IRS Audits Blacks at substantially higher rates than others

[Oleg]

Most IRS audits are a letter about something the computer didn't like and are resolved either by paying the new numbers the IRS gives or amending your return to fix the actual error.

Um, yeah. No need for the "systemic racism" narrative.

Fraud | Internal Revenue Service

EITC Fraud

www.eitc.irs.gov

IRS estimates that between 21 percent to 26 percent of EITC claims are paid in error. Some of the errors are unintentional caused by the complexity of the law, but some of the claims are intentional disregard of the law. Here are the questions preparers frequently ask concerning fraud.

If the review shows questionable or incomplete information, the IRS holds the EITC portion of the taxpayer's refund and contacts the taxpayer to verify the information. IRS releases the EITC amount after the claim is verified.

 

[southernhybrid]

The IRS adults low income people more than wealthy people and since statistically Black people have lower incomes, my guess would be that is the reason why they are audited more often. I have a white friend who was audited one year when she was working as a waitress and had a very low income. She was claiming the EITC because she had a young son at the time. It seems as if the IRS is more worried about people like her compared to high income earners, like my brother in law, often cheat on their taxes. Sure, there are people who claim the EITC illegally or out of ignorance, but that money is pittance compared to the high income tax cheats like TFG.

 

[Jimmy Higgins]

A study published Monday shows that IRS algorithms target blacks for auditing at much higher frequencies even after controlling for other variables. Remember that race is not part of the IRS tax forms.

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.

“Using counterfactual audit selection models, we find that maximizing the detection of underreported taxes would not lead to Black taxpayers being audited at higher rates,” the paper reads.

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.

“Even when such algorithms are formally neutral with respect to protected characteristics like race, there is widespread concern that they can disproportionately burden vulnerable groups,” the economists wrote.

(source : Blacks much more likely to be audited by the IRS )

Note also that these audits are more likely to be middle and low income earners (especially EITC eligible filers).

I don't think this result is something that should be shrugged off as "whaddya going to do" because algorithms are based on decisions made by people.

So once again they can't actually find discrimination and resort to using disparate impact as "evidence".

I don't think anyone is saying the regulations are set forth to ensure more blacks are audited than whites. What people are saying is that 3x... that seems pretty high a discrepancy, maybe we should look into it.

Now adults and professionals who look at the results, would usually step back and say... gee... 3x more audits? Is the IRS getting paid or are the audits useless? And from there, determine whether expanding the audits in these areas makes sense or whether they need to modify the algorithms to reduce false positives.

There's something that needs to be understood here: "Audit" covers a great range of actions. At one end we have the TCMP audits from hell, at the other end we have what happened to me one year--got a letter from them saying I had put down a wrong date, the correct date is xxxx, we have adjusted the tax calculations, you owe us [trivial amount] in interest. Since an amount this small isn't worth collecting we are writing it off, do not submit a payment. I'm not sure exactly where the error was because it wasn't worth hunting down over $0.

Most IRS audits are a letter about something the computer didn't like and are resolved either by paying the new numbers the IRS gives or amending your return to fix the actual error.

Yes. And if 3 times the number of African Americans are getting audited than whites, but there is no money to it, that implies the hounds in the algorithm need to be adjusted.

 

[Harry Bosch]

I suspect, but don't know for sure, that most of the audits being discussed here are "correspondence audits". Correspondence audits are no big deal. They are mostly triggered by a mistake on the tax return. In the case of a correspondence audit, the auditor calls the tax payer, tax payer fixes the error, and everyone moves on. I had one 6 or 7 years ago. The auditor thought that I made a mistake on the return. Sure enough I did, cost me $75.

It's the in-person audits that are deep in your grill that you need to worry about more. But I suspect that those are mostly done on business owners. People who have much more grey areas in their taxes (and opportunities to cheat).

 

[hurtinbuckaroo]

Is there data on they type and outcome of the audits?

 

[Harry Bosch]

Is there data on they type and outcome of the audits?

I'm not sure. Will do some research. I actually think that if you think about it, a correspondence audit or informational audit is a good thing. I always want perfect tax returns so that there can be no blow back when applying for college loans or retail loans. Some of the informational audits lead to people having tax money returned to them (I'll research this also). If you request a loan with a mistake on your return, it's a misdemeanor. Now that I own a small business, I particularly want perfect tax returns that confirm to the law perfectly. I don't want to be in default with bank covenants. Or my investors. It could be death to a company if there are mistakes on your tax returns that raise questions.

 

[TV and credit cards]

Most IRS audits are a letter about something the computer didn't like and are resolved either by paying the new numbers the IRS gives or amending your return to fix the actual error.

Um, yeah. No need for the "systemic racism" narrative.

Fraud | Internal Revenue Service

EITC Fraud

www.eitc.irs.gov

IRS estimates that between 21 percent to 26 percent of EITC claims are paid in error. Some of the errors are unintentional caused by the complexity of the law, but some of the claims are intentional disregard of the law. Here are the questions preparers frequently ask concerning fraud.

If the review shows questionable or incomplete information, the IRS holds the EITC portion of the taxpayer's refund and contacts the taxpayer to verify the information. IRS releases the EITC amount after the claim is verified.

Or "Common Errors".

 

[laughing dog]

A study published Monday shows that IRS algorithms target blacks for auditing at much higher frequencies even after controlling for other variables. Remember that race is not part of the IRS tax forms.

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.

“Using counterfactual audit selection models, we find that maximizing the detection of underreported taxes would not lead to Black taxpayers being audited at higher rates,” the paper reads.

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.

“Even when such algorithms are formally neutral with respect to protected characteristics like race, there is widespread concern that they can disproportionately burden vulnerable groups,” the economists wrote.

