Watchdog: Follow the Money

IRS program hands out billions in bad payments for earned income tax credit, watchdog finds

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Watchdog,Taxes,IRS,Kelly Cohen,Inspectors General,Waste and Fraud,Follow the Money,Tax Credits

Despite a law requiring federal agencies to crack down on fraudulent payments, the Internal Revenue Service still paid out billions of dollars in fraudulent payments last year.

Under the Earned Income Tax Credit -- a refundable tax credit for poor individuals and couples -- the IRS gave out between $13.3 billion and $15.6 billion in improper payments last year, according to the agency's inspector general.

These fraudulent tax credits accounted for almost a quarter of all EITC payments last year, the IG said. Some of the money went to people who shouldn't have qualified for the credit; in other cases, an eligible person was paid the wrong amount.

For the third year in a row, the IRS has failed to put together a plan to reduce its improper payment rate, nor has it provided all required information for the Improper Payments Elimination and Recovery Act of 2010, the IG said.

EITC remains the only IRS program flagged as "high-risk" by the Office of Management and Budget. In its response to the inspector general, the IRS acknowledged a problem with EITC payments and said it was working to resolve the issue.

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