroughly evaluate the right potential programmatic changes to address it. In this letter, we provide our initial findings. I want to note that fairness in audit selection is a complex topic, and our initial findings will evolve as the work continues. IRS does not collect data on race, and there is substantial uncertainty in any estimates of the audit rate by race or differences in audit rate by race.”
CNN reports that the head of Stanford’s research team, Daniel E. Ho, and his unit does not have access to how the IRS conducts its audits. However, their analysis indicates “the EITC and a focus on lower dollar, higher certainty claims as opposed to lower certainty, higher dollar value claims” as potential factors for the racial disparities.
Furthermore, Warfel’s letter claimed that “research is ongoing and additional time is needed to yield a robust understanding of the drivers of this disparity and to thoroughly evaluate the right potential programmatic changes to address it.”
In response to the IRS’ revelation, Democrats on the Ways and Means Committee stated they are committed to equality in audit rates.
“Commissioner Werfel publicly confirmed that audit rates are disproportionate. He has committed the IRS to address the biased methodology used in the audit program and implement changes to fix this issue by the next tax filing season. Ways and Means Democrats will not rest in our quest to build a tax system that works fairly for all Americans and we will continue our rigorous oversight of the IRS to end these disparities.”
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