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LETTER: Biden Must Stop Wasting Americans’ Tax Dollars in Fraud & Improper Payments

April 12, 2021

WASHINGTON – At the very moment Democrats are pushing to raise job-killing taxes and make the expanded refundable Child Tax Credit permanent, billions of taxpayer dollars are already being lost in improper payments in a similar program, write Ways and Means Republican Leader Kevin Brady (R-TX) and Ways and Means Oversight Subcommittee Republican Leader Mike Kelly (R-PA) in letters to top Biden Administration officials. Warning of the Child Tax Credit program’s susceptibility to rampant fraud and impropriety, they urge greater protection for hardworking Americans from wasteful spending.

Key Takeaways:

  • Over the last decade, the IRS has wasted an astonishing amount of Americans’ hard-earned tax dollars in improper tax credit payments.
    • In 2015, the IRS made $15.6 billion (23.8% of all payments) in improper Earned Income Tax Credit (EITC) payments.
    • In 2019, that number increased over time to $17.4 billion (25.3% of all payments) in improper EITC payments. A concerning pattern also exists for Additional Child Tax Credit (ACTC).
  • More spending shouldn’t result in more fraud: A new, monthly payment system will lead to an increase, rather than a decrease in improper payments.
    • In 2020, the extra $600 in weekly unemployment insurance benefits was a boon for fraudsters and criminal rings.
    • A new, monthly cash payment system of $3,600 in the Child Tax Credit refund will serve as an even more powerful fraud magnet.

In a letter to Biden’s top economic adviser Gene Sperling, the members wrote:

“We write with deep concerns about provisions in the partisan American Rescue Plan Act of 2021 (ARP) that expand refundable tax credits. We are particularly concerned about the structure of the new refundable child tax credit (CTC). The new CTC and other provisions in ARP fail to learn from lessons of the past, are not targeted to pandemic relief, and risk the loss of billions of taxpayer dollars in fraudulent and improper payments.”

They also called on the Biden Administration to indicate whether the refundable Child Tax Credit will be made permanent. The full letter to Sperling may be viewed here. Read the letters to the IRS (here), GAO (here), and TIGTA (here).