Black taxpayers more than three times more likely to be audited by IRS

A new report published Monday found that the IRS audits Black taxpayers at a significantly higher rate than non-Black taxpayers, The New Times reports.

Black taxpayers are at least three times as likely to be audited by the Internal Revenue Service as other taxpayers, even after accounting for the differences in the types of returns each group is most likely to file, a team of economists has concluded in one of the most detailed studies yet on race and the nation’s tax system.

The paper was published by Stanford’s Institute for Economic Policy Research by economists from Stanford University, the University of Michigan, the University of Chicago, and the Treasury Department.

The new 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. 

The research did not suggest that the bias is a result of one group of people evading taxes more than another. 

It also does not suggest that there is bias from individual tax enforcement agents. 

It found that the bias may come from computer algorithms the agency uses to determine who is selected for an audit. 

Some of that discrimination appears to be rooted in decisions that I.R.S. officials made over the past decade as they sought to maintain tax enforcement in the face of budget cuts, by relying on automated systems to select returns for audit.

The research said that one of the reasons the disparity exists is that it is “more complicated” to audit those who also report their business income and thus correlates with an increase of audits focused on one demographic over another.

Another reason for the disparity may be that the algorithm prioritizes the over-claiming of refundable credits, which may be more prominent in one group over another.

The researchers suggest that the I.R.S. has focused on audits that are easier to conduct. 

The result is that the agency finds itself disproportionately auditing a historically disadvantaged group rather than other taxpayers, including high net-worth individuals.