Thursday, September 21, 2023
NY Times: IRS To Reduce Audits Of Refundable Credits Like EITC To Ameliorate Racial Disparities
New York Times, I.R.S. Changes Audit Practice That Discriminated Against Black Taxpayers:
The Internal Revenue Service is overhauling how it scrutinizes the tax returns of lower-income Americans as part of an effort to reduce enforcement disparities that have made Black taxpayers far more likely than anyone else to be audited.
At the center of this effort is a major change to how the I.R.S. conducts audits of recipients of the earned-income tax credit, a special tax refund that was created to help low-income workers.
Tax returns that claim the E.I.T.C. have historically been more likely to be selected for audits, even if those investigations tend to yield little in taxes that are owed. Research has shown that audit rates for Black Americans are three to five times higher than for other taxpayers, with audits focused on the tax credit being a major driver of the disparity.
The I.R.S. has pledged to use the $80 billion that it received through the Inflation Reduction Act of 2022 to target wealthy taxpayers and make the tax system more equitable by ensuring that taxpayers are not disproportionately scrutinized because of their race.
“We are making broad efforts to overhaul compliance efforts in a manner that robustly advances our commitment to fair, equitable, and effective tax administration,” Daniel Werfel, the I.R.S. commissioner, wrote in a letter to Senator Ron Wyden of Oregon, the Democratic chairman of the Senate Finance Committee, on Monday.
Law360, IRS To Reduce Audits Focused On EITC, Refundable Credits
https://taxprof.typepad.com/taxprof_blog/2023/09/ny-times-irs-to-reduce-audits-of-refundable-credits-like-eitc-to-ameliorate-racial-disparities.html