A low-income and largely African-American county in Tennessee is the most heavily audited county in the United States, while wealthier counties continue to skate when it comes to policing tax evasion, a recent study by Tax Notes revealed.
The study found that Humphreys County, Tennessee, where the median annual household income is $26,000, is audited at a rate 51 percent higher than the majority white Loudoun County, Virginia, which boasts the highest median income in the nation at $130,000. On the flip side, more than a third of Humphreys County’s mostly Black residents live below the poverty line, yet are subjected to tax audits more than anyone in the country.
So why the intense scrutiny? Because most of the county’s residents are poor, more than half of them claim the earned income tax credit, a program aimed at helping low-income workers mitigate the effects of poverty.
Kim Bloomquist, a former senior economist with the IRS’ research division and the author of the study, mapped the distribution of IRS tax audits across the U.S. and noticed a direct correlation to the number of residents in each county who claimed the EITC tax credit. For instance, he found that counties with the highest audits rates saw 11 audits per 1,000 tax returns, which is more than 40 percent higher than the national average.
Taxpayers shouldn’t be “disproportionately targeted for claiming a certain tax credit,” Rep. Terri Sewell (D), whose Alabama district includes some of the counties heavily audited by the IRS, told ProPublica in response to the report. “[Congress] must ensure that the IRS initiates and executes audits in a fair and impartial manner.”
Bloomquist’s map not only revealed stark variations in audit rates from county to county but also how the practice affects certain groups of Americans more than others. The report showed that the five counties with the highest tax audits were predominately Black, rural communities in the South. Elevated audit rates were also found in largely Latino counties in Texas, counties with Native American populations like North Dakota, and poor white areas in Appalachia.
States with the lowest audit rates tended to have largely white, middle-class populations, like New Hampshire, Wisconsin and Minnesota, the report stated. ProPublica reported that taxpayers with household incomes between $50,000 and $100,000 are the least audited by the IRS. In 2018, the outlet also found that the IRS audits EITC recipients at higher rates than any other group besides those earning over $1 million each year.
In an email, an IRS spokesman told ProPublica that the agency doesn’t perform audits based on race or where a taxpayer lives.