Corson and Campbell Counties are situated right next to each other, along South Dakota's northern border. Both encompass vast, sprawling plains, and are rural — Campbell more so with a population under 1,400, and Corson's just over 4,000.
But look closer at the two counties and you'll find that despite sharing a border, they are vastly different. Campbell County is over 97% white, its residents earning a median household income of nearly $52,000, and less than 10% in poverty, per Census data.
Just west, in Corson County, lies the southern half of the Standing Rock Indian Reservation. Nearly 66% of Corson County's residents are Native American, and over 42% live in poverty. The county's median household income is just over $32,000.
Corson County residents are also audited by the Internal Revenue Service at more than twice the rate as their neighbors to the east.
According to an April ProPublica report, Corson County is the third-most audited county in South Dakota, with approximately 10.5 of every 1,000 income tax filers being audited between 2012 and 2015. Campbell County was tied for the least-audited county in South Dakota in those same years, with 4.7 filers per 1,000 being audited.
A nationwide trend
The discrepancy between Corson and Campbell Counties is part of a larger, nationwide trend. According to a December ProPublica report, the number of audits conducted by the IRS nationwide plummeted 42% between 2010 and 2017. But that drop impacted high- and low-income Americans differently.
From 2011 to 2017, audits of people earning $200,000 to $500,000 annually dropped by 74%; from $500,000 to $1 million by 71%; from $1 million to $5 million by 70%; from $5 million to $10 million by 62%; and $10 million and above by $52%.
However, for filers who claim the Earned Income Tax Credit — who, on average, make less than $20,000 per year — that audit rate dropped by only 36% in the same time period.
In short, the IRS is easing up on audits of the highest-earning Americans, while maintaining pressure on the lowest.
Kim Bloomquist, a retired senior economist with the IRS Office of Research, saw ProPublica's report and hypothesized in a March report published with Tax Notes that "a predictable consequence of this realignment of IRS enforcement is growing regional bias in audit case selection (...) because EITC taxpayers are not randomly distributed throughout the country."
Bloomquist appears to be correct. In an April report, ProPublica published a heat map of counties' audit rates across the country, which appears very similar to a heat map denoting which counties have the highest number of filers claiming the EITC.
States in the Northeast and parts of the Midwest are mostly a dull grey, denoting that the majority of their counties are audited at or below the national average of 7.7 audits per 1,000 filings.
The Deep South is painted a range of pink and deep magenta, with a clear concentration of color along the majority-Black and impoverished Mississippi Delta, which saw the highest audit rates in the country between 2012 and 2015.
Audit rates in the Midwest
In the Dakotas, it's a mix. Forty-three of South Dakota's 66 counties are audited at or below the national average. In North Dakota, it's 35 of 53. But amidst the grey is a smattering of pink, primarily in counties with lower incomes, many of which where Native American reservations are located.
In South Dakota, the most audited county is Oglala Lakota County, home to the Pine Ridge Reservation. The county is 92.5% Native American, with 41.5% in poverty, according to the Census. At 11.2 audits per 1,000 filings, Oglala Lakota is the 12th-most audited county in the United States.
Behind Oglala Lakota are Todd and Corson Counties, home to the Rosebud and Standing Rock Reservations, at 10.7 and 10.5 audits per 1,000 filings, respectively.
Three of North Dakota's five most-audited counties are home to reservations: Sioux County, where the northern half of Standing Rock Reservation is located, is the most-audited. Benson County, home to the Spirit Lake Reservation, comes in second, and Rolette County, home to the Turtle Mountain Reservation, third.
The vast majority of Minnesota and Wisconsin counties are audited at or below the national average, except for four Minnesota counties: Mahnomen, Traverse, Beltrami and Cass Counties, all but one are home to reservations. In Wisconsin, only Menominee County, home of the Menominee Reservation, is audited above average.
In an April 9 Congressional hearing, U.S. Rep. Charlie Crist, D-Fla., held up ProPublica's map before IRS Commissioner Charles Rettig. Crist said, "When you look at the map, you probably see a heat map of lower-income filers.... But there's more here that's disturbing."
"What I see is the Black belt of the Mississippi Delta," Crist said. "I see the border region of Texas, the desert Southwest and California Central Valley, and tribal areas of the Upper Plains and Midwest.
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"The map looks like the IRS is targeting Black, Hispanic and Native American populations for audit," Crist concluded.
"Is that the case?" Crist asked Rettig, who responded, "no."
Why audit low-income earners?
The IRS maintained through April's hearing and media reports that race and geography are not considered when deciding who to audit. They declined to elaborate when contacted by Forum News Service.
Caleb Smith is the director of University of Minnesota's Ronald M. Mankoff Tax Clinic, which, as part of a nationwide network of tax clinics, helps low-income people with tax controversies, including audits. He said the IRS's tendency to audit EITC recipients is a policy issue, and "the big thing to realize is everything is extremely automated."
The IRS's budget has been slashed in recent years, causing the agency to cut agents and reduce the overall number of audits, per ProPublica. While losing resources, the IRS is under pressure to maintain its audit revenues, and Smith said audits on EITC recipients are easy targets.
Smith said there's a public perception of what an audit is like — the IRS storms in and takes your books, you're in contact with an IRS agent through the long, drawn out process — but that's only "semi-true" for audits of wealthy people.
In reality, for low-income disputes and EITC cases, individual agents are not assigned. Low-income disputes are mostly handled by mail, through what Smith called "warehouses" of IRS agents, who inspect multiple cases at a time.
EITC recipients who are audited are usually asked to provide proof that they care for the children they claim.
"You'd think it's pretty easy," Smith said, but not always. The IRS requires very specific documents in order to prove a child's residence and guardianship: a birth certificate, school or hospital records — records that Smith said aren't always easily available to low-income filers or immigrants.
And when someone sends in their documents, whoever sees them that day "has pretty much no discretion" over whether to accept or deny them, Smith said.
"So if you send a lot of documents that would make clear to any human being, yeah, that kid lived with you, but they don't fit perfectly in the little peg the IRS set out for you (...) their direction is to deny it," Smith said.
Taxes, audits and the whole system are hard to navigate for anyone, but particularly low-income, immigrant or non-English-speaking people. Smith said it's easy for filers to confuse where they have to send their documents, and it can take months to hear back after you do.
And then there's the emotional toll. Smith said he had clients who waited to open their letters from the IRS because they had other more pressing problems and "they just emotionally cannot handle it."
"When they have a tax problem, usually they have a lot more imminent problems — housing insecurity, health problems," Smith said. "Taxes are just one more thing on the plate and it's one that they really don't understand."
As complicated as this can be for the person being audited, it's a pretty black-and-white, automated process for the IRS. These cases, above all, are efficient — an easy target for the money- and time-strapped IRS.
And then there's what Smith called "the elephant in the room": In the 1970s, and again in the 1990s, the tax code was changed to deliver traditional welfare benefits through the tax code.
"We've always, as a society, just broadly speaking, not tolerated anything that looks like welfare fraud," Smith said. "So we'll go after it hard."
Rettig during the April Congressional hearing said that the IRS "has no filters whatsoever that identify individuals by race, religion, or any other capacity." And he said the IRS is "working very hard" to solve the issues with the EITC controversies.
But Crist said "it is not good enough to say the IRS doesn't consider race when making audit determinations."
"Disproportionate impact is an important way to identify racism in policies and procedures that may not deliberately or intentionally want to do so," Crist said. "Sometimes, in order to find racial discrimination occurring, you’ve got to sort of look back after the fact and analyze if the systems or the algorithms that may be in use would violate or could violate individual civil rights, even if you didn't mean to."