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IRS failed to send child tax credit to millions: Audit

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WASHINGTON (NEXSTAR) — The Biden administration’s advanced child tax credit payments proved to be a “godsend” for many low-income families, but a recent audit found that the IRS also failed to send money to millions of taxpayers who qualified.

The audit, released Tuesday by the Treasury Inspector General for Tax Administration (TIGTA), found that overall, the agency was 98% accurate when issuing the 178.9 million payments between July and November of 2021.

The 2% inaccuracy, however, involved billions of dollars and affected millions of households.

The IRS neglected to send 8.3 million payments — about $3.7 billion – to 4.1 million taxpayers who were eligible. Programming errors were to blame, according to the IRS. In July, taxpayers with an Individual Taxpayer Identification Number were mistakenly excluded, and, in August, if only one spouse updated bank account information the household didn’t receive the advanced payment.

While some qualifying people didn’t receive their payments, the IRS did mistakenly send 3.3 million payments, valued at $1.1 billion, to 1.5 million taxpayers who weren’t eligible to receive the money, the audit found. People who received the money in error needed to claim it on their taxes earlier this year, unless their annual income qualified them for “full repayment protection.”

The TIGTA report, which was sent to IRS managers involved with the tax credit rollout, made several recommendations to prevent future erroneous payments, to which the agency has agreed, according to the TITGA. Some of the mistaken payments were made for children who were too old or who were claimed on multiple tax returns.

The IRS said in its official response to the report that it had already started flagging accounts in 2021 to prevent additional payments, and in August and September issued roughly $728 million in payments to impacted taxpayers. The IRS advised other taxpayers whose payment issues they couldn’t address to file for the credit on their 2021 tax returns before this past deadline.

The IRS set up a list of FAQs to guide affected taxpayers through the tax filing process.

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