IRS Commissioner Daniel Werfel has acknowledged what many have known for some time: Black taxpayers face an IRS audit exponentially more than other groups.
Werfel acknowledged the disparity in a letter this week in which he responded to a request for information about the “apparent racial disparity” in selecting tax returns for audit, along with a plan to address the issue.
“Let me start by stressing that the IRS is committed to enforcing tax laws in a fair and impartial manner,” Werfel said in the letter addressed to the U.S. Senate.
“When evidence of unfair treatment is presented, we must take immediate action 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.”
He continued: “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. The research further suggests that most of this disparity is driven by differences in correspondence audit rates among taxpayers claiming the Earned Income Tax Credit (EITC).
“We are deeply concerned by these findings and committed to doing the work to understand and address any disparate impact of the actions we take.”
Werfel noted that as soon as Congress confirmed his appointment, he met with an IRS team that had already studied the issue of race discrimination in audits. He noted that the research has continued as authorities try to pinpoint what drives the disparity and how to fix the issue.
Researchers discovered that Black taxpayers are five times more likely to face an audit when filing federal returns than any other race.
When President Biden signed the Inflation Reduction Act, the IRS received $80 billion, which the agency pledged to use to determine a better system to eliminate such discrimination.
“Back in March, my colleagues and I raised alarms with the new IRS boss about Black taxpayers being over-audited, and today he confirmed our suspicions,” tweeted Rep. Bill Pascrell, Jr. (D-N.J.).
“The IRS is making strides, but extra audits of Black Americans are disgraceful and must end.”
Werfel promised that the IRS would accelerate an existing research effort to detect and ensure compliance among “ghost preparers,” individuals who are paid to prepare returns for others but do not identify themselves to the IRS. “Initial evidence confirms that unscrupulous and ghost preparers disproportionately prepare returns in minority communities,” Werfel noted.
“We are making broad efforts to advance our commitment to fair and equitable tax administration and evaluating the best ways to address bias within our audit program.”
Stacy M. Brown is an NNPA Newswire senior national correspondent.
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