Tax Administration:

Earned Income Credit--Data on Noncompliance and Illegal Alien Recipients

GGD-95-27: Published: Oct 25, 1994. Publicly Released: Nov 14, 1994.

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Pursuant to a congressional request, GAO provided information on the Earned Income Credit (EIC), focusing on the: (1) extent of noncompliance with EIC requirements in tax year 1993; and (2) number of illegal aliens who received EIC benefits.

GAO found that: (1) although reliable data do not exist on the extent of noncompliance with EIC requirements, the Internal Revenue Service (IRS) believes that substantial noncompliance continues; (2) a preliminary IRS study showed that an estimated 29 percent of EIC returns filed electronically during the sampling period claimed excessive refunds and 13 percent of the returns intentionally claimed too much EIC; (3) erroneous EIC claims totalled $358 million in 1993; (4) intentional erroneous claims constituted 12 percent of the total dollar amount claimed in 1993; (5) IRS had controls in place to prevent EIC refunds from being issued when returns included possibly erroneous or incomplete information; (6) illegal aliens are not prohibited from paying taxes or receiving EIC and are not required to reveal their immigration status on their tax returns; and (7) IRS has identified at least 160,000 potentially illegal-alien tax filers through tax return information and believes most of them will not receive EIC benefits because they cannot support their EIC claims.

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