Stellar Snippets
The IRS announced this week that it plans to reduce tax investigations for low-income taxpayers claiming the earned income tax credit (EITC).
It plans to shift more focus onto the wealthy and large corporations that are not footing their bills, hoping to free up more funds for families in need.
According to reports, almost half of the audits last year were on families making $25,000 or less claiming EITC. They received the audits by mail.
This can prolong the audit process, causing hardship for lower-income households relying on tax refunds for essential expenses.
Amending a return during an audit can extend the process by up to 16 weeks, and for low-income families, refunds can constitute up to 30% of their annual income.
The move is expected to also address racial disparity because Black taxpayers have been found to be audited 2.9 to 4.7 times more than non-Black ones.
The agency plans to focus more on people like bad actors, who file tax returns for vulnerable taxpayers like people of color and non-English speaking populations.