TIGTA: IRS Made $14.5 Billion in Erroneous of EITC Payments in 2013, a 24% Error Rate

The Treasury Inspector General for Tax Administration has released The Internal Revenue Service Is Working Toward Compliance With Executive Order 13520 Reporting Requirements (2015-40-009):

Although the IRS has reported an overall decline in the Earned Income Tax Credit (EITC) improper payment rate since Fiscal Year 2003, the amount of payments made in error has increased from $10.5 billion in Fiscal Year 2003 to $14.5 billion in Fiscal Year 2013. The IRS’s Fiscal Year 2013 EITC improper payment report to TIGTA estimates that in Fiscal Year 2013, EITC claims totaled approximately $60 billion and that 24 percent of the EITC payments were paid in error.

This audit was initiated because Executive Order 13520, Reducing Improper Payments and Eliminating Waste in Federal Programs, requires TIGTA to assess the IRS’s compliance with the Order on an annual basis. The objective of this review was to assess the IRS’s compliance with the requirements contained in Executive Order 13520 for Fiscal Year 2013. ...

The IRS is not in compliance with certain requirements of Executive Order 13520 for Fiscal Year 2013.  The IRS has not established annual improper payment reduction targets as required.  Nonetheless, the IRS is making some progress related to its inability to comply with this requirement.  The IRS has obtained approval from the Office of Management and Budget to establish and report supplemental measures in lieu of annual reduction targets.