Arrival of Obamacare puts focus on IRS tax-credit scandal

“The IRS has repeatedly ignored the fraud and abuse in the Earned Income Tax Credit program, which has already cost Americans over $100 billion,” Camp said in a statement Monday. “Americans should be confident that their tax dollars are being used properly, but that confidence has been shattered by the blatant disregard this agency has shown for monitoring refundable tax credits and better protecting taxpayers.”

The flow of money has continued despite the Improper Payments Elimination and Recovery Act, which Congress passed and President Obama signed in 2010. The law “requires agencies to achieve an improper payment rate of 10 percent or less for each high-risk program,” says a recent compilation of IRS reports prepared by the Ways and Means Committee. “The Earned Income Tax Credit’s improper payment rate has been above 20 percent since 2003.”

And now comes Obamacare. In the new national health care scheme, the IRS will do basically what it does with the Earned Income Tax Credit: It will determine Americans’ eligibility for subsidies, to be paid in the form of tax credits, and then hand those tax credits out. And that has lawmakers concerned.

“Considering the IRS’s failure to address the Earned Income Tax Credit problem,” says Camp, “there is no reason to think the agency will somehow do a better job administering the refundable tax credits included in Obamacare.”