IRS squanders $1B in erroneous pandemic credits, won’t try to recoup

The following is an excerpt from Just the News.

Note: The Golden Horseshoe is a weekly designation from Just The News intended to highlight egregious examples of wasteful taxpayer spending by the government. The award is named for the horseshoe-shaped toilet seats for military airplanes that cost the Pentagon a whopping $640 each back in the 1980s.

This week’s Golden Horseshoe is awarded to the IRS for issuing almost $1 billion in improper pandemic tax credits — and rebuffing an inspector general’s recommendations to recover the erroneous payments.

The tax collectors issued potentially $898 million in improper Recovery Rebate Credits (RRCs) to ineligible individuals, including potential nonresident aliens, according to a final audit report by the Treasury Inspector General for Tax Administration (TIGTA).

The CARES Act authorized Economic Impact Payments in varying amounts depending on income and filing status. Any eligible individual who did not receive the stimulus payment could claim the missing amount on their tax return as an RRC on their taxes in 2020 and 2021.

“As of May 27, 2021, the IRS had processed 26.3 million tax returns with RRC claims totaling $39.2 billion,” according to the TIGTA final audit report. “Of these, the IRS issued potentially improper RRC payments totaling $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 IRS declined to review or take steps to recover approximately two-thirds of the erroneously disbursed amounts, the inspector general revealed.

“The IRS did not agree to review erroneous payments totaling nearly $598 million that were paid to ineligible individuals as of May 27, 2021,” the IG said. “The IRS also did not agree to conduct analysis to identify and recover additional erroneous RRC payments issued after May 27, 2021.”

The watchdog found potentially 355,015 individuals were erroneously issued the payments, which included “ineligible dependents, nonresidents, and individuals associated with a credit from a U.S. Territory.”

There were 75,594 tax returns with RRCs for more than $125 million that the IRS issued to potentially nonresident aliens, the TIG found.

The IRS agreed with just eight of 22 of the inspector general’s recommendations. (Continued)

Read full article here.

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3 thoughts on “IRS squanders $1B in erroneous pandemic credits, won’t try to recoup”

  1. Who woulda thunk?! The latest money-laundering scheme was constructed on the premise of a false pandemic. Aren’t the crooks clever? As grandma said: “Foxes guarding the henhouse!”

  2. metaphorsbwithu

    It’s a pattern.

    It’s the same with things like child tax credits. The IRS KNOWS there is widespread abuse involving billions of dollars but, hey, it’s just taxpayer money being doled out so who cares?

    Everyone knows it’s a scam but no one will be held accountable unless you are on the wrong list. For everyone else it’s free money.

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