ProPublica reports that the IRS audits the rich and the poor at about the same rate, because it’s just cheaper and easier to audit poor people.

Audit Rates the Same

According to ProPublica the IRS audits the top 1% of taxpayersby income at a rate of 1.56%. IRS audits EITC recipients, who typically have annual income under $20,000, at 1.41%.

Of course the IRS knows that the rich pay the lion’s share of taxes and should be more lucrative audit targets. But the rich are also most able to defend themselves against aggressive audits.

The Poor Are Relatively Defenseless

The poor on the other hand, can be audited, billed, and collected from with relatively little resistance. Once again according to ProPublica’s article,

“The agency audited 382,000 recipients of the EITC in 2018, accounting for 43% of all audits of individuals last year. When we mapped the estimated audit rates for every county in America, the counties with the highest audit rates were poor, rural, mostly African American and in the South, a reflection of the high number of EITC claims there.”

According to the Internal Revenue Code, Americans are entitled to a “fair and just” tax system. I would be interested to know how beating small money out of the poor squares with that right.

Lysander

Lysander Venible is the author of "On Your Own in Tax Court," a book about how to save your shirt in U.S. tax court. He has been engaged with the Service for over 10 years both administratively and in tax court.

If you have questions, topics or a situation you'd like to discuss, his phone and email are at the top of every page.

Lysander is not an attorney and it is not his intent to offer legal advice.
Lysander