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The IRS Tax Credit Error Tab Has Reached $28.1 Billion
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Subscribe06 AUG 2026 / IRS UPDATES
The IRS's problem with improper refund payments worsened in fiscal year 2025, as they reached around $28.1 billion — a 4.6 percentage points leap — with the estimated improper payment rate across major refundable credits hitting 26.5%. This mainly results from complex eligibility rules, the lack of timely third-party data, and the difficulty in verifying self-employment income. It doesn't necessarily mean fraudulence but does include overpayments, underpayments, or payments made to individuals who fail to confirm eligibility under the rules. This problem, combined with the increasing targeting of tax professionals by phishing scams, highlights the importance of trustworthy data and strict verification processes, placing a big task at the hands of Congress to simplify and improve verification system.
The IRS is trying to inspect a moving train while passengers keep boarding. Refundable tax credits move quickly through the filing system, often producing refunds before the agency can confirm every detail about income, residency, family relationships, ed...
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