IRS Hurdles in Reviewing EITC Audits

Date: June 27, 2022

Get Help from a Low-Income Taxpayer Clinic

The Earned Income Tax Credit, (EITC) can be claimed by lower income individuals and families. In 2021, the IRS estimated 24%, or 16 billion dollars, in EITC payouts were “improper” payments. To help decrease improper payments, hundreds of thousands of EITC “correspondence audits” are performed, focusing on a narrow issue in the taxpayer’s filing. A disproportionate number of audits (40% of audits) are conducted on low-income EITC recipients annually, although only 18% of taxpayers claimed an EITC. Correspondence audits are meant to help IRS conduct many audits, with fewer employees. However, limited resources and the pandemic impacted their ability to properly serve taxpayers. Taxpayers often spend hours on the IRS phoneline, hoping to get answers. Currently, the phone line has a service rate of 47%. After not receiving taxpayer response, the IRS closed 35% of audits in 2019.

Working with the IRS can be an intimidating and complicated process. If you have
received a letter questioning your EITC claim, get free assistance from a Low-Income
Taxpayer Clinic (LITC) at (812) 339-7668.

Franklin Hunt-Gonzalez,
Student Law Clerk