Ending EITC’s $15.9 Billion Improper Payment Challenge: Proven Solutions for Immediate Savings
The Problem: Structural Issues Fuel Improper Payments
The Earned Income Tax Credit (EITC) is consistently among the federal government’s most error-prone programs, resulting in annual improper payments totaling approximately $15.9 billion (IRS EITC Improper Payments Fact Sheet). Over the past decade, improper payment rates routinely exceeded 25%, placing EITC firmly on the GAO’s "high-risk" list (GAO, 2023). Conservatives’ estimates suggest nearly 40% of EITC claims involve income misreporting or eligibility errors (Heritage Foundation, 2023).
Key issues contributing to these improper payments include:
Structural Limitations: The IRS was designed primarily for tax collection—not proactive eligibility verification, lacking necessary workforce databases and technological resources.
Reactive Verification Approach: Current verification occurs post-payment, making it difficult to recoup incorrect payments efficiently or at all from modest income recipients.
Complex Eligibility Criteria: Ambiguities surrounding income eligibility, status of dependents, and residency requirements create frequent opportunities for mistakes or fraud.
Congressional Opportunity: Immediate, Proven Solutions
Congress faces a clear decision: proactively implement rigorous eligibility verification or continue losing billions annually. Recent congressional hearings have underscored the urgent need for upfront verification, creating an immediate legislative opportunity to mandate proactive identity verification and eligibility checks.
Immediate Congressional Actions Required
Congress should act decisively to:
Mandate Immediate Pre-payment Identity and Eligibility Verification: Require IRS collaboration with proven private-sector experts through existing federal contracts.
Implement Real-time Verification: Proactively verify claimant identities, incomes, and dependents prior to approving tax credits.
Deploy Scalable Solutions: Apply advanced, technology-driven solutions already successfully utilized by private sector contractors in comparable programs such as Medicaid and the Children’s Health Insurance Program (CHIP).
Conclusion: Immediate Action Means Substantial Savings
Delay is costly—every day Congress waits, millions of taxpayer dollars continue to be unnecessarily lost. Immediate action ensures fiscal responsibility, significantly reduces improper payments, and safeguards critical support for America’s working families.