News from TRAC

IRS Continues Targeting Poorest Families for More Tax Audits During FY 2022

(29 Mar 2022) The latest Internal Revenue Service (IRS) statistics covering federal income tax audits through February of 2022 reveals that the agency is continuing to target audits on the poorest wage earners. So far it has completed 132,922 audits of these low-income wage earners with less than $25,000 in total gross receipts. This is up from 105,978 audits IRS had completed a year ago at the end of February 2021.

If IRS continues at this same pace for the rest of this fiscal year, audit rates would inch up to 13.5 per 1000 returns—slightly higher than the phenomenally high rates that occurred last year when IRS audited the poorest families claiming an anti-poverty earned income tax credit at five times the rate for everyone else.

Not only are total correspondence audits up so far this year, but IRS is increasingly targeting them on these poorest families. Last year at this same time, 51.6% of all correspondence were targeted at this lowest income group which represents only a small proportion of all taxpayers. The concentration of correspondence audits on this single small group of taxpayers during this filing season has increased to 58.1%. Field audits, although relatively small in number, are also up for these lowest wage earners.

In contrast, thus far during FY 2022 both the number and percentage of correspondence as well as field audits dipped for all other taxpayers.

"Correspondence audits" as the National Taxpayer Advocate Erin M. Collins has noted, are "one of the most significant tools the IRS employs to pursue compliance with tax laws."

With only five months completed during this current fiscal year these figures only present a very preliminary picture of IRS enforcement efforts during this filing season. But the IRS's own internal management statistics provide little evidence as yet that the IRS is not again forging ahead to target the poorest families at more than five times the rate for everyone else combined.

TRAC Calls for IRS To Release Data

The Transactional Records Access Clearinghouse (TRAC) at Syracuse University obtains these figures directly from the IRS under a long-standing court order that requires the IRS provide internal management reports to us every month with detailed statistics on audits IRS is conducting. See Long et al v. United States Internal Revenue Service, USCDC WAW, Case Number 2:1974CV00724.

Since this successful litigation by TRAC's co-founder, the IRS began including current audit statistics in its annual reports. For the first time, these statistics on completed IRS audits for the latest year were omitted from IRS's FY 2020 Data Book. TRAC has written IRS Commissioner Charles P. Rettig urging him to reinstate publishing current statistics on the actual numbers of IRS audits completed by examination class. TRAC's letter followed the Commissioner's March 17, 2022, congressional testimony charging TRAC's March 8, 2021 report findings were "absolutely 100% false." The Commissioner has not responded to TRAC's letter.

For full details on IRS's targeting of audits on low-income wage earners, and the IRS Commissioner's denials, see full report at:

https://trac.syr.edu/tracirs/latest/682

If you want to be sure to receive a notification whenever updated data become available, sign up at:

https://tracfed.syr.edu/cgi-bin/tracuser.pl?pub=1

https://twitter.com/tracreports

or like us on Facebook:

https://facebook.com/tracreports

TRAC is self-supporting and depends on foundation grants, individual contributions and subscription fees for the funding needed to obtain, analyze and publish the data we collect on the activities of the US Federal government. To help support TRAC's ongoing efforts, go to:

https://trac.syr.edu/cgi-bin/sponsor/sponsor.pl