TIGTA reviews IRS’s handling of premium tax credit claims

The IRS accurately determined the allowable Premium Tax Credit (PTC) on more than 2.4 million returns, according to a report by the Treasury Inspector General for Tax Administration (TIGTA). TIGTA evaluated the effectiveness of the IRS’s verification of PTC claims during the 2015 filing season to ensure that unauthorized payments or overpayments of the PTC were fully recouped.

Qualified enrollees in the health insurance marketplace can receive the PTC in advance or claim the PTC on their return. According to the IRS, almost $11 billion in advance credits were paid to insurers in fiscal year (FY) 2014.

TIGTA reviewed more than 2.6 million tax returns with a PTC claim that were filed between January 20, 2015, and May 28, 2015, and found that the IRS accurately determined the allowable PTC on more than 2.4 million (93 percent) returns. However, computer programming errors resulted in an incorrect computation of the allowable PTC for some 27,800 tax returns. For some 4,600 tax returns, the IRS lacked the authority to correct the PTC claim during processing.

TIGTA recommended that the IRS review the 27,800 returns to ensure that these individuals received the correct PTC. Also, TIGTA recommended that the IRS modify certain processes to use the most current information available when determining if a taxpayer had reconciled APTCs received in the prior calendar year. The IRS agreed with TIGTA’s recommendations but stated that the implementation of the second recommendation was subject to budgetary constraints, limited resources and competing priorities.

SOURCE: TIGTA Report, 2016-43-033, March 31, 2016.

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