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ExpectMore.govExpectMore.gov home pageEXPECT FEDERAL PROGRAMS TO PERFORM WELL, AND BETTER EVERY YEAR.
 
Program Assessment

Program

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Internal Revenue Service Earned Income Tax Credit Compliance

This program administers the earned income tax credit (EITC) which rewards work and lifts families out of poverty. The program seeks to maximize participation of eligible taxpayers and reduce payments to ineligible taxpayers.

Rating

What This Rating Means

NOT PERFORMING
Ineffective

Programs receiving this rating are not using your tax dollars effectively. Ineffective programs have been unable to achieve results due to a lack of clarity regarding the program's purpose or goals, poor management, or some other significant weakness.
  • The program has failed to reduce EITC erroneous payments to acceptable levels. While IRS prevents roughly $1 billion in erroneous EITC payments per year, 27 to 32 percent of all EITC payments were still made in error for 1999. The magnitude of this error rate is the reason for the rating of "ineffective."
  • IRS has a strong planning process closely linked to its budget process, but it has not yet used outcome information for this program to set performance targets that allow it to demonstrate results.
  • IRS has made numerous management improvements in recent years. However, its financial management systems do not provide the information needed to make effective day to day management decisions.

Improvement Plan

About Improvement Plans

We are taking the following actions to improve the performance of the program:

  • Conducting 500,000 examinations of EITC returns per year based on enhanced case selection systems.
  • Measuring EITC overclaim estimates through prior year National Research Program (NRP) study results and economic modeling to account for tax law changes.
  • Yielding annual estimates of EITC error beginning with TY 2006 and provide detailed information regarding areas of error to allow for more directed compliance treatments

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