The Internal Revenue Service (IRS) overpaid between $11.6 billion and $13.6 billion in tax credits designed to help low-income families in fiscal 2012 , the Treasury Department announced in a report released Monday.
The overpayments account for 21 percent to 25 percent of the tax credits issued under the Earned Income Tax Credit (EITC), the IRS estimated.
The report from the Treasury Inspector General for Tax Administration, the department’s IRS watchdog, highlights the difficulties faced by the agency in properly issuing refunds and credits under the popular program.
Though the fiscal 2012 overpayment was among the agency’s lowest in a decade, since 2003, as much as $132.6 billion has been improperly distributed as part of the EITC.
The varying number of tax credit claims and a change in the way improper payments are estimated have hampered the IRS’s efforts to decrease the amount of improper payments, the report says.
The inspector general’s report claims that “the annual EITC improper payment amount has consistently been one of the largest of all Federal programs.”