IRS Wastes Billions

The Internal Revenue Service paid up to $13.6 billion in bogus claims for the Earned Income Tax Credit last year and as much as $132.6 billion over the past decade, according to an internal audit that already has some members of Congress questioning how the agency will be able to administer Obamacare.

IRS problems with the tax credit are not new. In fact, the Treasury inspector general for tax administration said it warned officials about the problems in 2011 — but two years later, the agency still has not solved the situation and remains in violation of one of President Obama’s executive orders. Indeed, the IRS has not established annual targets for reducing the payments, which is required by law, nor is the agency complying with requirements that it report to auditors each quarter on any EITC payments.

The large error rate left some lawmakers questioning whether the agency will be able to administer the tens of billions of dollars in health care tax credits that are part of the Affordable Care Act. “That the IRS can’t figure out how to rein in the improper Earned Income Tax Credit payments does not bode well for the $1.1 trillion in ObamaCare subsidies,” said Sen. Orrin G. Hatch of Utah, the ranking Republican on the Senate Finance Committee.

He said if the error rate in Obamacare subsidies is as big as it is in the EITC, that could mean $250 billion would be wasted in health care payments. The size of the erroneous payments was staggering to lawmakers. At more than $13 billion a year, the bogus tax claims are more than the entire budget of the Environmental Protection Agency or the Interior or Labor departments.

“The waste outlined in this report — more than $13 billion a year — equals or exceeds the annual budgets of some federal agencies,” said Sen. Tom Coburn, Oklahoma Republican and Congress‘ chief waste-watcher. “Before we ask taxpayers to send even more of their own money to Washington, we must do more to prevent these egregious examples of waste.”