Two Republican congressional leaders are asking the Internal Revenue Service about recent reports that it has been paying out billions of dollars for improper Earned Income Tax Credit claims.

The Treasury Inspector General for Tax Administration issued a report last week estimating that the IRS paid between $11 billion and $13 billion in improper EITC claims in fiscal year 2009 (see IRS Can’t Stop Paying Billions in Bogus EITC Claims). The Justice Department also recently reported that it has filed six lawsuits in five states to stop tax preparers from fraudulently claiming the EITC as well as the First-Time Homebuyer Tax Credit (see DOJ Cracks Down on False Tax Credit Claims).

In response to the TIGTA report, House Ways and Means Committee Chairman Dave Camp, R-Mich., and Oversight Subcommittee Chairman Charles Boustany, R-La., sent a letter to IRS Commissioner Douglas Shulman on Friday, inquiring about the improper payments.

In the letter, the two chairmen outlined several concerns related to the program, noting that it consistently ranks among the most poorly administered federal programs in terms of improper payments.

“Not only does it seem that the IRS is unable to reduce these improper payments, but it seems unable to create reduction targets,” they wrote.

Highlighting repeated recommendations on ways to reduce the waste, fraud and abuse in the EITC program, Camp and Boustany requested that the IRS explain why it has failed to implement numerous long-standing recommendations to improve the program’s recovery of improper payments. As part of the committee’s oversight jurisdiction relating to the activities of the Treasury Department and the IRS, Camp and Boustany requested the IRS to provide information by February 25 related to the EITC program, including the amount of money that has been recovered from improper payments, results of the agency’s “EITC Paid Preparer Strategy” program and an explanation as to why the agency has delayed implementation of recommendations for reducing overpayments in the EITC program.

“If these common-sense recommendations were implemented, TIGTA estimates they would save the American taxpayer more than $8 billion over five years,” they wrote. “Their lack of implementation is not a cause for confidence in IRS reduction efforts.”

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