IRS Accused of Racism for Using “Colorblind” Algorithm

IRS Accused of Racism for Using

( – When President Joe Biden signed the Democrats’ ill-fated Inflation Reduction Act (H.R.5376) into law last year, he unleashed IRS auditors on unsuspecting working-class taxpayers despite his promise the new law wouldn’t target poor or middle-class Americans. Yet, in a bizarre twist, his own Treasury Secretary recently conceded the agency could also be targeting blacks in particular.

On March 10, the Republican-led House Ways and Means Committee grilled Treasury Secretary Janet Yellen about the Biden administration’s recently released budget request for the fiscal year 2024. The topic of H.R.5376’s allocation of roughly $80 billion to hire new IRS auditors to target working-class families and to increase taxes by $4.7 trillion arose during the hearing.

In a stunning move, Yellen told committee members that recent studies suggested the algorithms used by the IRS to target individuals/families for audits could be “racially biased in the sense they are much more likely to audit… taxpayers of color” over others filing returns under “similar circumstances.” Continuing, Yellen warned lawmakers that it is vital for IRS officials to “become aware of that [fact] and make sure that the procedures they use are fair.”

A quick review shows only one study that dealt with the algorithms used by the IRS — one conducted by Stanford University’s Institute for Economic Policy Research in collaboration with economists working for the Treasury Department’s Office of Tax Analysis.

The study was published on January 30 and focused on racial disparities in tax audits. It found even though the audit selection process is colorblind, the IRS algorithms select black taxpayers for audits at a rate over 2.9 to 4.7 times that of non-blacks. Additionally, researchers held that the findings show “how seemingly technocratic choices” in designing algorithms can embed important “values and trade-offs.”

However, an examination of the data shows it doesn’t let other taxpayers off the hook. For instance, the latest figures released by the US Sentencing Commission on tax fraud offenders showed 52.4% were White, 28.3% Black, 11.1% Hispanic, and 8.2% were from other races. Roughly 82% of those audited had little or no prior criminal history.

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