A combination of complex and confusing tax law as well as the the IRS’s limited resources result in billions of dollars in tax credits going to taxpayers who don’t qualify.
Most of the erroneous payments (both under- and overpayments) are a result of taxpayers who unintentionally misunderstand whether or not they qualify. But intentional fraud and dishonest tax preparers also contribute significantly to overpayments.
The Hill reports that Senator Orrin Hatch of Utah, the top Republican on the Finance Committee, has insisted that the IRS ensure that erroneous payments be eliminated.
Although improper payments have declined since 2010, the IRS acknowledges that more needs to be done. IRS officials are meeting with the Office of Management and Budget to try to come up with ways to more efficiently target these incorrect payments.