Today, in a hearing examining the administration of refundable tax credits, Ways and Means Democrats refused to address the rampant waste, fraud and abuse in the current tax code which has led to over $100 billion in improper payments — robbing taxpayers of their hard-earned tax dollars.  
 
Despite testimony offered by witnesses from the Internal Revenue Service (IRS), Treasury Inspector General for Taxpayer Administration (TIGTA) and Government Accountability Office (GAO) detailing the scope of improper payments, Democrats called the hearing an attack on middle-class working families.  Rather than rhetoric, consider the facts:

FACT: In recent years, improper payments arising from refundable tax credits have cost the American taxpayer an estimated $106 billion dollars.[1]

FACT: In 2010, TIGTA found that 44,944 fraudulent tax returns were filed by prisoners, reflecting $295.1 million in fraudulent refund claims in the 2009 calendar year, resulting in over $9.1 million in homebuyer credits having had been issued to prisoners that did not qualify for the credit.[2]

FACT: U.S. investigators found 128 employees of the Internal Revenue Service fraudulently claimed an $8,000 first-time home buyer tax credit for 2008 and 2009.[3]

Despite repeated recommendations by TIGTA and GAO, the IRS has failed to implement the reforms necessary to better protect and safeguard taxpayer dollars.  Today, in response to an inquiry by Ways and Means Chairman Dave Camp about steps that should be taken to reduce the magnitude of improper credits, TIGTA noted that the failure of the IRS to take immediate steps to implement reforms to the EITC program is likely to result in $55 billion to $65 billion in improper payments by Fiscal Year 2014.
 

FACT OF THE DAY: Failure to act to prevent improper payments and hold the IRS accountable is a failure to protect hard-earned taxpayer dollars.  Demanding action and accountability from the IRS is the best defense for America’s taxpayers.

[1] $106 billion is a combination of the estimated overpayment amounts published by TIGTA and GAO for the largest three tax credits, the EITC from 2003-2010, the ACTC from 2000-2007 (excluding 2002 and 2003 due to lack of data), and the First Time Homebuyer Credit over the life of the credit.  
[2] See Treasury Inspector General for Tax Administration, Significant Problems Still Exists with Internal Revenue Service Efforts to Identify Prisoner Tax Refund Fraud (Reference Number 2011-40-009, dated Dec. 29,2010). See also, Treasury Inspector General for Tax Administration, Additional Steps Are Needed to Prevent and Recover Erroneous Claims for the First-Time Homebuyer Credit (Reference Number 2010-41-069, dated June 17, 2010).
[3] Treasury Inspector General for Tax Administration, Administration of First-Time Homebuyer Credit Indicates a Need for Improved Controls Over Refundable Credits (Reference Number 2011-41-035, dated March 31, 2011).