A new report published says that the IRS audits Black taxpayers at a significantly higher rate than non-Black taxpayers. The paper, published by Stanford’s Institute for Economic Policy Research, said that despite the IRS’s “race-blind audit selection,” Black taxpayers are audited 2.9 to 4.7 times more often than non-Black taxpayers. However, the research did not suggest that the disparity is a result of one group of people evading taxes more than another but rather that it may be a result of the computer algorithms the IRS uses for selection.
The study found that the largest disparity between the groups was among those claiming the earned income tax credit (EITC), which helps low- to moderate-income workers and families get a tax break, according to the IRS. Black taxpayers make up 21 percent of nonbusiness EITC returns, compared to 11 percent of business EITC returns, which could help explain why these taxpayers are audited more often than other groups, the report estimated. Another reason for the disparity may be that the algorithm prioritizes the overclaiming of refundable credits, which may be more prominent in one group over another. Click Here To Read More.