Warren Urges IRS to Study Racial Inequities in Tax Enforcement

Sen. Elizabeth Warren (D-Mass.) is urging the Treasury Department and IRS in a new letter to study and work to remedy racial inequities concerning tax benefits and enforcement.

Warren’s letter comes after a recent study from Stanford University and Treasury researchers found that Black taxpayers are audited at higher rates than non-Black taxpayers. It also comes after Treasury released an analysis finding that White households benefited disproportionately from tax preferences such as lower rates on capital gains income and the pass-through deduction, while Black and Hispanic families disproportionately benefited from the earned income tax credit.

• An IRS examination of racial disparities in enforcement should look at areas including audit rates, asset seizures, the duration for which refunds are held, and criminal referrals. The agency should also examine “the racial equity implications of IRS budgeting, benefits, and enforcement priorities, and use that analysis to inform future decision-making,” Warren said.
• The IRS currently doesn’t collect data about taxpayers’ race. Warren said “the IRS should collect racial data in a way that protects taxpayers and allows the IRS to guard against racial bias.” She noted the recent Treasury analysis of tax preferences was able to use imputation methods.
• During his confirmation hearing in February, IRS Commissioner Danny Werfel said he would report back to Congress about the causes of racial disparities in audits and what he plans to do to address the issue.