The IRS made little progress in reducing improper Earned Income Tax Credit (EITC) payments last year, doling out an estimated $13.3 billion to $15.6 billion in error, according to a new report from the Treasury Inspector General for Tax Administration (TIGTA).

The IRS estimated that 22 to 26 percent of all EITC payments were issued improperly in fiscal year 2013.

The EITC is a key tax credit that helps the working poor. In his $4 trillion budget plan for 2015, President Obama called for the expansion of the EITC for workers without qualifying children. Currently, workers can claim the credit only if they are between the ages of 25 to 65 and make less than $14,790 a year. The proposal would broaden the scope to an age range of 21 to 67 and increase the income limit to $18,070.

In his February draft tax reform plan, House Ways and Means Committee Chairman Dave Camp (R-MI) said he would simplify the EITC by converting it into an exemption of a certain amount of payroll taxes – both employee and employer shares – that are reported directly on an employee’s W-2. He noted that depending on household circumstances, families could be shielded from as much as $4,000 in payroll tax liability.

Camp said the proposal would eliminate the nearly $133 billion in erroneous and fraudulent EITC payments that have been handed out the past 10 years. In fiscal year 2012, TIGTA found that 21 to 25 percent of all EITC payments were incorrect, costing taxpayers between $11.6 billion and $13.6 billion.

TIGTA discovered last year’s erroneous payments in a review of the IRS’s compliance with the Improper Payments Elimination and Recovery Act of 2010, which expanded requirements for recovering overpayments across a broad range of federal programs.

“The intent of this law is to help ensure that the government serves as a responsible steward for the tax dollars it collects,” J. Russell George, Treasury Inspector General for Tax Administration, said in a written statement. “As noted in previous TIGTA reports, the IRS can and must do more to protect taxpayer dollars from waste, fraud, and abuse.”

The Office of Management and Budget declared the EITC a high-risk program that is subject to reporting in the US Treasury Department Agency Financial Report.

Risk assessments were performed for each of the programs that the Treasury Department required the IRS to assess, but the process still may not provide a valid assessment of improper payments in tax administration, according to the report. The EITC remains the only revenue program fund to be considered a high risk for improper payments.

TIGTA did not make any recommendations in its report. In its response to a draft of the report, the IRS said it has received guidance from the Office of Management and Budget that will allow it to resolve the noncompliant areas that TIGTA identified.

“The IRS is continuing to develop these measures and anticipates meeting with OMB to obtain their concurrence and provide the measures to Treasury, along with our annual EITC error estimates for reporting in the FY 2014 Annual Financial Report,” IRS CFO Robin Canady wrote.

During a hearing before the Senate Subcommittee on Financial Services and General Government last month, IRS Commissioner John Koskinen called stopping erroneous claims for refundable tax credits, particularly the EITC, a “critical area of focus.”

“We are concerned that the improper payment rate has remained unacceptably high throughout the program’s history,” he said. “Therefore, we initiated a major review of our activities in this area earlier this year. If Congress enacts the proposal in the [Obama] administration’s FY 2015 budget to provide the IRS with greater flexibility to address correctable errors, we will have additional tools to stop erroneous claims and, as a result, we believe we will be able to make a real reduction in the improper payment rate.”

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