IRS audits affect taxpayers, with racial disparities noted

As Tax Day approaches, many taxpayers are anxious about audits, despite only 0.2% of Americans being audited in 2020. Audits can sometimes lead to increased refunds, not just additional taxes owed. The IRS audits individuals and organizations to verify the accuracy of reported income and tax information. Audits can be random or triggered by discrepancies in tax filings. Higher income earners and those claiming certain credits face a greater likelihood of being audited. The IRS typically audits returns from the last three years but may go back six years for significant errors. A recent study found racial disparities in audit rates, with Black taxpayers being audited at much higher rates than non-Black taxpayers.