IRS to Reduce Audits on Low-Income Credits to Combat Disparities

The IRS will “substantially” decrease audits on refundable tax credits that benefit low-income taxpayers in an effort to reduce racial disparities, the agency said in a letter to Senate Finance Committee Chair Ron Wyden (D-Ore.) Monday.

A study released in January by researchers at Stanford, University of Michigan, University of Chicago, and the Treasury Department found that Black taxpayers claiming the earned income tax credit were audited at higher rates than non-Black taxpayers claiming the credit. Multiple senators have raised concerns about the study’s findings.

To address the disparity, starting in fiscal year 2024, there will be fewer correspondence audits ...