IRS Must Try Innovative Compliance Methods To Reduce Improper Payments, TIGTA Says

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By Lydia Beyoud

Oct. 22 -- The Internal Revenue Service must develop more innovative compliance methods to significantly reduce improper Earned Income Tax Credit payments, the agency's watchdog said in a report.

Traditional methods for reducing EITC overpayments or underpayments have been stymied by limited resources and the need to balance compliance efforts among taxpayers in all income levels, the Treasury Inspector General for Tax Administration said in its report, released Oct. 22.

The EITC program allows low-income taxpayers to receive a refundable tax credit that offsets owed income tax.

According to Department of Treasury estimates, the IRS paid out between $110.8 billion and $132.6 billion in improper EITC payments from fiscal years 2003 through 2012.

For FY 2012, the IRS reported that its efforts protected approximately $4 billion in erroneous EITC payments and identified about 7,000 paid tax return preparers who weren't complying with EITC due diligence requirements, according to the report, dated Aug. 28.

To contact the reporter on this story: Lydia Beyoud in Washington at

To contact the editor responsible for this story: Brett Ferguson at

Text of the report, “The Internal Revenue Service Is Not in Compliance With Executive Order 13520 to Reduce Improper Payments” (2013-40-084), is at

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