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IRS gives away $13B in taxpayer dollars to crooks
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If your company lost $13 billion in one year due to sloppy work you wouldn’t expect them to hand out $2.8 million in bonuses plus grant big step pay raises for a job well done.

But then again you probably don’t work for the Internal Revenue Service.

Last month the IRS paid 1,146 employees that had disciplinary issues some $2.8 million in bonuses. That includes $1 million in bonuses paid to IRS employees who have failed to pay their federal income taxes.

Now comes the news that the IRS in 2013 paid more than $13 billion to people that did not qualify for the Earned Income Credit that Richard Nixon incorporated into the 1040 form to counter poverty.

The Treasury Inspector for General for Tax Administration office issued a report this week that between $13 billion and $15.6 billion in EIC payments were mailed that should not have been. That’s a quarter of the roughly $62 billion of taxpayer income redistributed via the filing of the 1040 form for the EIC program.

The IRS says it is aggressively fighting tax fraud contending they’ve stopped nearly 15 million suspicious returns since 2011. Overall they claim they avoided paying $50 billion in fraudulent refunds in the past three years.

I hate to burst the IRS’s bubble but they are talking about all IRS returns and not specifically the ones tied to the EIC credit. While they “saved” taxpayers $50 billion they cost taxpayers at least $40 billion in EIC fraud alone during the same three-year time period.

To put that in perspective, the IRS’s massive failure with administering just one aspect of the tax code has cost every man, woman and child in the United States $127.30 each between 2011 and 2013. That’s before the IRS spent $4.1 million on  a lavish conference in Las Vegas where high ranking tax officials stayed in luxury suites and squandered your money on things such as making a $50,000 Star Trek parody video.

Once you factor in well-documented government waste, pork barrel projects, other fraud, and federal grants to pay for crucifixes placed in urine it completely undercuts contentions by Congressional leaders such as Nancy Pelosi that there is no more room to cut the federal budget.

Perhaps if Pelosi and her colleagues concentrated on making sure the government they oversee does its job instead of only dreaming up new ways to spend money they might actually have more cash to do what they want to do or – heaven forbid – pay down the debt or reduces taxes.

It’s rich to hear politicians on both sides of the aisle trash talk Wall Street for waste and avoiding taxes yet Uncle Sam can’t get his own house in order.

Sending out $13 billion in fraudulent payments each year is an outage.

But then again if you run an operation that rewards rules breakers and incompetence what other outcome would you expect? The politicians talk about making teachers accountable in some manner so that they can get fired for not producing results, but they never talk about applying the same concept to bureaucrats even though it would be much easier to do.

Teachers deal with trying to educate 30 to 150 individuals who don’t learn the same or have similar skills or backgrounds. Testing may produce real data but you’re not talking about widgets. Bureaucrats, on the other hand, have tasks that are very definitive. Making sure someone qualifies for an EIC refund isn’t exactly an abstract art.

Apologists may say the bureaucrats have too much work. Join the crowd.

But if that is the case and at least $13 billion is paid out fraudulently each year in arguably the biggest ongoing duping of the federal government, then pull the plug. A 25 percent fraud rate is unacceptable.

Disconnect the EIC from the 1040 process so ID thieves filing  fraudulent returns or tax preparers playing fast and loose with “facts” can’t hoodwink the IRS.

The EIC is a welfare program. It isn’t a tax issue. Rollover the money in the federal budget to welfare assistance programs to help the low-income. That way they get something every month instead of a windfall once a year. It also makes it a much less attractive target for fraud.

The IRS has a tough enough time collecting taxes. They don’t need to be a welfare payment agency as well.

Speaking of the IRS not having the right skill sets and tools to oversee a welfare eligibility program ever wonder how the IRS is going to do enforcing the Obamacare financial eligibility rules?

Give the IRS a few years. The $13 billion in EIC fraud will look like chicken feed in comparison.


This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at or 209.249.3519.