Wealth, power, and the internal revenue service: Changing IRS audit policythrough litigation

Objectives. Although scholars have recognized that the wealth and power of litigants has substantial influence on litigation outcomes, there has been less recognition of the ability of the wealthy to sway agency policy throug h litigation. I argue that the wealthy, through lawsuits and the outcomes f rom the litigation, influence Internal Revenue Service (IRS) audits of the wealthy and the less affluent. Methods. I examine IRS state audit races and use ordinary least squares regression with panel corrected standard errors . Results. I show that wealthy litigants can influence the IRS to decrease audits of the wealthy and increase audits of the less affluent. Conclusions . The wealthy appear to have the ability to influence IRS policy through la wsuits. Litigation can influence agency policy.