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October 22, 2013

IRS auditors: $13B in EITC fraud last year

If they're admitting to that much...

...The IRS paid as much as $13.6 billion in bogus claims for the Earned Income Tax Credit last year, according to a report the agency’s internal auditor ...
...Over the last decade, the IRS could have paid out as much as $132.6 billion in improper payments...
I'm not sure I buy the WT's simplistic 10x'ing of last years figure for a decade number though. Pre-crash when UE was in the 5% range and a lot more people had decent full time jobs it would have been a lot harder to finagle an EITC payment.

Whatever...the $13B for last year being generated by the IRS itself is probably real'ish. So how much is $13B?

$13B/360M warm bodies (more or less) = $36/warm body. That includes people in comas, iron lungs, infants, pensioners etc.

Some percentage of total US population doesn't even qualify for EITC at all. Working parents might, but their children and pets wouldn't, non-working spouses wouldn't (although a household EITC is larger than a single person's).

So how much EITC can someone legally qualify for?

2012 Tax Year

Earned Income and adjusted gross income (AGI) must each be less than:

$45,060 ($50,270 married filing jointly) with three or more qualifying children
$41,952 ($47,162 married filing jointly) with two qualifying children
$36,920 ($42,130 married filing jointly) with one qualifying child
$13,980 ($19,190 married filing jointly) with no qualifying children

Tax Year 2012 maximum credit:

$5,891 with three or more qualifying children
$5,236 with two qualifying children
$3,169 with one qualifying child
$475 with no qualifying children

FWIW, that single $13,980 number works out to be almost a perfect match for a $9/hr 32hr/week part time job, so a single person with a min wage part time job legitimately qualifies for the bottom rung $475 EITC.

From looking at those salary/payout ranges, the phat fraud cash is clearly in fabricating a couple of non-existent children. Suddenly your shitty $14k/yr part time job is paying $19k and the fridge is full of Heinies rather than jelly jars of tap water.

With the payout bump from zero kids to 2 kids being over $4,000 that's a huge incentive manufacture alternative realities.

BTW, a qualifying "child" can be up to 23yo if they're a "full time student".

So, suppose you did scam up an extra $4k/yr manufacturing a couple of faux-kids. That's over $330/mo. What kind of snazzy bling can that $300+/mo get you?

Well, you could lease a new BWM 3-series, or if you wanted to "go green", a new Chevy Volt. If you wanted some cash left over for insurance and gas, a new SmartCar is probably the way to go though at $99/mo lease.

I'm guessing this is why the Walmart parking lot is full of new cars when I roll up in my 1998 vintage Jetta.

digg this
posted by Purp at 02:15 PM

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