A report by an IRS watchdog, the Treasury Inspector General for Tax Administration (TIGTA), recently found that the agency correctly sent 98% of Child Tax Credit (CTC) payments to qualified recipients as of December 2021.
However, 4.1 million eligible CTC taxpayers missed out on their deserved credit pay-outs, and millions of others who didn’t qualify for funds received them, according to Accounting Today.
TIGTA reported that the IRS issued 216.9 million payments totaling $93.5 billion between July and November 2021.
“However, 3.3 million payments, totaling over $1.1 billion, were sent to 1.5 million taxpayers who should not have received the payment,” claimed the report. “Further, the IRS did not send 8.3 million payments, totaling about $3.7 billion, to 4.1 million eligible taxpayers.”
According to CNBC, the IRS admitted that many taxpayers who received CTC payments wrongfully had children that were too old to qualify for CTC benefits — or had claimed children on multiple income tax returns.
IRS Takes Action to Fix CTC Woes
The IRS claimed it has taken corrective action to prohibit future payments to unqualified taxpayers, and has issued the rightful funds to millions of taxpayers who were wrongly overlooked, per CNBC.
The IRS has been grappling with processing stimulus checks and, since the enactment of American Rescue Plan Act (ARPA), expanded CTC benefits, which were increased significantly for one year. This increase resulted in the largest U.S. child tax credit ever, and provided most working families with $3,000 per child under 18 years of age and $3,600 per child 6 and younger.
“At the time of the ARPA’s enactment, the 2021 filing season was well underway,” wrote IRS Wage and Investment Division commissioner Kenneth Corbin, responding to TIGTA’s report. “In addition to the provision for issuing advance payments of the CTC, it also called for the IRS to issue a third round of Economic Impact Payments (EIPs).”
Although the IRS is working to distribute all missed CTC payments, there are still some families eligible for the CTC who haven’t received their payments yet, according to former IRS commissioner John Koskinen.
“If you’re a low-income taxpayer, a little concerned about whether you’re doing this right and you want to call somebody to get help, the last couple of years it’s been impossible to get somebody at the IRS,” said Koskinen during a Bipartisan Policy Center panel on Sept. 26, per CNBC.