Watchdog: Improper IRS payments of tax credit increased last year

The Internal Revenue Service last year made no progress on reducing improper payments for a tax credit that helps the working poor, handing out an estimated $13 billion to $16 billion through the program in error, according to a watchdog report.

The Treasury Inspector General for Tax Administration said the faulty payments accounted for up to 26 percent of the Earned Income Tax Credits that filers claimed in 2013.


(J. David Ake/AP)

In comparison, the IRS issued an estimated $11 billion to $14 billion in improper payments for the credit in 2012, representing between 21 percent and 25 percent of all such expenditures that year.

MORE: IRS paid billions of dollars in improper refunds in 2012, report says 

A 2010 law requires federal agencies to estimate faulty payments for programs in which the costs of such errors represent a significant amount of money. The Office of Management and Budget has determined that the EITC is a high-risk program that is subject to the reporting requirement.

“The intent of this law is to help ensure that the Government serves as a responsible steward for the tax dollars it collects,” said inspector general J. Russell George. “As noted in previous TIGTA reports, the IRS can and must do more to protect taxpayer dollars from waste, fraud, and abuse.”

The IRS said in a statement Tuesday that it takes tax fraud “very seriously” and has taken steps to aggressively address improper payments since 2011, stopping nearly 15 million suspicious returns and preventing more than $50 billion in fraudulent refunds.

“The IRS remains deeply concerned about the level of improper payments, and a major review currently underway is exploring a wide range of options to distinguish valid claims from excessive ones,” the agency said.

The IRS added that certain legislative proposals, specifically one that would give the agency authority to correct certain filing errors, could help reduce the improper payments.

Follow Josh Hicks on TwitterFacebook or Google+. Connect by e-mail at  josh.hicks(at)washpost.comVisit The Federal Eye, and The Fed Page for more federal news. Submit news tips and suggestions to federalworker@washpost.com.

Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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