July 2, 2022 - Douglas Myser

TIGTA says IRS right on rebate credits. The Tax Inspector General for Tax Administration said that the IRS was right 99.3% of the time on the recovery rebate credit, in a report issued. Both portions of the recovery rebate credit were paid in advance to qualifying taxpayers as economic impact payments so that the recovery credit was generally available to taxpayers who did not receive either or both EIPs or their full eligible amounts but who had been eligible for them. The first round of EIPs was issued to nearly 162 million individuals and the second to 146.5 million individuals, for a combined total dollar amount of nearly $413 billion. Although the recovery rebate credit error rate was low, TIGTA found that more than 355,000 individuals had received recovery rebate credits totaling $603 million for which they may have been ineligible either because they were listed as a dependent on another tax return or the amount was based erroneously on a dependent who had been claimed on another return or for whom an EIP had been paid. Some other ineligible claimants were nonresident aliens or residents of U.S. territories. TIGTA says IRS right on rebate credits.

More than 11.2 million returns required resolution of an EIP/recovery rebate credit discrepancy, 5.6 million of them manually, TIGTA reported. Besides risking additional errors, manual corrections created lengthy delays. More than 500,000 such IRS returns were still being processed in September of 2021. Fraud filters generally worked as intended, according to TIGTA. Although a programming error prevented 7,478 returns with potentially erroneous recovery rebate credits totaling $29.4 million from being flagged for additional review before the recovery rebate credits were paid.

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