IRS Takes Action to Reduce Audits on Low-Income Tax Credit: Promises to Address Disparities

The IRS has promised to cut down on audits for low-income tax credits, aiming to fix unfairness in their process. Commissioner Danny Werfel revealed this plan during a House hearing, stating they’re reducing audits for the Earned Income Tax Credit (EITC). They’re also testing new methods to choose who gets audited, hoping to make it more fair. But, they need more time to make sure these changes work.

IRS Takes Action to Reduce Audits on Low-Income Tax Credit: Promises to Address Disparities

IRS Vows to Ease EITC Audits and Boost Access for Eligible Workers

Research showed that Black Americans face more audits for this credit, often due to a flawed computer program. This program picks who gets audited, and it’s been unfair. Werfel confirmed this in a letter to the Senate Finance Committee, admitting they’ve been working to fix it. They’ve looked into their systems and data to solve the problem.

In September, the IRS said that it would address this problem by reducing the number of postal audits for EITC claims. Tax breaks for low-income workers are provided via the Earned Income Tax Credit (EITC); nevertheless, many eligible individuals fail to take advantage of this opportunity. Applying is difficult, and errors frequently occur. Millions of people still benefit greatly from it, as it provides them with refunds even in cases where they have no tax liability.

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How IRS Improvements Ensure Fair Access to Earned Income Tax Credit

In 2022, millions got $57 billion from the EITC, with an average of $2,541 per person. For households with three or more children, it can be worth up to $7,430. Even workers without children can get up to $600. However, the application process can be tricky, leading to many eligible people missing out.

The IRS’s efforts to reduce audits on low-income tax credits aim to make the system fairer for everyone. By addressing disparities and improving their processes, they hope to ensure that those who qualify for the EITC can access this valuable tax benefit without unnecessary scrutiny.

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