Tax Enforcement at the Intersection of Social Welfare and Vulnerable Populations

Authors

Michelle Lyon Drumbl, Washington and Lee University School of LawFollow

Document Type

Essay

Publication Title

Wisconsin Law Review

Publication Date

2024

DOI

https://doi.org/10.59015/wlr.RTWX5858

Abstract

This Essay engages with Professor Bernadette Atuahene’s theory of stategraft in the context of tax administration and the role that the Internal Revenue Service (IRS) plays in implementing certain social welfare benefits, including the Earned Income Tax Credit (EITC). Specifically, it considers whether the IRS’s denials of the EITC to those who might otherwise be eligible and entitled to it constitutes a wrongful taking by the state or a violation of basic human rights. While this Essay concludes that denials of the EITC generally do not fit within Atuahene’s definition of stategraft, it highlights two particularly problematic concerns with modern EITC enforcement and frames those within the context of Professor Atuahene’s broader concerns about how state actions affect vulnerable populations.

One concern is the racially disparate EITC audit outcomes that have come to light. Though the IRS does not collect information on taxpayer race and ethnicity, a recent report found that, among all taxpayers claiming the EITC, Black taxpayers are statistically more likely to be audited than non- Black taxpayers. The other concern relates to the so-called two-year ban, which can be imposed by the IRS following a determination that a taxpayer wrongly claimed the EITC or Child Tax Credit due to reckless or intentional disregard of rules and regulations. Though the ban is not imposed frequently, this Essay highlights due process and fairness concerns related to this authority. This Essay concludes with brief remarks about the IRS’s enforcement priorities and efforts to curtail improper payment rates of refundable tax credits.

Recommended Citation

Michelle Lyon Drumbl, Tax Enforcement at the Intersection of Social Welfare and Vulnerable Populations, 2024 Wisc. L. Rev. 587.