Michiganders face little chance of an IRS audit

Tax Day has come and gone and most households have put their irritation with the IRS behind them for another year.

Unless they get hit by an audit.

But in Michigan, the chances of a taxpayer getting audited by the IRS are rather small, according to the latest research. One reason is that the IRS audits taxpayers with household income between $50,000 and $100,000 the least, and most Michiganders fall into that category.

The main reason why audits are not a big concern in our state is that areas that are audited the most, surprisingly, are those with a preponderance of poor people.

A study by the journal Tax Notes has found that the five U.S. counties with the highest audit rates are rural counties in the Deep South with predominantly black populations. The audit rate is also very high in south Texas’ largely Hispanic counties; in counties with Native American reservations, such as in South Dakota; and in primarily poor, white counties, such as those in eastern Kentucky in Appalachia.

In Michigan, only Wayne County residents are audited significantly above the national average of 7.7 audits per 1,000 tax returns.

According to ProPublica, an online news site that specializes in investigative journalism, the most clear-cut link between taxpayers and IRS auditors is a relatively obscure federal tax deduction known as the Earned Income Tax Credit. The EITC is designed to provide tax rebates to the working poor to help lift them out of poverty.

At the same time, the IRS audits EITC recipients at a higher rate than all but the richest Americans. That’s in response to pressure on the agency from congressional Republicans who suspect EITC fraud or incorrect payments of the credit.

In fact, the Tax Notes study found that more than a third of all audits nationwide target those who claim the EITC credit.

An IRS spokesperson told ProPublica that tax returns are selected for audit without regard to race or where the taxpayer lives or whether a particular tax credit or deduction is involved.

In addition, the IRS points out that it offers a program that provides free legal help to low-income taxpayers. That includes Mississippi, the state with the highest audit rate in the country. But the program only offers one attorney to cover the state’s 82 counties.