House Republicans ask IRS about tool to prevent improper tax-credit payments

Republicans on the House Ways and Means Committee are asking the Internal Revenue Service (IRS) about its use of a tool that could help to lower the rate of improper payments of the earned income tax credit (EITC).

The lawmakers said in a letter to IRS Commissioner John Koskinen on Wednesday that it is their understanding that the “Do Not Pay” portal “is not being fully utilized by the IRS.”

The portal, housed at the Treasury Department, provides federal agencies with access to databases containing information such as employment data. The agencies can use this data to determine whether payments should be made to beneficiaries.

{mosads}The EITC benefits working low- and middle-income families. According to data cited in the letter, the EITC’s improper payment rate was over 27 percent in 2014, and about 30 percent of the improper payments are due to income verification errors.

The IRS makes EITC payments based on applicants’ self-reported income and does not confirm income levels until after the payments are made — a process that the lawmakers said is “not working.”

Republicans on the Ways and Means Committee asked the IRS to confirm its current use of the Do Not Pay portal and to provide information about the steps it is taking to encourage and increase the use of tools, such as information from payroll-data providers, that would reduce the EITC improper-payment rate. They asked Koskinen to respond by April 13.

“Reducing improper payments is critical to safeguarding federal funds, helping to achieve cost savings, improve the government’s fiscal position, and ensure we are meeting the needs of those who are eligible,” the Congress members said.

Rep. Charles Boustany (R-La.), who leads the Ways and Means tax policy subcommittee, said in a news release that the IRS has “fallen asleep at the wheel.”

“The IRS must start doing its job and protecting our taxpayer dollars from fraud and abuse — using the proactive DNP Portal is a good start,” he said.