IRS Service Woes Slowing Streamlined Low-Income Taxpayer Audits

The Internal Revenue Service’s long-standing resource constraints and customer-service challenges are hampering what is supposed to be a streamlined process used to audit low-income taxpayers who claim the earned income tax credit.

The agency typically relies on “correspondence audits” to conduct hundreds of thousands of earned income tax credit audits each year. Correspondence audits are designed to be narrowly focused, typically focusing on a specific issue on a taxpayer’s return in a single year, allowing the agency to conduct a larger number of audits with fewer employees.

The IRS maintains that auditing taxpayers claiming the earned income tax credit is ...