EITC

The taxpayer class with unbelievably high audit rates, five and a half times virtually everyone else, were low income wage earners taking the earned income tax credit (EITC). Of the 626,000 audits last year 298,000 were in this group. This brought in about $40 billion to the IRS. Years ago people on welfare would lose their benefits if they went to work so instead of changing that law the IRS instituted the EITC to compensate for the lost income. It is available for low income families but it can be substantial. The highest EITC is $6,800 for taxpayers with three children. Note the word children. People would make up children and get the credit. Prior to 1987 the IRS did not require social security numbers for the children and cheating was rampant. Since then people used fake SS numbers but many get caught thus the audits. The year this requirement took effect 7 million children disappeared overnight. Even so people still use this scam as witnessed by the $40 billion. No one knows how many got away with the scam. Maybe the 87,000 new agents will get the rest of those criminals.