Sen. Burr Pushes IRS to Provide Reasons for Taxpayer Audits
WASHINGTON – Senator Richard Burr (R-NC) today introduced a bill to force the Internal Revenue Service (IRS) to present a taxpayer clear reasons why an individual or business is chosen for an audit. The legislation, the Biased IRS Audit Systems (BIAS) Prevention Act, will ensure that the IRS is fairly administering the tax code by requiring that the IRS provide documented justification to taxpayers for the standard audits it conducts. Recent government watchdog studies found that the IRS needs better protocols to protect citizens and ensure fairness across the entirety of its audit selection process.
“When taxpayers are audited by the IRS, they deserve to know why. Taxpayers have a right to know if they are being treated fairly by the IRS, especially in light of revelations that the IRS has targeted Americans for their political beliefs,” said Senator Burr. “A government watchdog recently found that the IRS can unfairly select an individual for an audit, and that potential for bias must be eliminated. This bill will bring much needed transparency by making the audit selection process used by the IRS clearer to those who are getting audited. It’s true that no one wants the hassle of an IRS audit, but the government owes the taxpayer a reason for being subjected to one.”
The BIAS Prevention Act would also end so-called “Audits from Hell” or “guinea pig audits” -- these are audits that have been continually resurrected by the IRS despite congressional efforts to make the agency more taxpayer friendly. These intensive, multi-year research audits are conducted solely for the purpose of “research” by the IRS, not to catch mistakes or to check inconsistencies in tax returns. These so-called “research audits” needlessly burden taxpayers by subjecting them to quality control experiments to assist IRS planning. It is not the job of taxpayers to serve as guinea pigs for IRS bureaucrats. Senator Burr’s office recently became aware of a North Carolina couple who, after facing three audits that all resulted in no changes to their tax returns, was selected for additional, extensive audits purely for research purposes. This means the couple, in a span of 8 years, could be audited 6 times.
Instead of guinea pig audits, the BIAS Prevention Act would focus IRS resources on combatting tax refund fraud and identity theft. Tax fraud related to identity theft is a $21 billion problem and growing; the IRS should not be conducting tens of thousands of guinea pig audits while simultaneously claiming that they don’t have the budget to combat tax-related identity theft.
About the bill:
- IRS shall ensure that any taxpayer, at the time of being notified of a standard audit, be provided an explanation as to why they were selected for such audit.
- IRS shall retain records and make them available to the taxpayer and various oversight bodies to ensure that standard audits are not influenced by political bias, inaccurate sources of information, or bias at the individual examiner or department level.
- The IRS shall be prohibited from conducting “guinea pig audits”, which is any audit that is purely for research purposes, not to catch mistakes or inconsistencies.
- The IRS shall be required to submit a plan to Congress on how it can take the resources it currently uses to conduct tens of thousands of guinea pig audits and redirect them to combatting real tax fraud and identity theft.
- The BIAS Prevention Act maintains the IRS’s current ability to conduct standard audits.
Government watchdog studies about the need for improvement to the audit selection process:
- IRS Return Selection: Wage and Investment Division Should Define Audit Objectives and Refine Other Internal Controls
- IRS Correspondence Audits: Better Management Could Improve Tax Compliance and Reduce Taxpayer Burden
- IRS Examination Selection: Internal Controls for Exempt Organization Selection Should Be Strengthened
- Certain Internal Controls for Audits in the Small Business and Self-Employed Division Should Be Strengthened
The BIAS Prevention Act bill text is available here.
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