With Tax Day around the corner, the fear of an audit looms for some Americans. A recent report by Stanford University shows that some Americans are being targeted for audits more than others.
Stanford report showed black taxpayers might have more to stress about come tax time. The report found the Internal Revenue Service (IRS) audits black taxpayers about three to five times more than non-black taxpayers.
Financial advisor Camari Ellis says part of the problem could be about tax refunds. The study found a big disparity with the earned income tax credit, a rule that typically helps low to moderate-income families.
“You see a lot of these things happen with unregulated tax preparers. If you just look at some of the court records for tax fraud in some of these low-income areas it’s because they’re doing fraudulent things as it relates to children and children deductions,” said Ellis.
Senators grilled new IRS Commissioner Daniel Werfel about the apparent racial bias at the agency during his confirmation hearing in February.
“Do you plan on addressing these disparities that the IRS have confirmed?” asked Sen. Bob Menendez (D-NJ) during the hearing.
“Absolutely. I mentioned earlier, Senator, this is very concerning. Equity is a critical part of effective tax administration. We should be constantly understanding where activities are having a disparate impact on any particular group,” Werfel responded.
Government agencies typically use algorithms to drive decisions like audits. User experience researcher Kamaya Jones who crunches numbers with her firm Theory Research + Insights says that even though data may be blind to race, the circumstances surrounding the numbers the IRS is using are not.
“It’s got roots. It’s got lots of parts and pieces. So if we actually believe someone from this particular zip code shouldn’t be making that much money because that’s not the type of people who live in this zip code, then that is based on systemic racism and how we classified particular zip codes,” Jones told CBN News. “Does that mean that that person was sitting there with that thought in mind, not necessarily, they were probably looking at data.”
The new IRS commissioner pledged to the U.S. senators that he’d get back to them in 60 days about the discrimination and how the IRS will correct it.
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