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Tax Byte

The GAO estimates that 34% of Earned Income Tax Credit payments issued in FY 2023 were improper at a cost to the government of $21.9 billion. The Treasury Inspector General for Tax Administration (TIGTA)  estimated an error rate of 24% for FY 2020.

TIGTA reported that refundable credit improper payments are not primarily the result of internal control weaknesses that the IRS can address. Eligibility rules for ETTC are “often complex because they address complicated family relationships and residency arrangements to determine eligibility.”

Carefully completing the Form 8867 to demonstrate preparer due diligence (while bothersome) serves to protect us and the client from IRS problems. This is particularly true if we do few EITCs in our office, i.e. the CEO’s granddaughter or the physician’s barista son.

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