The IRS Has Known About This Fraud Since 1995. Thirty Years Later, They’re Still Working On It.

A $70 Billion Refundable Tax Credit With a 33% Error Rate.

The Earned Income Tax Credit is a refundable tax credit for low-to-moderate income workers — one of the largest anti-poverty programs in the federal government. In FY2023, IRS paid approximately $65 billion in EITC benefits. Of that, $21.9 billion — 33.5% — was paid to ineligible claimants or for incorrect amounts, according to TIGTA’s annual compliance assessment.

The statutory improper payment target, set by the Improper Payments Elimination and Recovery Act, is a rate below 10%. The IRS has never once hit that target for the EITC — not in any of the 21 consecutive years since the law’s passage. Not in a single fiscal year since the program was placed on the high-risk list in 1995.

Thirty Years of “Working On It.”

“The EITC has been on GAO's High-Risk List since 1995. In 30 years, the program's improper payment rate has never once met its statutory target.”

GAO High-Risk Series — Tax Enforcement: Ensuring Eligible Tax Credits Are Paid to Eligible Claimants (2025)

~$330 Billion. Cumulative. Since 1995.

The IRS has published EITC improper payment estimates continuously since the mid-1990s. Summing those annual estimates produces a cumulative improper payment total of approximately $330 billion — roughly the size of the entire federal discretionary budget for a year. This is not a back-of-the-envelope calculation; it is the addition of official IRS and TIGTA annual figures, each of which was reviewed and published by the federal government.

FY2024 showed some improvement: the rate dropped to 27.3%, with $15.9 billion in improper payments. TIGTA called this “significant progress.” The statutory target is 10%. At the current trajectory, the IRS will reach 10% in approximately the 2040s — assuming the trend continues, which it has not, reliably, in three decades.

The EITC Is Politically Untouchable. And the Fraudsters Know It.

The EITC serves approximately 23 million households. Tightening verification requirements would reduce improper payments but would also likely reduce access for legitimate claimants who struggle with documentation. Democrats have historically opposed verification tightening as barrier-to-benefits legislation. Republicans have supported tighter controls but have paired proposals with other provisions that make bipartisan agreement difficult.

The result is a thirty-year institutional failure that nobody in Congress has been forced to own. The GAO publishes the data. TIGTA publishes the data. Congress holds hearings. The rate stays well above target. The losses accumulate. The high-risk list designation remains.