Black taxpayers are much more likely to face an audit by federal authorities than non-Black Americans — and the underfunding of the Internal Revenue Service (IRS) could be playing a significant role in driving that disparity, new research reveals.
Black taxpayers are much more likely to face an audit by federal authorities than non-Black Americans — and the underfunding of the Internal Revenue Service could be playing a significant role in driving that disparity, new research reveals.
The precise mechanism used by the IRS is kept secret. But the researchers tested several methods of audit selection and found that a method of targeting people who claim the Earned Income Tax Credit , a credit offered to workers with lower incomes, with less complex tax filings, or non-business filings, produced similar proportions of Black taxpayers being audited.
This suggests that a major reason that Black taxpayers are being audited at higher rates despite their race not being visible to the agency could be that they are both more likely to claim the EITC and less likely to report business income. Because underfunding of the IRS is causing the agency to choose to conduct audits that are less complicated to carry out, this could be putting Black taxpayers particularly at risk.
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