The IRS has announced steps to address the significant disparity in audit rates between Black taxpayers and other filers. A study found that data-driven algorithms selected Black taxpayers for auditing at a much higher rate than non-Black taxpayers, particularly those claiming the Earned Income Tax Credit. The IRS has taken action to reduce these audits and has made changes to the selection criteria. IRS Commissioner Daniel Werfel emphasized the importance of fair and equitable tax administration in restoring trust in the tax system.
Werfel assured that individuals making less than $400,000 per year will not be subject to more audits due to funding from the Inflation Reduction Act. He stated that the IRS has not exceeded audit rates for individuals in this income bracket. The agency is focusing on using the funding to conduct higher rates of audits on suspected wealthy tax cheats and plans to raise audit rates on companies with assets above $250 million. The aim is to ensure that all taxpayers, regardless of income level, are held accountable for paying their taxes.
The IRS has received funding to modernize the agency and improve taxpayer services. By collecting hundreds of millions in back taxes this year, the IRS has already made strides in achieving this goal. However, Werfel emphasized that more improvements are needed to transform the IRS for the benefit of taxpayers. The agency plans to increase audit rates on large corporations and complex partnerships with significant assets. The goal is to maintain fairness in tax administration and ensure that all individuals and entities are complying with tax laws.
IRS Commissioner Daniel Werfel has been vocal about the need to address discriminatory audit practices and restore trust in the tax system. He has testified before Congress and made changes to the selection criteria for audits to reduce the disproportionate targeting of Black taxpayers. By focusing on suspected wealthy tax cheats and large corporations, the IRS aims to increase compliance with tax laws and hold those who evade taxes accountable. The agency’s efforts to improve tax administration and provide better services to taxpayers are ongoing, with the goal of creating a more equitable tax system for all individuals and entities.
Despite concerns about discriminatory audit practices, the IRS has reaffirmed its commitment to fair, equitable, and effective tax administration. The agency has taken steps to address the overrepresentation of Black taxpayers in audits and has made changes to the selection criteria for audits. By focusing on suspected wealthy tax cheats and large corporations, the IRS aims to raise audit rates and increase compliance with tax laws. The IRS plans to continue using funding from the Inflation Reduction Act to modernize the agency and improve taxpayer services, with the goal of transforming the IRS for the benefit of all taxpayers.
