Congressmen Urge Social Security and IRS to Stop EITC Fraud


Three Republican lawmakers are calling on the Social Security Administration to work with the Internal Revenue Service to do more to stop fraudulent claims for the Earned Income Tax Credit, particularly by the self-employed.

The lawmakers acknowledged that the Earned Income Tax Credit is an important tool to help people move from welfare to work, but said it must be protected from fraud. The Inspector General found that when the SSA asked individuals about their earnings—which could make them ineligible for payments under the Supplemental Security Income program—thousands of individuals disclaimed those earnings.

Over the course of four years, the IG found that nearly 50,000 individuals reported—but later disclaimed—$742 million in self-employment earnings on their tax returns that had previously made them eligible for the EITC or other payments. In over half of these cases, involving $399 million in self-employment earnings, SSA failed to report the disclaimed earnings to the IRS, effectively preventing the IRS from investigating or recovering EITC mispayments averaging $4,053. Boustany, Johnson and Roskam urged the SSA to take corrective action immediately and work with the IRS to eliminate EITC self-employment fraud. They said the SSA and the IRS need to develop the electronic reporting system that the SSA claimed it was developing seven years ago when the Inspector General initially reported the possibility of fraudulent self-employment income earnings.

Source: AccountingToday. Click here to read more

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