Tax Tip of the Week | No. 260 | IRS Made Improper EITC Payments of $13.3 - $15.6 Billion
Tax Tip of the Week | July 23, 2014 | No. 260 | IRS Made Improper EITC Payments of $13.3 - $15.6 BillionHere is an interesting article we came across....
The Internal Revenue Service allowed an estimated $13.3 billion to $15.6 billion to be paid in improper claims for the Earned Income Tax Credit last fiscal year, or about 22 to 26 percent of all EITC payments, according to a new government report which found the IRS continuing to be noncompliant with a 2010 law that sought to limit improper payments.The IRS continues to make little progress in reducing improper EITC payments, according to the report, which was publicly released by the Treasury Inspector General for Tax Administration.TIGTA’s finding came in a review of the IRS’s compliance with the Improper Payments Elimination and Recovery Act of 2010, which requires federal agencies to estimate improper payments for all programs in which such payments are significant. The IPERA requires TIGTA to assess the IRS’s compliance with improper payment requirements.Editor’s Note: The EITC was put into the tax code to incentivize work vs. people receiving welfare checks. The EITC is a lump-sum refundable credit (the government gives you money). As with most refundable credits, there are plenty of crooks out there looking for ways to steal money.The following are a couple of interesting comments that accompanied this article:- “I don't think that EITC should be paid in a lump sum. If the payments were parceled out in possibly 4 to 6 payments, the IRS would at least have a chance to cut their losses after the first erroneous payment. Really why is this "welfare" given in one lump sum anyway?”- “The present EITC regulations are not only absurd, they discriminate against marriage. If two taxpayers are living together but not married, and each makes say $30,000, have 2 children, the EITC regulations allow each parent to claim one of the children and receive the EITC. If they were married, of course, they would not qualify for the EITC. So if I was married and in this situation, I could qualify for thousands of dollars a year in EITC simply by getting divorced. Why would any sane person making $25,000 or so get married? Is Congress even aware of this fact?”Let us know if you have any comments.
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Rick Prewitt - the guy behind TTW...until next week.