Is the IRS Racist?

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An AARP volunteer helps a man fill out his taxes (photo: Jonathan Ernst/REUTERS)

If you are a minority, you might want to take extra care filling out your taxes this April. Apparently, the Internal Revenue Service is gunning for you.

According to a study released on Thursday, African-Americans and Hispanics are twice as likely to get hit by an enforcement action from the IRS than the average US citizen. What’s worse, according to the study, is that in at least some of the instances minorities are being unfairly targeted:

Some minorities hit with IRS enforcement actions don’t owe any taxes and indeed might be entitled to a refund.  Nevertheless, the IRS still garnishes their wages, imposes tax liens, and levies their bank accounts which often costs them their jobs, ruins their credit ratings, and forces them into the underground cash economy.

The study comes from TaxLifeboat, a website that works with people who have run afoul of the IRS. According to Fortune.com, which first wrote about the study, TaxLifeboat’s CEO Thomas Evans says the rise in enforcement actions against minorities may not be intentional but the result of a recent effort to boost tax revenues. Unfortunately, it is having the opposite effect. Instead of going after more of the big abusers, Evans claims that a the IRS’ reliance on highly automated systems is pushing the agency toward filing more claims against low-income filers, who may have slight, but obvious, mistakes on their returns. When the IRS does find the errors, usually a few years after they are made, the agency imposes penalty fees and interest, which many of the low-income filers don’t have the resources to pay.

The IRS doesn’t specify the ethnicity of the people it files actions against. To do his study Evans, who works with thousand of low-income filers a year, took a look at the zipcodes that had the largest number of IRS actions and found that they were often areas with large minority populations. The IRS declined to comment on the study to Fortune.com.

Evans told Fortune.com, “The IRS enforcement actions drive workers and revenue out of the system. Once people are caught in that mill, their life changes, and they’re forced to stay in the underclass.”

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