IRS Mistakenly Gives 132 Billion of Tax Credits
WASHINGTON D.C – The IRS’s inability adequately evaluate claims for tax credits has led to billions being given away every year.
Every year the Internal Revenue Service (IRS) gives out more than USD 11 billion in Earned Income Tax Credits to individuals whose incomes exceed the thresholds for the program, according to a report released on October 22nd by the US Treasury Inspector General for Tax Administration.
In total since 2003 the IRS has given out more than USD 132.6 billion in improper credits under the EITC program.
The ETIC is intended to provide financial assistance to low-income families, with an estimated 27 million households receiving in total about USD 62 billion annum.
According to the Inspector General, the complexity of evaluating and inspecting each ETIC applications makes it difficult to determine whether any given claim should be rejected, and the number of overpayments could be significantly reduced if the IRS implemented comprehensive reporting procedures for EITC payments exceeding USD 5 000 per year.
The IRS has already replied to the finding in the report, saying that recipients of the ETIC are nearly twice as likely to be audited as an average taxpayer, and, so far, the investigations helped uncover illicit claims worth more than USD 4 billion per annum.
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