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IRS May Have Wasted $898 Million in Erroneous Pandemic Credits, Refused to Rectify

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US dollars - Sputnik International, 1920, 29.05.2022
The Internal Revenue Service wasted nearly $1 billion in improper pandemic tax credits, according to a final audit report by the Treasury Inspector General for Tax Administration. What's worse, the IRS declined to review or take steps to recover the funds, says conservative media Just the News.
The Treasury Inspector General for Tax Administration (TIGTA) has released an audit assessing the Internal Revenue Service’s (IRS) processing of Recovery Rebate Credit (RRC) claims during the 2021 season.
"The Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Consolidated Appropriations Act, 2021 (CAA) authorised the IRS to make advance payments of the RRCs to eligible individuals," read the TIGTA report, released in May.
According to the watchdog, the IRS processed 26.3 million tax returns with RRC claims until May 27, 2021, totalling $39.2 billion. Of this, the statutory body issued potentially erroneous RRC payments of $898 million.
"These include $79.8 million in the RRC that should have been paid to eligible individuals and $818.5 million in the RRC that was paid to ineligible individuals," the report claimed.
Potentially, 355,015 people were erroneously issued the payments, which included "ineligible dependents, non-residents, and individuals associated with a credit from a US Territory," the watchdog found. There were 75,594 tax returns with RRCs valuing more than $125 million that the body issued to possible non-resident aliens, according to TIG.
Having completed the audit, the inspector general issued 22 recommendations for the IRS. In particular, the watchdog urged the body to take action to correct improper tax credit payments and ensure that those eligible receive their credit. TIGTA also requested that the IRS notify individuals who have not filed a tax return or did not claim the RRC.
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However, the revenue service agreed with only eight of the inspector general's 22 recommendations. The IRS declined to review nearly $598 million of the potentially erroneous payments. Likewise, it did not agree to conduct analysis to identify and recover additional erroneous RRC payments issued after May 27, 2021, nor did it plan to further assist approximately 10 million potentially eligible individuals in receiving their payments.
Moreover, the IRS fought back disputing the watchdog's methodology.

"We disagree with TIGTA's methodology to identify taxpayers who were potentially non-resident aliens," wrote Commissioner of the Wage and Investment Division Kenneth Corbin to Deputy IG Michael McKenney, as quoted by Just the News. "The exemption from employer withholding of Federal Insurance Contributions Act (FICA) taxes is not a proxy for an individual's status as a resident alien or non-resident alien."

Corbin further argued that reviewing improper claims processed after 27 May 2021 "would require us to divert limited resources where there is only a 0.7 percent projected error rate."
In March, The Hill reported that the IRS budget for 2022 is due to receive a 6% increase from the previous year in the $1.5 trillion omnibus spending legislation, while an additional 10,000 agents are expected to be hired. Time will tell whether the IRS will stop squandering funds after the boost.
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