I was listening a discussion on poverty on CSPAN radio this morning and Robert E. Rector from The Heritage Foundation claimed that 25% of the Earned Income tax credit is fraudulent.

Specifically, the claim was that 25% of the money goes to people who misreport their income or people who don't have the "relevant child in their home" (I'm guessing divorced parents claiming dependents on their taxes that live with the other parent).

Is there any evidence that 25% of the EITC is payed improperly?

Edit: Link to the program, the claim is made around 21:30

1 Answer 1


According to the US government report The Internal Revenue Service Fiscal Year 2013 Improper Payment Reporting Continues to Not Comply With the Improper Payments Elimination and Recovery Act improper earned income tax credit payments for 2013 were between 22% and 26%.

Similar percentages occurred for all the years studied (2003-2013).

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    Though I wonder how much of those "improper payments" is due to deliberate fraud, and how much is due to not understanding the instructions.
    – jamesqf
    Sep 16, 2017 at 16:50
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    @jamesqf - ignorance of the law is not generally considered a defense against violating it. Including where IRS and taxes are concerned.
    – user5341
    Sep 16, 2017 at 23:10
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    It needs to be noted that the above report is ambiguous in the sense that it does not clearly state that the actual money paid was 22-26% above what is "proper'. Rather, it can be interpreted to mean that 22-26% of the applications were in error to some degree, whether that be by $1 or $100,000. Sep 17, 2017 at 14:29
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    @DavePhD - But it doesn't clearly specify whether that is the value of the improper submissions or the improper value of the submissions. Sep 17, 2017 at 18:01
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    @DanielRHicks If you read page 15 of the this pdf (page 9 according to the document numbering) you will see: "are consistent with the budget estimates used by the IRS to compute Fiscal Year 2013 EITC improper payments. ... ACTC Improper Payments – The amount of the difference between the amount of the ACTC claimed by the taxpayer on his or her tax return and the amount the taxpayer should have claimed" treasury.gov/tigta/auditreports/2014reports/201440093fr.pdf
    – DavePhD
    Sep 18, 2017 at 10:35

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