The Internal Revenue Service erroneously sent more than $1 billion in child tax credit payments last year to millions of Americans who weren’t eligible for the free cash, an audit showed Tuesday.
The audit also found while 3.3 million payments shouldn’t have been sent between July and November of last year, the IRS also failed to send payments worth $3.7 billion to the more than 4 million taxpayers who were eligible.
The wrongly delivered payments went to 1.5 million ineligible taxpayers in instances where “a dependent did not meet age requirements, was deceased, or was claimed on another tax return,” the Treasury Inspector General for Tax Administration report stated.
People who received the payments that were not supposed to were likely forced to fork over the money on their 2021 tax returns filed this year while the people who should’ve gotten the money and didn’t could claim the full amount on their tax returns, according to the audit.
The Tax Administration advised the IRS if it was sending payments to the wrong people in real time while the tax credit was available to some American households from July to December 2021.
The American Rescue Plan, passed last March, expanded the tax credit temporarily from $2,000 to $3,000 for a child under 18 and up to $3,600 for children under 6.
The findings come as the IRS seeks to clamp down on average taxpayers to help fund Biden’s Inflation Reduction Act. The IRA legislation that was signed into law by President Biden will force working-class Americans to pay billions of dollars in new taxes, the nonpartisan Congressional Budget Office said last month.
Still, the report noted that 98% of all payments — or 175.6 million — that equaled $75.6 billion were made to the correct recipients.
The agency in their response to the audit touted that most taxpayers received the payments they were owed while explaining officials were saddled with a huge undertaking.
“Achieving this level of accuracy within the limited timeframe provided required a significant amount of collaboration among several agencies within the Department of Treasury,” said Kenneth Corbin, the commissioner of wage and investment division.