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Most Americans have completed their tax returns and may even have got back some of their own money. Now they should get out the government cost calculator again because as Kelly Cohen reports in the Washington Examiner, last year the IRS gave out between $13.3 billion and $15.6 billion in improper payments. That amounted to nearly one fourth of all payments under the Earned Income Tax Credit (EITC) and it was the third year in a row the IRS failed to reduce the improper payments. As Cohen noted, the IRS has also failed to provide all required information for the Improper Payments Elimination and Recovery Act of 2010. And this is hardly the extent of IRS failure.
Between October 1, 2010 and December 31, 2012 the IRS gave more than $2.8 million in bonuses to 2,800 employees with disciplinary issues and tax compliance problems of their own. As Gail Sullivan observed in the Washington Post, “the IRS’s contract with the National Treasury Employees Union bars the agency from considering bad conduct when making performance-based awards.” So IRS bosses were just following the rules when they rewarded bad employees and tax deadbeats.
The IRS has also been singling out groups for extra scrutiny based on their political views and calling it “horrible customer service.” In 2012 the IRS sent out more than $3 billion in fraudulent tax refunds to people using stolen identities. A full 655 fraudulent refunds went to a single address in Lithuania and 343 to one address in Shanghai. As the president might have put it, if you like your fraudulent refund you can keep it, period.
The EITC program, meanwhile, is the only one tagged “high risk,” by the Office of Management and Budget. The IRS says it is working to fix the problem but taxpayers should remain skeptical because the agency has not managed to reverse other failures. On the other hand, the IRS may be the best evidence that the federal government has institutionalized waste, fraud and abuse.