IRS about 3 to 5 times more likely to audit Black Americans’ tax returns, study finds

The findings show the disparity stems from a faulty software algorithm used by the agency to pick who gets audited.

While there isn’t evidence of explicit discrimination from the IRS or its revenue agents, the findings show the disparity stems from a faulty software algorithm used by the agency to pick who gets audited.

“The IRS should drill down to understand and modify its existing audit selection methods to mitigate the disparity we’ve documented. And we’ve shown they can do that without necessarily sacrificing tax revenue.”

said Stanford University law professor Daniel Ho, who co-wrote the study

The Treasury Department said, “Equitable enforcement of our tax laws is a top priority for the administration” and Inflation Reduction Act funds will help upgrade technology and hire top talent.

Based on microdata on roughly 148 million tax returns and 780,000 audits, the study was conducted by economists at Stanford University, the University of Michigan, the U.S. Department of the Treasury and the University of Chicago.

Black taxpayers make up 21 percent of nonbusiness EITC returns, compared to 11 percent of business EITC returns, which could help explain why these taxpayers are audited more often than other groups, the report estimated.