In our commentariat there is a widely held belief that the only people who fear IRS audits are tax cheats.

If you actually apply the worldview of Matts Fuller and Yglesias, African Americans are disproportionately tax cheats. That seems unlikely to me, and I don’t think the Matts would say that. But the Government Accountability Office recently noted research concluding that “Black taxpayers are audited at higher rates than taxpayers of other races” and that African Americans are disproportionately likely to lose their audits.

The GAO discusses this fact in the context of pursuing greater equity in audits. The clear implication is that the IRS audit process in 2024 is inequitable — unfair.

A key argument from the GAO: Folks who don’t have time or resources to fight an audit seem disproportionately likely to lose an audit and end up owing the IRS money, even if their original filings were correct.

Here’s a quick summary of what the GAO found:

The IRS decides which taxpayers to audit in part based on the success rate of its past audits. If a taxpayer wins, the result is a “no change” finding. A high percentage of “no change” audits suggests the IRS is targeting the wrong folks, and so the agency tweaks its audit algorithm so as to minimize “no change” outcomes.

Whose filings require a change after an IRS audit? You could put them into four categories:

1. Folks who cheated on their taxes and got caught.
2. Folks who made an error on their taxes.
3. Folks who filed properly but cannot convince the IRS of it, if for instance, they couldn’t produce all the records the IRS demanded.
4. Folks who just never got around to answering the IRS.

Those last two groups interest me the most. Not everyone has the time or resources to keep meticulous records or knows exactly what records he or she is supposed to keep. Also, not everyone has the skills of navigating the demands of bureaucrat-accountants.

The GAO’s study considers that fourth group, which makes up a massive portion of the IRS’s “successful” audits.

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Here’s what the GAO found: “the calculation of the no-change rate includes default audits — audits closed as a ‘change’ because taxpayers did not respond or provided insufficient responses to IRS’s notices. IRS officials said their recent research found that Black taxpayers are more likely not to respond to IRS correspondence than taxpayers of other races. Default audits also may be more common among low-income and EITC taxpayers, because of challenges that make communicating successfully with IRS more difficult, such as being transitory or not having bank accounts.” (Emphasis added.)

This GAO report ought to reshape the media’s notion of who fears audits and who suffers from audits: Disproportionately, it’s the folks who have a harder time fighting The Man.