(source : Blacks much more likely to be audited by the IRS )

Note also that these audits are more likely to be middle and low income earners (especially EITC eligible filers).

I don't think this result is something that should be shrugged off as "whaddya going to do" because algorithms are based on decisions made by people.

So once again they can't actually find discrimination and resort to using disparate impact as "evidence".

Once again, you miss the point. Nowhere in the OP did I claim discrimination. The algorithms (made via explicit choices by people) create a disparate outcome. No one forces the IRS to make these decisions to come to this outcome.

This results suggests there is something wrong. Most people when confronted with something that appears wrong and unfair wish to change the process. So instead of misconstruing the OP content and making excuses for this unfair outcome that increases the level of distrust of the IRS which may possibly reduce the level of voluntary compliance, why not ask what can be done to improve the situation?

BTW, now that the IRS knows about this, and if it follows your implicit advice of "tough nuggies", then it becomes discrimination via inaction.

 

[Politesse]

If it doesn't purposely target black people, it's not systemic racism.

There is no correct definition of "systemic racism" that would help this sentence make logical sense.

 

[Oleg]

If it doesn't purposely target black people, it's not systemic racism.

There is no correct definition of "systemic racism" that would help this sentence make logical sense.

"Systemic racism" = the left's favorite conspiracy theory.

 

[Politesse]

If it doesn't purposely target black people, it's not systemic racism.

There is no correct definition of "systemic racism" that would help this sentence make logical sense.

"Systemic racism" = the left's favorite conspiracy theory.

If you don't understand what words mean, sure. If an individual actor is the key motivating force in a situation, it is by definition not systemic.

Conservatives can't grasp this, because they are unable to understand "racism" as a mental bias in the first place: to the conservative, "racist" can only be an insult, a personal accusation of moral wrong akin to being a "sinner" in Christian tradition. So they get confused when talking about systems of racism, and think it must mean "a bunch of people being sinful at the same time" rather than (as it is actually used) as an observation that systemic biases lead to predictably differential class situations based on perceptions of race.

Incidentally, it makes you guys look dumb when you accuse others of conspiracy theorizing, while also uncritically accusing "the wokes" of secretly enacting all manner of wacky conspiracies from abducting children at the pizza hut to faking global pandemics to planting dinosaur bones to using Critical Race Theory to teach pre-algebra to illegal aliens.

 

[Oleg]

as an observation thatvsystemic biases lead to differential class situations based on perceptions race.

Any disparity of outcome equates to “systemic racism.” That’s what makes it a silly conspiracy theory. When you’re presented with evidence that there’s no racial bias involved, you just double down. Like, more Whites are probably audited by the IRS for EITC than Asians. Would that also be “systemic racism,” or do you have a double standard you’d like to share?

 

[Politesse]

Any disparity of outcome equates to “systemic racism.”

If race is the differentiating agent, yes. Personal guilt is irrelevant. The problem is the result - unfair and inequal outcomes based on race - not the dumbass beliefs of conservatives.

 

[Oleg]

Any disparity of outcome equates to “systemic racism.”

If race is the differentiating agent, yes. Personal guilt is irrelevant. The problem is the result - unfair and inequal outcomes based on race - not the dumbass beliefs of conservatives.

It’s a belief that there is no God, but HE made us all equal.

 

[Oleg]

Asian women have higher incomes than White men. Systemic racism.

 

[Oleg]

Whites, Asians, and Hispanics are grossly underrepresented in the NBA and NFL. Systemic racism.

 

[laughing dog]

Asian women have higher incomes than White men. Systemic racism.


Whites, Asians, and Hispanics are grossly underrepresented in the NBA and NFL. Systemic racism.

Those examples might be examples of systemic racism if you can show that the race was the cause (ie. "differentiating agent" )of those disparate examples. Can you show that?

 

[Oleg]

Asian women have higher incomes than White men. Systemic racism.


Whites, Asians, and Hispanics are grossly underrepresented in the NBA and NFL. Systemic racism.

Those examples might be examples of systemic racism if you can show that the race was the cause (ie. "differentiating agent" )of those disparate examples. Can you show that?

Can you show that race was the cause of the IRS audits? I don’t think Asian women earning more or the NBA being mostly Black is “systemic racism.” Disparity in outcomes, alone, is not “systemic/institutional/whatever” racism. If lefties truly felt it was, they wouldn’t be so inconsistent in deploying the accusation.

 

[laughing dog]

Asian women have higher incomes than White men. Systemic racism.


Whites, Asians, and Hispanics are grossly underrepresented in the NBA and NFL. Systemic racism.

Those examples might be examples of systemic racism if you can show that the race was the cause (ie. "differentiating agent" )of those disparate examples. Can you show that?

Can you show that race was the cause of the IRS audits? I don’t think Asian women earning more or the NBA being mostly Black is “systemic racism.” Disparity in outcomes, alone, is not “systemic/institutional/whatever” racism. If lefties truly felt it was, they wouldn’t be so inconsistent in deploying the accusation.

I see, you were trying to make a point with this stupid "examples".

Why would I show that race was the cause of the IRS audits? I made no so claim, and neither did the study. I do think that if the algorithms are not changed, then the continuance of this disparate outcome would be due to bigotry.

 

[Oleg]

Why would I show that race was the cause of the IRS audits? I made no so claim, and neither did the study. I do think that if the algorithms are not changed, then the continuance of this disparate outcome would be due to bigotry.

Well, okay. So that's why "structural racism" = disparate outcome is a silly conspiracy silly. And there's nothing wrong with the IRS algorithm. EITC has a high fraud/error rate. You'd expect it'd get a hightened level of scrutiny.