The Internal Revenue Service said on Monday that Black taxpayers have been far more likely to be audited than others and that it is considering changes to its case selection process to address discrimination in how the tax code is enforced.
The acknowledgment came after the publication of research this year showing that Black taxpayers were disproportionately audited, prompting calls from members of Congress for a review into the methodology and algorithms that help determine who is selected. The tax collection agency, which received an $80 billion infusion in funding last year as part of the Inflation Reduction Act, has said it would work to make the system more equitable.
“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,” Daniel Werfel, the I.R.S. commissioner, wrote in a letter to Senator Ron Wyden of Oregon, the Democratic chairman of the Senate Finance Committee.
Mr. Werfel said the I.R.S. had dedicated “significant resources” to determine the reasons for the disparity and evaluating the data that is available to the agency when deciding who to audit and its automated processes. He suggested that the I.R.S. could consider basing audits on “broader tax issues” rather than focusing on people who might be improperly claiming earned-income tax credits.
The research found that Black taxpayers were three to five times more likely than taxpayers who are not Black to be audited. It noted that the I.R.S. disproportionately flagged tax returns with potential errors in the claiming of certain credits, like the earned-income tax credit, which supplements low-income workers’ incomes in an effort to alleviate poverty.
The I.R.S. does not collect information about race as part of the tax-filing process, and Mr. Werfel did not say whether he believed that should change.
Senator Elizabeth Warren, Democrat of Massachusetts, said last month that the I.R.S. should collect racial data in a way that allows the agency to guard against racial bias.
Mr. Wyden said on Monday that it was “shameful” that racial disparities in algorithms used by the I.R.S. had been guiding the audit selection process. He urged Mr. Werfel to correct that with the next filing system.
“You cannot have equality in society if algorithms and other automated systems that affect people’s lives treat them differently based on the color of their skin,” Mr. Wyden said.
Mr. Werfel said he intended to use some of the $80 billion that has been dedicated to modernizing the I.R.S. to improving outreach to underserved communities and helping those taxpayers claim credits that are available to them. He added that the agency would also be working to reduce disparities in tax enforcement on the basis of gender, geography and ethnicity.
“The I.R.S. is committed to enforcing tax laws in a manner that is fair and impartial,” Mr. Werfel said. “When evidence of unfair treatment is presented, we must take immediate actions to address it.”