A new study which was a collaboration between Stanford University and the U.S. Department of the Treasury clearly shows that Black Americans are more likely to be subject to audit by the IRA than non-Black filers. According to a new paper presented by Stanford law professor Daniel E. Ho Black and others, taxpayers receive IRS audit notices at least 2.9 times (and perhaps as much as 4.7 times) more than non-Black taxpayers.
Ho believes the disparity is probably not intentional but could be driven by a set of secretive internal IRS algorithms. “The IRS should drill down to understand and modify its existing audit selection methods to mitigate the disparity we’ve documented,” said Ho. “And we’ve shown that can be done without necessarily sacrificing tax revenue. Researchers found that the racial composition of neighborhoods drove audit rates. Officials from the Treasury Department created an advisory committee in the fall of 2022 to address disparities faced by people of color.
Deputy Treasury Secretary Wally Adeyemo said that in the last decade “historic challenges and underfunding” caused audit rates for taxpayers at the top to decrease more than the corresponding audits of those at the bottom.
