In a second report, the IG said that the IRS estimates that 21 to 25 percent – $11.6 billion to $13.6 billion – of Earned Income Tax Credit payments were issued improperly during fiscal 2012, but the agency has made no significant improvement in reducing them.
It said the agency’s fiscal 2012 estimate for EITC claims and improper payments are understated because the laws extending increases in the EITC were not factored into the estimates, and that the IRS has not established annual improper payment reduction targets as required by law.
IRS management says it met with OMB recently and agreed to develop supplemental measures and indicators in lieu of reduction targets, but the agency did not indicate when these measures would be in place, according to TIGTA.
It said the IRS agreed to develop processes to identify high-dollar (over $5,000) improper EITC payments and report the information to TIGTA and the Council of the Inspectors General for Integrity and Efficiency.
