TIGTA: IRS Needs to Investigate Preparers Who Make False EITC Claims

TIGTA: IRS Needs to Investigate Preparers Who Make False EITC Claims

Share this

The Treasury Inspector General for Tax Administration (TIGTA) says that the IRS needs to crack down on Earned Income Tax Credit preparer fraud:

The Internal Revenue Service needs to improve its ability to identify tax preparers who submit improper Earned Income Tax Credit claims, according to a new government report.

The report, by the Treasury Inspector General for Tax Administration, acknowledged that the IRS has increased its efforts to improve compliance with the EITC. However, in tax year 2008, individuals claimed $49.2 billion in EITC; 66 percent of the returns were prepared by tax return preparers.

The report, which can be read here in its entirety, states in part:

Although the IRS has increased its efforts to improve compliance with the Earned Income Tax Credit (EITC), it also needs to improve its ability to identify preparers who submit improper EITC claims…. The EITC was created in 1975 to offset the impact of Social Security taxes for individuals who work but have low incomes. The refundable nature of the EITC and the complexity of eligibility requirements increase the likelihood of taxpayer error and fraud. The IRS estimates that between $11 billion and almost $14 billion in erroneous EITC claims are paid annually. For Tax Year 2008, individuals claimed $49.2 billion in EITC; 66% of the returns were prepared by tax return preparers.

Refundable credits are, of course, a form of welfare. And we know from past experience that some folks think they are entitled to receive free money from the government.

I wrote about the tempting nature of refundable tax credits last October in a post titled Homebuyer Credit Fraud: House Investigation Begins this Morning:

Government policies like progressive taxation blatantly redistribute wealth from the rich to the poor thereby creating a climate in which people no longer find it morally repugnant to steal from others whom they deem to be better off than they.

Obtaining a tax refund by claiming a tax credit to which you are not legally entitled is theft. Straight up.

But the problem is it doesn’t feel like theft.

People who commit fraud to obtain a tax credit don’t believe they have done anything wrong. It somehow feels okay to take the taxpayers’ money. After all, the rich only got that way because they stole from the working poor in the first place, right?

It isn”t like they worked harder or smarter than we did, is it? No, its because they are dishonest and greedy. And how can it be wrong to steal from the dishonest and greedy?

This is class warfare plain and simple and you have the progressive left to thank for it. It has deliberately and consistently created in the minds of the masses the notion that the “haves” became haves by nefarious means and that anything bad that happens to them is well deserved.

Refundable credits are like double parking your car and leaving the doors open and your keys in the ignition. You shouldn’t be surprised when you come back and find that your car was stolen.

Whenever the government blatantly takes money from one class of Americans and gives it to another class of Americans there will be rampant fraud.

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida