Pascrell Praises IRS Action to Fix Broken Audit Process

IRS overhauls efforts to reduce disparities and prioritize enforcement on wealthy tax cheats

WASHINGTON, DC – Congressman Bill Pascrell, Jr. (D-NJ-09), the Ranking Member of the House Ways and Means Subcommittee on Oversight, today praised the Internal Revenue Service (IRS) for announcing a new push to address the disgraceful auditing disparity between poor and wealthy Americans.

In March of this year, Pascrell led his colleagues demanding this exact action and calling on the IRS to eliminate the “reprehensible racial discrimination built into the IRS’s audit selection.” Today the IRS announced it was heeding Pascrell’s calls.

“For years, IRS auditing processes went easy on wealthy tax cheats while disproportionately targeting some of the poorest communities in our country,” said Congressman Pascrell. “These disparities at the heart of our tax enforcement harms all of us. The IRS’s announcement that it will rebalance enforcement disparities is a momentous step for the agency under the new commissioner. The IRS is too often an easy political target. Democrats provided the IRS resources to close the tax gap and have used our power to remove disparities in tax auditing root and limb. Enshrining true tax fairness in our system is essential to building a lasting democracy. By deciding to go after high wealth individuals and large corporations who are not paying what they owe, the IRS is taking a critical step to achieving that fairness.”

A recent Stanford University study found that Black taxpayers are audited by the IRS at 2.9 to 4.7 times the rate of non-Black taxpayers. According to the report, IRS has targeted low-income taxpayers who claim the Earned Income Tax Credit (EITC). The elevated audit rate among EITC recipients is a well-documented phenomenon, which only grew worse under Trump IRS head Charles Rettig. The report further found Black taxpayers that claim the EITC are between 2.9 and 4.4 times as likely to be audited as non-Black EITC recipients.

On March 9, 2023, Pascrell and his colleagues asked Commissioner Danny Werfel to provide by March 31, 2023, a “detailed plan and timeline for implementing corrective action to address racial disparities in audit selection and outlining how the IRS plans to direct tax enforcement funds provided under the IRA to crack down on wealthy tax evaders.”

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