House Republicans want answers on improper EITC payments

A report issued last week by the Treasury Department’s inspector general for tax administration found that between $11 billion and $13 billion in EITC payments had wrongly been handed out in the 2009 fiscal year. 

Furthermore, the study reported that the IRS currently estimates that improper EITC payments occur between 23 percent and 28 percent of the time, and that the agency had yet to set goals for reducing the number of those checks that are given out in error.

That last point appeared to especially gall Reps. Dave Camp (R-Mich.) and Charles Boustany (R-La.), who expressed their displeasure in a letter to Doug Shulman, the IRS commissioner.

“Not only does it seem that the IRS is unable to reduce these improper payments, but it seems unable to create even reduction targets,” wrote Camp, the Ways and Means chairman, and Boustany, chairman of the Ways and Means oversight subcommittee. 

In its response to the inspector general report, the IRS said that it believed its initiative to increase oversight of paid tax preparers would help reduce improper payments and that it had to spread its enforcement efforts out among all tax brackets. The EITC is aimed at low to moderate income families and individuals. 

In their letter to Shulman, dated last Friday, Camp and Boustany noted that the IRS had not followed through on several suggestions from the tax administration inspector general, including forcing taxpayers to recertify their EITC eligibility if they had falsely claimed the credit in the past. 

The two lawmakers also asked Shulman if the IRS is trying to recoup any of the billions of dollars in improper EITC payments issued in fiscal 2009 and how the agency’s program for paid preparers will affect the pay out of the earned income credit. 

Russell George, the tax administration inspector general, asserted in his report that he did not believe that the paid preparer oversight program was an adequate enough response to the EITC issue.