Massive Fraud Reported in Federal Earned Income Tax Credit

The inspector general of the Internal Revenue Service again reports that there is widespread fraud related to the refundable federal earned income tax credit.

According to a May 13 press release, the inspector general estimates that 22 percent to 26 percent of the refundable earned income tax credits were issued improperly for 2013.

Additionally, the report by the U.S. Department of Treasury’s inspector general said the IRS is ignoring the requirements of a law called the Improper Payments Elimination and Recovery Act, signed by President Barack Obama in 2010, which requires the IRS to set fraud-control targets and keep improper payments below 10 percent of all earned income tax credit payouts.

“The IRS continues to not provide all required IPERA information to the Department of the Treasury,” the report states.

At the federal level, this amounts to the waste of a minimum of $13.3 billion, and a maximum of $15.6 billion in a single program in a single year.

California Tax Foundation   |   1215 K Street, Sacramento, CA 95814   |   916.441.0490   |