IRS Lacks Authority to Catch Billions in Erroneous EITC Claims

The Internal Revenue Service still doesn't have the authority from Congress to correct billions of dollars in erroneous claims for the Earned Income Tax Credit despite recent legislation, according to a new report.

The report, from the Treasury Inspector General for Tax Administration, noted that the Consolidated Appropriations Act of 2016 provides the IRS with additional tools to reduce EITC improper payments. However, the law did not expand the IRS’s authority to systemically correct the erroneous claims it identifies.

The Office of Management and Budget has declared the Earned Income Tax Credit Program to be the only IRS revenue program fund at high risk for improper payments. The IRS estimates that 23.8 percent ($15.6 billion) of EITC payments were issued improperly in fiscal year 2015.

Without the authority to systemically correct erroneous claims, the IRS continues to be unable to address the majority of potentially erroneous EITC claims it identifies, according to TIGTA. The number of potentially erroneous EITC claims the IRS can audit is limited by resources. As a result, billions of dollars in potentially erroneous EITC claims go unaddressed each year. Read More