Audits of Low Income Taxpayers on the Rise
Low income taxpayers, defined as the "working poor" with annual income below $25,000, are being targeted to catch fraudulent claims of earned income tax credits.
Audits of low income taxpayers, which the study said also included taxpayers who don't file any taxes (income = $0), generally are handled through computer generated correspondence. Face-to-face meetings with IRS agents are rare.
The shift towards lower income audits comes from a mandate from Congress for the IRS to restructure and be more cost effective. Computer generated letters, which by nature are much more cost effective to produce than face-to-face meetings, can easily target "obvious" cases which often revolve around earned income credits.
The study concluded that low income taxpayers are 18% more likely to be audited than wealthy taxpayers.
Computer "red-flagging" by the IRS has "increased tremendously," said a spokesman for the National Taxpayers Union, and may be the way most people encounter the tax man now.