US News - In 2021, taxpayers filed 164 million individual income tax returns and the IRS audited 626,204 of them. The IRS might flag a return for review based on random selection and computer screening or if it involves "issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit."
But are audits discriminatory, with one group of taxpayers being audited more frequently than others? A 2023 Stanford Institute for Economic Policy Research report suggests they may be. The study analyzed microdata on roughly 148 million tax returns and 780,000 audits starting in 2014, and discovered that Black taxpayers were audited at 2.9 to 4.7 times the rate of non-Black taxpayers.
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