An inspector general report found the IRS improperly distributed millions in Earned Income Tax Credits to individuals using Social Security numbers not authorized for employment.
By yourNEWS Media Newsroom
The Internal Revenue Service issued more than $213 million in Earned Income Tax Credit payments to foreign nationals using nonwork Social Security numbers during 2023 and 2024, according to an inspector general report highlighted in a report by The National Pulse.
The findings detailed broader weaknesses within the IRS’s systems for identifying and preventing improper tax credit claims involving Social Security numbers issued for limited non-employment purposes.
According to the report, the Social Security numbers involved were originally issued for restricted functions such as access to government services and federal benefits, not employment authorization or eligibility for refundable tax credits.
Investigators found the IRS lacks sufficient data from the Social Security Administration to automatically determine why certain nonwork Social Security numbers were issued, limiting the agency’s ability to block ineligible Earned Income Tax Credit claims before refunds are distributed.
Auditors said the IRS currently relies heavily on manual reviews and post-filing investigations to identify questionable returns.
The inspector general’s review found the agency flagged approximately 12,600 potentially suspicious tax returns through risk-based screening processes and manually reviewed roughly 5,100 of those filings. According to the report, those reviews prevented nearly $11 million in improper payments.
The watchdog report stated that incomplete information-sharing between the IRS and the Social Security Administration remains a major obstacle to identifying ineligible claims.
Investigators said the IRS does not consistently receive full eligibility information indicating whether specific Social Security numbers were issued solely for federal benefits purposes, which would disqualify recipients from claiming the Earned Income Tax Credit.
The Earned Income Tax Credit is a refundable federal tax program designed to assist low-income workers and families.
The report also noted that refundable tax credit programs remain particularly vulnerable to fraud and payment errors. According to the inspector general’s findings, the Earned Income Tax Credit alone accounted for an estimated $21.1 billion in improper payments during fiscal year 2025.
The report said those losses included both fraudulent claims and unintentional filing mistakes.
Kenneth Corbin, chief of the IRS Taxpayer Services Division, acknowledged the agency’s limitations in processing eligibility information efficiently.
“Having timely, updated, reliable eligibility information would enable immediate eligibility determinations and would avoid costly, resources intensive, post-filing determinations,” Corbin said.
The report also pointed to longstanding concerns over coordination between federal agencies.
In 2017, the inspector general previously recommended that the IRS work more closely with the Social Security Administration to strengthen data-sharing systems and reduce misuse involving nonwork Social Security numbers.
According to the report, although federal agencies explored possible reforms after the recommendation was issued, no permanent solution has been implemented.
The National Pulse report also referenced prior coverage involving the IRS, taxpayer spending concerns involving taxpayers, federal benefit programs connected to tax, and other investigations involving alleged government fraud.
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