Millions of dollars in refundable tax credits that were determined to be erroneous after taxpayers received them may never be recovered by the Internal Revenue Service, but the IRS plans to clamp down on erroneous and fraudulent claims for tax breaks such as the Earned Income Tax Credit.
A new report released Monday by the Treasury Inspector General for Tax Administration on refundable tax credits found that they are highly vulnerable to fraud. Refundable tax credits such as the EITC, the Additional Child Tax Credit, the First-Time Homebuyer Credit, and the American Opportunity Tax Credit for education also provide valuable tax breaks for low-income taxpayers and the middle class.
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