Colorblind Tax Enforcement
97 NYU L. Rev. __ (2022 Forthcoming)
GWU Legal Studies Research Paper No. 2021-48
56 Pages Posted: 21 Jul 2021 Last revised: 25 Feb 2022
Date Written: July 20, 2021
The United States Internal Revenue Service (“IRS”) has repeatedly taken the position that, because the IRS does not ask taxpayers to identify their race or ethnicity on submitted tax returns, IRS enforcement actions are not affected by taxpayers' race or ethnicity. This claim, which I call “colorblind tax enforcement,” has been made by multiple IRS Commissioners serving in multiple Administrations (both Democratic and Republican). This claim has been made to members of Congress and to members of the press.
In this article, I refute the IRS position that racial bias cannot occur under current IRS practices. I do so by identifying the conditions under which race and ethnicity could determine tax enforcement outcomes under three separate models of racial bias: racial animus, implicit bias, and transmitted bias. I then demonstrate how such conditions can be present across seven distinct tax enforcement settings regardless of whether IRS asks about race or ethnicity. The IRS enforcement settings analyzed include summonses, civil penalty assessments, collection due process hearings, innocent spouse relief, and DOJ referrals.
By establishing that IRS tax enforcement practices remain vulnerable to racial bias, this article also challenges the IRS decision to omit race and ethnicity from the collection and analysis of tax data. The absence of publicly available data on IRS enforcement activities by race should not be interpreted as evidence that no racial disparities exist. I conclude by describing alternative approaches to preventing racial bias in tax enforcement other than the current IRS policy of purported colorblindness.
Keywords: Tax, Race, Tax Administration, Tax Data, Tax Enforcement
JEL Classification: K34, K00, E00, E40, E50, E60, H20, H70, H72, H77
Suggested Citation: Suggested Citation