Audit: IRS having trouble with improper tax payments

The IRS has made little progress in cutting back the number of improper payments of the Earned Income Tax Credit (EITC), a federal watchdog said Tuesday.

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Treasury’s inspector general for tax administration said that the IRS wrongly issued roughly a quarter — 22 percent-26 percent — of EITC payments in fiscal 2013, for a loss of between $13.3 billion and $15.6 billion.

The inspector general added that the IRS had not published targets for reducing the improper payments or disclosed an improper payment rate of less than 10 percent for a third consecutive year, as required by law.

“The intent of this law is to help ensure that the government serves as a responsible steward for the tax dollars it collects,” Russell George, the tax administration inspector general, said in a statement.

“As noted in previous TIGTA reports, the IRS can and must do more to protect taxpayer dollars from waste, fraud, and abuse.”

The IRS has said that, following consultations with the Office of Management and Budget, it will now be better able to tackle compliance issues with the EITC.

President Obama and top congressional Democrats have pushed to expand the EITC, a crucial tax break for the working poor, in recent months as part of their efforts to battle income inequality.

Democrats say the credit is one of the government’s top tools for helping the working poor and want to give greater access to the credit to workers without children.

But Republicans have resisted that idea, in large part because of the number of wrongly issued payments. House Ways and Means Committee Chairman Dave Camp (R-Mich.) sought to simplify the credit in his recent tax reform draft, saying that would help reduce fraud in the program.