The top 10 counties for the highest income tax audit rates in the United States are in communities where the average population of people of color is 80 percent. The ten counties for the lowest income tax audit rates in the United States are districts where white residents’ average population is 90 percent. While audit selection is “colorblind,” the impact is patently racist.

Moreover, the selection is antithetically classist as well. All of the top 10 communities are in poverty-stricken neighborhoods in Mississippi, Alabama, or Louisiana. These disproportionate audit rates result from the high quality of participation in the Earned Income Tax Credit (EITC) in these communities, coupled with the EITC’s high audit rate. Given the significant short-term and long-term health, education, and benefits families and their communities enjoy from the EITC, and the adverse health consequences of being audited and denied the EITC, the intersection of these factors not only exacerbates income and wealth inequality but perpetuates the cycle of poverty. This is the exact opposite of the EITC’s purported goal to encourage work and lift families out of poverty. Nevertheless, communities of color are suffering this double-edged sword with little relief or resources.

This presentation builds on existing EITC scholarship, including countless studies demonstrating the broad-based EITC benefits for families, including but not limited to increased work rates, decreased smoking, increased birth weight, higher test scores, better job attainment, and higher household income, etc. Recent scholarships have monetized EITC audits’ adverse impact and benefit denials on families, including the 80% of whom may qualify for EITC benefits. These adverse consequences include reduced future tax filings, tax refunds, and employment. Consistent with Professor Eubanks’ recent book “Automating Inequality: How High-Tech Tools Profile, Police, and Punish the Poor,” Professor Lipman explains how automated EITC correspondence audits are discriminatory even though they are “colorblind.” Given the significant economic hardships and inherent racism of the current system, something must be done. The first step to resolving systems of injustice is shining a bright light of truth on the problem. This panel achieves this goal.

Learning Objectives:

• List IRS audit data and distributions


• Identify the top and bottom audited zip codes


• Identify EITC data, audits, and post-EITC audit behavior


• Identify issues of racial discrimination in EITC audits


• Recall potential outcomes of inaction


• Determine if solutions to the issue exist