At least $11 billion was improperly refunded by the Internal Revenue Service (IRS) to low-income taxpayers in 2012, according to a new inspector general report.

The Treasury Inspector General for Tax Administration, which audits the IRS, found the agency overpaid between $11.6 billion and $13.6 billion in Earned Income Tax Credits (EITC). EITC is primarily used to give low- and moderate- income workers credit for their children. If the credit exceeds the amount of money they owe, they receive a refund.

The report stated that “the annual EITC improper payment amount has consistently been one of the largest of all Federal programs.”

According to the report, since 2003, the IRS has issued $132.6 billion in faulty refunds relating to the EITC. The IRS also has not adopted annual goals for reducing improper payments or reducing improper payments below 10%, both of which are violations of the 2010 Improper Payments Elimination and Recovery Act.

The Treasury’s oversight office claims that the IRS “faces significant and unique challenges” to reducing overpayments, such as the “ever-changing population” of families and individuals claiming the credit, and tax return processing time limits, which restrict the IRS from being able to verify each EITC claim before it is paid out.

Despite the EITC’s frequent overpayments, the program, which economists claim has lifted millions of families above the poverty line, is one of the few tax provisions that receives praise across partisan lines.

-Noel Brinkerhoff, Aaron Wallechinsky

To Learn More:

IRS Overpaid Up To $13.6B In Low-Income Tax Credits, Report Finds (by Julian Hattem, The Hill)

IRS Paid Billions of Dollars in Improper Refunds, Report Says (by Josh Hicks, Washington Post)

The Internal Revenue Service Was Not in Compliance With All Requirements of the Improper Payments Elimination and Recovery Act for Fiscal Year 2012 (Treasury Inspector General for Tax Administration) (pdf)

Illegal Workers Received $4 Billion in Refundable Tax Credits Last Year (by Noel Brinkerhoff, AllGov)