Friday, June 19, 2009


For some time now when discussing the Earned Income Tax Credit I have mentioned that I read a survey somewhere that about 1/3 oF all EITC claims were fraudulent - but I could not remember where I had read it.

The AICPA issue briefing “Federal Regulation of Tax Preparers” that I mentioned in this morning’s post included the following item –

An 1RS study of 1999 tax returns suggests that - out of the $31 billion in EITC claims by taxpayers that year - between 27 and 32 percent of those claims were erroneous.”

If that was the number back in 1999 I can imagine what it is today!


Anonymous said...

It does make me wonder where the fraud originates: the tax payer or the preparer. My experience with EIC clients was varied. Most were upstanding individuals with lower incomes; some seemed to plan their income to maximize the payout. Especially frustrating were self-employed individuals whose income was always in the maximum payout range every year, no matter what their personal circumstances (married, or not, one child or two) were that year. Curious, that.

Robert D Flach said...


Thanks for the comment. I have had similar experiences with EIC clients - although I tend to think that most of mine were honest.

I do believe that the fraud originates more often with the taxpayer.

I think IRS has put an extraordinary burden on tax preparers in this area. We have the added responsibility of trying to determine if an individual or family is eligible for federal welfare.

Let's call a spade a spade. The EITC is, for the most part, Aid to Families With Dependent Children - a welfare program. And it should not be administered via the Tax Code.