In a stunning admission, the Internal Revenue Service (IRS) has written to the Senate acknowledging racial bias within its operations.
The agency disclosed that Black taxpayers face greater challenges in benefiting from tax breaks and are more likely to be audited compared to their White counterparts. The IRS now asserts its commitment to rectify this issue by taking necessary actions.
On May 15, IRS Commissioner Daniel Werfel responded to the Senate Finance Committee’s request for information regarding taxpayer selection for audits and the apparent disproportionate targeting of Black taxpayers.
Werfel cited a study from Stanford University, which estimated that Black taxpayers are audited at a rate 2.9 to 4.7 times higher than other ethnic groups. He emphasized that the agency is fully focused on addressing this issue and pledged to implement changes before the next tax return filing deadline.
Contrary to actual racial discrimination, the reason behind the disproportionate auditing of Black taxpayers is attributed to the IRS’s computer algorithms. Taxpayers are selected for audits based on algorithms that analyze their tax returns and identify patterns that may indicate potential issues.Â
One such issue is the potential overclaiming of Earned Income Tax Credits (EITC), which is specifically designed to assist low-income families—an area where Black taxpayers are more likely to qualify. The IRS is now exploring ways to modify its algorithms to prevent the over-selection of Black taxpayers for audits.
The IRS has drawn inspiration from the work of Dorothy Brown, an emeritus professor of law at Emory University in Atlanta, Georgia. Brown has long highlighted racial bias within the federal tax system and has authored a book titled “The Whiteness of Wealth.” Under the Biden administration’s focus on “equity,” the IRS appears to have embraced her claims as substantiated.
The IRS’s acknowledgment of racial bias within its operations marks a significant step towards addressing systemic inequities. By acknowledging the over-auditing of Black taxpayers, the agency demonstrates a commitment to rectifying this issue and promoting fairness in its practices.
Efforts to modify the algorithms used for taxpayer selection and eliminate the disproportionate auditing of Black individuals reflect a tangible commitment to combating racial disparities.
Moving forward, it is imperative for the IRS to continue collaborating with experts like Dorothy Brown and other stakeholders to implement effective reforms. The aim is to ensure that the tax system operates with integrity, fairness, and equality for all taxpayers, regardless of their racial or ethnic backgrounds.
