UNITED STATES NEWS

IRS acts to address wide disparity in audit rates between Black taxpayers and other filers

May 2, 2024, 12:07 PM

WASHINGTON (AP) — The IRS said Thursday that it has taken steps to address a wide disparity in audit rates between Black taxpayers and others filers, and is more closely examining the returns of larger numbers of wealthy people and major companies.

“We are overhauling compliance efforts to advance our commitment to fair, equitable, and effective tax administration and hold ourselves accountable to taxpayers we serve,” according to an annual update from the agency.

A study from January 2023 involving university researchers and the Treasury Department found that IRS data-driven algorithms selected Black taxpayers for auditing at up to 4.7 times the rate of non-Black taxpayers. The study said the IRS disproportionately audited people who claim the Earned Income Tax Credit, which is aimed at low- to moderate-income workers and families: While Black taxpayers accounted for 21% of the claims for that break, they were the focus of 43% of the audits concerning the credit.

“We have taken swift initial action to dramatically reduce the number of those audits. We have also made changes to the selection criteria for those audits,” IRS Commissioner Daniel Werfel said.

Werfel, who was sworn in a little more than a year ago, has testified before Congress about the issue and last September he wrote to the Senate Finance Committee that the IRS would make changes.

The discriminatory audits, he told reporters, “degrade trust in our tax system.”

Werfel and the IRS have tried over the past year to show how money from the Inflation Reduction Act, President Joe Biden’s big climate, health and tax law, has helped to modernize the agency and improve taxpayer services, and that people making less than $400,000 per year would not be subject to more audits due to the new funding.

Noting the promise to keep audit rates for people making $400,000 per year and less at 2018 levels, he said on Thursday that “we haven’t in any way exceeded that rate.”

He added: “There is no new wave of audits coming for middle and low income” taxpayers — “that is not in our plans in any way shape or form.”

The IRS is focusing the next year on using the funding boost to conduct higher rates of audits on suspected wealthy tax cheats after having collected hundreds of millions of back taxes this year.

Ensuring that people pay their taxes is one of the tax collection agency’s biggest challenges. The audit rate of millionaires fell by more than 70% from 2010 to 2019 and the rate on large corporations dropped by more than 50%.

The IRS plans to raise audit rates on companies with assets above $250 million to 22.6% in 2026, from an 8.8% rate in the tax year 2019. It also plans to increase audit rates by tenfold on large complex partnerships with assets over $10 million.

“While the IRS has accomplished a lot so far with IRA funding,” he said, “we need to do much more to make improvements and transform the IRS for the benefit of taxpayers.”

United States News

Associated Press

Latest deadly weather in US kills at least 18 as storms carve path of ruin across multiple states

VALLEY VIEW, Texas (AP) — Powerful storms killed at least 18 people, injured hundreds and left a wide trail of destruction across Texas, Oklahoma and Arkansas after obliterating homes and destroying a truck stop where dozens sought shelter in a restroom during the latest deadly weather to strike the central U.S. The storms inflicted their […]

9 hours ago

Associated Press

Stock market today: World shares are mostly higher after rebound on Wall St

Shares advanced in Europe and Asia ahead of Monday’s Memorial Day holiday in the United States. Oil prices also rose. European shares saw modest gains after the opening while Asian benchmarks gained upward momentum as the day wore on. Germany’s DAX edged 0.1% higher to 18,713.43 and the CAC 40 in Paris rose 0.2% to […]

9 hours ago

Associated Press

Lightning strike kills Colorado rancher and 34 head of cattle

DENVER (AP) — A lightning strike killed a Colorado rancher and 34 head of cattle over the weekend, officials said Sunday. Mike Morgan, 51, was feeding his cattle from a trailer when he was struck and died on the scene despite life-saving efforts, the Jackson County Sheriff’s Office said. The lightning bolt struck on wide […]

11 hours ago

Associated Press

Former ‘General Hospital’ actor Johnny Wactor killed in downtown Los Angeles shooting

LOS ANGELES (AP) — Former “General Hospital” actor Johnny Wactor was shot and killed when he interrupted thieves stealing the catalytic converter from his car in Los Angeles, his family said Sunday. The shooting occurred around 3 a.m. Saturday when the victim approached three men in downtown LA, according to the Los Angeles Police Department. […]

11 hours ago

Michael Cohen leaves his apartment building on his way to Manhattan criminal court to testify in Do...

Associated Press

Here’s what every key witness said at Donald Trump’s hush money trial

Testimony is over at Trump’s criminal trial featuring 22 witnesses, including a porn actor, tabloid publisher and White House insiders.

12 hours ago

Associated Press

Christian group temporarily opens beaches it has closed on Sunday mornings as court fight plays out

OCEAN GROVE, N.J. (AP) — For the first time in generations, beachgoers were out on the sand in a New Jersey shore community on the Sunday morning before Memorial Day as a Christian religious group fights the state over its regular beach closures there during Sunday services. The Ocean Grove Camp Meeting Association, a Methodist […]

16 hours ago

Sponsored Articles

...

COLLINS COMFORT MASTERS

Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.

...

Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

...

Day & Night Air Conditioning, Heating and Plumbing

Day & Night is looking for the oldest AC in the Valley

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.

IRS acts to address wide disparity in audit rates between Black taxpayers and other filers