The IRS sent 3.3 million child tax credit payments totaling more than $1 billion to taxpayers who were not eligible for the money, according to a new audit that underscores the difficulty of hastily implementing President Biden’s push to make the program more generous.
The Treasury Inspector General for Tax Administration (TIGTA) said the payments reached 1.5 million ineligible taxpayers.
At the same time, the IRS failed to send 8.3 million payments totaling about $3.7 billion to 4.1 million taxpayers who were eligible.
Mr. Biden’s coronavirus-relief package in early 2021 increased the child tax payments to $3,600 for each child up to age 6 and $3,000 for each one ages 6 to 17 in low- and middle-income families.
Families received half of their payments in monthly installments late last year before they claimed the rest on their tax returns.
Auditors said implementation of the changes was “a significant undertaking.”
“The first monthly payments were issued on July 15, 2021, only four months after legislation was enacted,” TIGTA wrote.
Auditors noted that 98% of the 179 million payments it reviewed in the period between July and November 2021 were made accurately and totaled $75.6 billion.
TIGTA said the IRS sent reconciliation letters to filers at tax time to correct the mistakes, and auditors plan to monitor the process.
Auditors sent a series of recommendations to the IRS to prevent errors in the future. One recommendation says the IRS should inform tax filers that payments might have been sent to the taxpayer’s wrong account, a problem that occurred during the direct deposit process.
The IRS agreed with all of the recommendations.