U.S. House Democrats held a hearing questioning the fairness of IRS audit rates. A recent GAO report found IRS audits of high-income Americans have dropped while audits of those claiming the Earned Income Tax Credit (EITC) remain high. The audit rate for EITC taxpayers is 0.77%, compared with 0.25% for all taxpayers. A taxpayer with income under $25,000 is twice as likely to be audited as someone earning $200,000 – $500,000. Rep. Tom Rice (R-SC) said he believes the audits of lower-income taxpayers claiming refundable tax credits, such as the EITC, are due to high error rates of those claims. “In the last fiscal year, the improper payment amount on the EITC totaled $19 billion,” he stated.
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