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The wrong folks get billions in tax dollars

By By Blake Ellis
Published On: Jul 09 2014 12:45:52 PM CDT
Updated On: Jul 09 2014 02:45:09 PM CDT
Taxes, 1040EZ

Ferre' Dollar/CNN

NEW YORK (CNNMoney) -

The federal government is continuing to dole out billions of dollars to people who shouldn't get them.

A government watchdog agency said an estimated $106 billion in payments were made in error last year: meaning they were the wrong amount, went to the wrong person or lacked sufficient documentation.

These payments include tax refunds, unemployment benefits, Social Security benefits, and Medicare and Medicaid coverage.

The improper payments could be even higher since not all agencies reported to the Government Accountability Office.

The White House acknowledged that "the loss to the Federal Government is significant," but it pointed to a declining overall error rate: Just 3.5 percent from 5 percent in 2009.

"[T]he Administration, working together with the Congress, has significantly reduced improper payments," Beth Cobert, deputy director for management at the Office of Management and Budget, said in her testimony. "[W]e will continue to work closely with agencies to find the root causes of the improper payments."

The Department of Agriculture's School Breakfast program, which provides free or reduced-price meals to needy students -- had the highest error rate in 2013, at 25 percent.

Other programs with error rates above 15% include the Earned Income Tax Credit and the Small Business Administration's Disaster Assistance Loans program.

In congressional testimony Wednesday, government agencies said they have been working on better procedures and trying to recover improper payments already made.

The IRS said it is going to be challenging to make improvements, however, given its lack of adequate funding.

The agency says its 2014 budget of $11.29 billion is $850 million below the funding it received in 2010, despite the surging fraud and identity theft that is leading to many improper payments.

"I remain concerned about our ability to continue to make progress in all of these areas in light of our ongoing difficult budget environment," IRS commissioner John Koskinen said in his testimony.

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