US taxpayers lose tens of billions of dollars a year due to “improper payment” of tax refunds, and investigators seem to have thrown towels.
The Directorate General of Taxation (TIGTA) regularly reports on programs that are determined to be “high risk” for improper payments. One of these programs, the earned income tax credit, paid a total of $ 68.2 billion in fiscal year 2020, and 24% of that money, $ 16 billion, was paid to those who were not supposed to receive it. ..
A TIGTA report for fiscal year 2020 also revealed that 26% of US opportunity tax credit payments were inadequate, resulting in a loss of $ 2.3 billion to taxpayers. An additional $ 4.5 billion went outdoors with improper payments for additional child tax credits.
This has been going on for years, but the inspector general is waving a white flag. In the section of the report titled “TIGTA Recommendations,” the auditor wrote, “TIGTA did not make recommendations.”
They are just looking. They check in regularly to ensure that the IRS is obliged to estimate the total amount of improper payments and report how worse the problem is. This is the official policy of the US government.
What’s happening
If you don’t know, you’re clearly not a criminal. You can withdraw a pile of cash from the federal government by obtaining a Social Security number and filing a fictitious tax return requesting a refundable tax credit. In 2003, the Justice Department filed 620 false personal tax returns and charged a San Diego man with tax refund of $ 2,412,162.
How is it done? “The defendant forged the income reported that year so that the taxpayers listed on the tax return would be eligible for an earned income tax credit refund,” the Justice Department said in a news release. “Defendants usually attach false Form W-2 to their returns to prove their income.”
The IRS can find these discrepancies, but they are not tax refunds, so the current policy does nothing. In response to the TIGTA report, Teresa Hunter, Chief Financial Officer of the Internal Revenue Service, said: Affordable price for higher education. “
The RTC program challenges the task of managing complex social benefit programs such as earned income tax credits, US Opportunity tax credits, additional child tax credits, and affordable care law premium tax credit components through a tax management system. “The Hunter IRS is set up primarily for collections, not for payments,” he wrote.
It’s much easier to call the program “Official Assistance Checks” and pay benefits directly to eligible individuals, but taxpayers will see a budget line labeled “Government Assistance Checks” and make a lot of noise. May occur. Spending.
The Treasury is attacked by fraudsters every year by paying tax refunds to those who fill out tax returns with the correct combination of real or imaginary numbers. In 2020, the IRS estimates that the EITC, AOTC, and ACTC accounted for a total of $ 22.8 billion in “inappropriate payments” that account for both errors and fraud. The IRS didn’t even try to calculate the amount improperly paid in the premium tax credit program. A related government agency said it was too busy working with COVIDs to produce the data it needed.
The problem of “improper payments” can grow exponentially. The American Rescue Planning Act has made the 2021 EITC more generous and more qualified. Currently, Capitol Hill is being asked to extend or make the EITC expansion permanent. Congressman Nguyen Moore of D-Wisconsin has introduced a bill called the Worker Relief and Credit Reform Act. This raises the maximum credit amount to $ 4,000 per individual or $ 8,000 per couple.
The program is documented as having a high risk of fraud, but the government does not want to bother those who are legally entitled to receive money. What can i do?
The Biden administration is proposing a crackdown on tax authorities. The president wants to empower the IRS to regulate paid tax preparers and increase government funding to conduct more tax audits. He will also require banks to share more account information with the government.
This is not the first attempt to regulate tax authorities. During the Obama administration, the IRS launched the Registered Tax Return Creator Program, requesting registration, testing, and continuing education. There was a proceeding over it, and in 2013 a federal court invalidated the program, stating that the IRS had no legal authority to regulate tax authorities.
Congress will have to pass a law to empower the IRS, and this won’t happen. Congressmen seem to be more interested in pushing money out than setting up a system to get it back.
Therefore, as politicians want to use the term “tax refund” to describe government aid checks, tax refunds totaling tens of billions of dollars a year can last indefinitely. The insane complexity of ever-changing tax law is probably the cause of many innocent mistakes, but hand-delivery enforcement policies also allow large-scale frauds that amount to tremendous amounts each year.
California has a state EITC that is vulnerable to the same issue. I’ve seen the Employment Development Department pay tens of billions of dollars for fraudulent billing. The CalEITC program is another shoe waiting to drop.
Criminals plunder the treasury and politicians let them do it, so taxpayers cannot easily see how much the government is spending on welfare payments. They all know what’s going on.
And now you do too.
Write Susan Shelley: [email protected] And follow her on Twitter: @Susan_Shelley
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