A new report from a government watchdog discovered that the Internal Revenue Service (IRS) paid out between $5.9 billion and $7.1 billion in bogus child care credits last year to individuals who were not eligible to receive them in the first place.
According to an audit by J. Russell George, the Treasury inspector general for tax administration (TIGTA), child care payments were allocated to Americans who incorrectly claimed the tax credit, inserted the wrong amount or committed tax fraud.
The report noted that families received approximately $1,000 per child in the form of a tax refund. This has now brought out critics of the program, which was expanded under the 2009 economic stimulus package, and this expansion is slated to end in 2017.
“It is imperative that the IRS take action to identify and address all of its programs that are at high risk for improper payments,” the inspector general said in a statement.
Although the IRS has not issued a public statement, it did make a comment in the report itself and explained that the risk is very low for improper payments as part of the child care tax credit.
Meanwhile, the non-partisan Joint Committee on Taxation confirmed 36 million families claimed roughly $57 billion in childcare tax credits.
The government watchdog agency also discovered that the IRS paid out $14.5 billion in earned income tax credits in errors in 2012. This may appear to be a problem to taxpayers, but the TIGTA argues that the IRS doesn’t seem to want to take responsibility for the issue or employ any remedies to solve the matter.
“This audit was initiated because the IRS is required to identify and take actions to address the root causes of improper payments in Federal programs identified as being at high risk for improper payments,” the report stated. “The only IRS program identified as a high risk is the EITC.”
The IRS may attempt to justify these mistakes because earlier this year the tax collecting agency said that fewer agents are auditing tax returns than at any other time since the early 1980s.
