DOUG JONES al a! llm?tr? Status Ernst: April 4, 2019 The Honorable Charles P. Rettig Commissioner Internal Revenue Service 1111 Constitution Avenue, NW Washington, DC 20224 Dear Commissioner Rettig, I write to you concerning recent reporting on the geographic disparities of Internal Revenue Service (IRS) audits of individual taxpayer returns. A study of recent audit rates, as reported by ProPublicall], revealed that taxpayers in areas of the country that are more rural and less wealthy than the national average are overwhelmingly more likely to come under IRS scrutiny than wealthy or city-dwelling taxpayers. To concentrate so exclusively on this subset of taxpayers de?es explanation. For example, in Greene County, Alabama (population, 8,330), with a median household income of less than $21,000lzl, it appears that taxpayers are audited over 40 percent more often than the national average, including areas that are much more urban and wealthy. For comparison, Bergen County, New Jersey, with a median population of nearly 1 million residents, and a median household income of over $90,000, ?nds its audit rate exactly at the national average. This is no anomaly. The chances of an IRS audit seem to correlate nearly exactly with the taxpayer?s proximity to either the rural Southeast or, in several stark cases, to Native American reservations. According to IRS statistics, the annual ?tax gap,? or the gross gap between total taxes owed and total taxes paid on time was over $450 billionm. To take such a large portion of limited IRS resources and to focus them so intensely on rural communities in Alabama and the Southeast makes little ?scal sense. Moreover, the practice appears to be blatantly discriminatory. In an effort to focus its resources and ensure fair treatment of all taxpayers, I believe the IRS should undertake a full and thorough review of the policies and practices that led to such a disparate geographic impact of its annual audits. Given the overwhelming focus on my constituents in the state of Alabama, I would request you respond to the following questions: I Does the IRS have any of?cial policy dictating that low-income or rural geographic areas be subjected to increased audit rates? ?Where in The U.S. Are You Most Likely to Be Audited by the 1128??, ProPublic, April 1, 2019, ?1 United States Census Bureau, ?What is the Tax Gap?", Tax Policy Center, linp5:.- I'll I a Does the IRS, in any manner, consider the taxpayer?s address in determining whether to conduct an audit? - Has the IRS conducted a study or analysis on the ?scal impact of its current practice of geographically concentrating audits versus the ?scal impact of a system that resulted in more evenly dispersed audits? - Similarly, has the IRS conducted a study or analysis on the ?scal impact of its current practice concentrating audits in low-income and rural communities versus the ?scal impact of a system that resulted in audits being conducted in geographic proportion to the amount of expected tax revenue?I I Has the IRS conducted a study or analysis on the impact of increasing pre??ling education or tax ?ling assistance in the communities currently oversampled for tax audits, and the effect this education or ?ling assistance may have on reducing employee hours spent on subsequent audits? Thank you for your attention to these important questions. I look forward to your timely response. Sincer Do Jon United St es Senator