TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, April 19, 2011

GAO: Improper EITC Payments Rose 37.6% in 2010, to $16.9 Billion

GAO Logo The Government Accountability Office has released Recent Efforts to Address Improper Payments and Remaining Challenges (GAO-11-575T):

Federal agencies reported an estimated $125.4 billion in improper payments for fiscal year 2010. The $125.4 billion estimate of improper payments federal agencies reported in fiscal year 2010 was attributable to over 70 programs spread among 20 agencies. Federal agencies’ fiscal year 2010 estimated improper payment amount is an increase of $16.2 billion from federal agencies’ prior year reported estimate of $109.2 billion.

The report named the Earned Income Tax Credit as the federal government program with the fourth highest amount of overpayments in FY 2010 (after Medicare, Medicare, and Unemployment Insurance) -- $16.9 billion, a 37.6% increase over FY 2009. The report lists as the primary causes of the improper EITC payments:  "High turnover of eligible claimants, confusion among eligible claimants, complexity of the law, structure of the program, unscrupulous return preparers, and fraud."

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Let's assume the $16.9 billion number is correct.

Let's also assume that 90% of the improper payments could be recovered or prevented with an expenditure on enforcement of $2 billion.

Two conclusions result

1. Spending $2 billion to recover about $15 billion makes perfect sense.

2. Conservatives would oppose an additional $2 billion added to the IRS budget because it represents an increase in government spending.

Posted by: Sid (real one) | Apr 19, 2011 5:01:45 PM