Almost 40 percent of the government's special income-supplement payments to working-poor families with children go to people who are ineligible, according to an Internal Revenue Service study.

The finding could have an impact on a child-care bill, now in a House-Senate conference, that includes a large increase in the supplement, the earned income tax credit (EITC).

The income supplement was enacted 15 years ago as a way to spur parents to work rather than stay on welfare, and it has had wide, bipartisan support in Congress. The House version of the pending child-care bill would increase the tax credit at a cost of $18.5 billion over five years. The Senate version's increases would total $2.8 billion over five years.

Under the existing EITC program, a low-income worker with one or more dependent children can receive a credit from the Treasury equal to 14 percent of the first $6,810 of earned income, or $953. As earnings rise, the credit is reduced and disappears at $20,264 in earnings. The 1990 benefit can be taken either as a credit against federal income taxes when the worker files returns next year or as a direct, cash payment from the Treasury.

This year, 10.4 million working-poor families are expected to receive $6 billion in supplements under existing law. Based on the nearly 40 percent ineligibility rate the IRS found, about $2.4 billion of that will go to ineligible recipients. Error rates in other programs, such as welfare and food stamps, range from 6 to 7 percent.

The IRS's Taxpayer Compliance Measurement Program, which routinely monitors returns of 50,000 tax filers to determine tax compliance patterns, concluded that in 1985, $818.4 million of the $2.09 billion EITC outlays went to individuals ineligible for the payments. Sources said a review of 1988 payments appears to be yielding the same error rate. In 1985, the IRS received about 95 million income tax returns.

The IRS study, completed months ago, has not been released but its findings have slowly percolated to other agencies, and The Washington Post obtained a copy.

Ellen Murphy, IRS public affairs director, confirmed the 40 percent figure but said the study is based on a limited sample, which is not designed to be absolutely representative of the population. She said it confirms "our experience each filing season that the EITC is prone to the more common errors taxpayers make." She said there are many ways to simplify the rules, adding that making them easier to understand also might encourage filing by parents who provide a majority of their child's support from their earned income and thus are eligible but fail to claim the credit because of the complicated rules.

Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) said if the 40 percent error rate is correct, "it's a very major problem for the {pending} bill" since it would be imprudent to expand the program without first inserting some provisions to reduce the error rate.

"I have written the IRS and also talked to the secretary of the Treasury," Bentsen said, to ask, "if it is true, what corrective measure can we take?"

Sen. Bob Packwood (R-Ore.), the senior Republican on the Finance Committee, said, "{The error rate} could be a big problem for the child-care bill if it is correct."

Rep. Thomas J. Downey (D-N.Y.), chief sponsor of the work-bonus expansion, said he has asked for an IRS briefing to determine how firm the findings are. He said questions have been raised about the accuracy of the study.

Aides said the number of EITC cases in the sample may have been too few to obtain accurate information and the program rules have been changed since 1985.

"If this is correct, we have to fix it; 40 percent is unacceptable," Downey said.

Under the House provision, the credit for a one-child family would be increased next year to 17 percent, or a maximum of $1,207, for a one-child family; 21 percent, or $1,491 maximum, for a two-child family; and to 25 percent, or $1,775, for a family with three or more children. In addition, a "young child" benefit provides a total of $426 more for a family with one child or more under age 6.

The Senate version does not change the basic existing 14 percent credit but does include a new "young child" credit that could total up to $750 a year for a family with two or more children under age 4. President Bush's budget proposed added benefits as well.

Ineligibility often occurs because the recipients of the tax credit did not provide the majority of the child's support from their own earnings, as required by the law, but received more than half of the support from relatives or welfare. Ignorance of the rules and cheating result in many ineligible people receiving payments, according to congressional aides.

They said the IRS does not make a strong effort to recover payments because most of the recipients already have spent the money and there is little chance they could repay it. An IRS spokesman said the agency normally audits a higher percentage of higher-income taxpayers because doing so results in the recovery of more taxes.