Biden IRS nominee pressed on ‘troubling’ reports on audit rates of Black taxpayers

CORRECTION: Sen. Ron Wyden is a Democrat from Oregon. An earlier version of this story included incorrect information.

Danny Werfel, who was tapped by President Biden to head up the Internal Revenue Service, committed before Congress to look into recent reports of racial disparities in agency audits if he is confirmed.

Senate Finance Committee Chairman Ron Wyden (D-Ore.) raised the issue during Werfel’s confirmation hearing before the panel on Wednesday morning.

“There have been troubling recent reports that Black Americans are at least three times as likely to be audited as other taxpayers, even though the IRS doesn’t collect information on race,” Wyden said toward the start of the hearing. 

“This raises serious questions about discrimination with respect to audit selection,” he said, before pressing Werfel about what he would do, if confirmed, to “uncover the reasons for the racial disparity in audit selection” and what he would “do to correct it.”

In response, Werfel, a former acting IRS commissioner who served under the Obama administration, called the disparity “concerning” and said “fairness is an essential element of tax administration.”

“We have to have an understanding of whether our approaches or activities are having disparate impacts on any population. It’s particularly alarming if it’s having a disparate impact on racial minorities. Right now, not being at the IRS, I don’t yet have a good sense of what the issue is — ” he began before Wyden interjected.

“Let’s do this,” Wyden said. “Will you commit within 60 days of being confirmed that you will get back to us and give us the underlying reasons, in your view, why there is this discrimination and what you’ll do to correct it within 60 days?”

“I will absolutely, as soon as I get to the IRS, talk to those individuals that are working this issue and report back to you on what we’re finding,” Werfel testified.

A paper published by the Stanford Institute for Economic Policy Research last month found that Black taxpayers bear a disproportionate burden compared to non-Black taxpayers when it comes to audit rates.

The research showed that Black taxpayers were audited 2.9 to 4.7 times more often that non-Black taxpayers and raised questions about the technology the agency uses to determine who gets audited.