A sweeping study conducted by economists from Stanford University, the University of Michigan, the University of Chicago, and the Treasury Department has found that Black taxpayers are far more likely to be audited by the Inland Revenue Service (IRS).
The IRS confirmed the results of the study and vowed to rectify the issue.
“While there is a need for further research, our initial findings support the conclusion that Black taxpayers may be audited at higher rates than would be expected given their share of the population,” IRS Commissioner Daniel Werfel told the Senate Finance Committee on Monday.
Artificial intelligence is allegedly to blame. IRS computer algorithms immoderately flags tax returns more likely to have errors, mainly taxpayers who claim refundable tax credits such as earned income tax credit (EITC), resulting in low-income Americans being five times as likely to get audited than any other filer.
The study did not find bias at the individual tax enforcement agent level, as IRS agents reportedly do not know the race of those being audited.
“We are dedicating significant resources to quickly evaluating the extent to which IRS’s exam priorities and automated processes, and the data available to the IRS for use in exam selection, contribute to this disparity,” Werfel said in the letter to the Committee.
The findings did not surprise Rep. Bill Pascrell, Jr., a Democrat from New Jersey, who has tried to bring attention to the issue in the past.
“Back in March my colleagues and I raised alarms to the new IRS boss about Black taxpayers being over-audited and today he confirmed our suspicions,” he tweeted. “The IRS is making strides but extra audits of Black Americans is disgraceful and must end.”
