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Monday, March 6, 2023
Kemker: Do Black Taxpayers Matter? A Vital Tax Evaluation Of IRS Audit Practices
Diane Kemker (DePaul & Southern), Do Black Taxpayers Matter? A Vital Tax Evaluation of IRS Audit Practices:
The Earned Earnings Tax Credit score, a federal anti-poverty program administered by means of the tax system, offers a complete of about $65 billion a yr in “refundable credit” (a cost in extra of tax legal responsibility) to greater than 25 million working low-income taxpayers, who obtain a mean of about $2000 (the exact quantity is dependent upon their variety of dependents). Its complicated eligibility guidelines produce persistently excessive error charges, that are in flip used to justify excessive audit charges and a grossly disproportionate share of IRS enforcement exercise. Due to the small greenback quantities concerned, EITC audits will not be profitable, though they’re additionally not terribly expensive (as most are performed by correspondence and never contested). EITC audits are pre-refund, forcing poor taxpayers to attend months even for the undisputed portion of what they declare. Those that are audited are deterred from claiming it once more; some errors can disqualify taxpayers from receiving it in future years. Given all this, maybe it’s not shocking that the EITC is underclaimed (about 20% of the eligible don’t declare it).
Making issues worse, regardless of the formal race-neutrality of the Inside Income Code and all IRS insurance policies and practices, EITC audit practices have grossly racially disparate results. America’s poorest, Blackest counties are audited at among the very highest charges. Black EITC claimants, and particularly Black fathers claiming the EITC, are the likeliest taxpayers in America to be audited. Current work by economists has confirmed what many essential tax regulation students have lengthy suspected: that the identical systematic racial inequities lengthy recognized and decried within the allegedly race-blind prison justice system afflict the tax enforcement system as nicely.
This Article breaks new floor through the use of essential idea, the work of Michel Foucault, Vital Race Principle, and intersectional evaluation, to assist perceive and interpret empirical information concerning the EITC and IRS EITC audit practices that in any other case defy clarification – not solely these racially disparate impacts but additionally the complicated and punitive options of the EITC itself and the continuing expenditure of scarce IRS sources on pointless EITC enforcement. This evaluation reveals the position performed in tax coverage and tax enforcement by the exact same persistent anti-Black stereotypes which have distorted each prison justice and American welfare coverage: myths about Black laziness, criminality, promiscuity, and household dysfunction. The Article additionally reveals the inadequacy of tax regulation casebook protection of this difficulty, which usually both ignores it or, worse, perpetuates the identical damaging stereotypes.
https://taxprof.typepad.com/taxprof_blog/2023/03/do-black-taxpayers-matter-a-critical-tax-analysis-of-irs-audit-practices.html
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