Audit Report

OIG-16-041

FINANCIAL MANAGEMENT

Treasury Was Not in Compliance with IPERA for Fiscal 

Year 2015 Due to High Improper Payment Rate for the 

Earned Income Tax Credit Program

May 13, 2016

Office of

Inspector General

Department of the Treasury
This Page Intentionally Left Blank.
Contents

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Audit Report................................................................................................. 1

Results in Brief............................................................................................ 1

Background ................................................................................................ 3

Audit Results .............................................................................................. 6

Treasury Was Not in Compliance With IPERA for Fiscal Year 2015 ............... 6

Payment Recapture Audit Reporting Needs Additional Improvements ............ 8

Recommendations................................................................................... 10

Annual Risk Assessments Underestimate the Risk of Improper Payments in

IRS Tax Refund Programs.................................................................... 10

Recommendation .................................................................................... 11

Appendices

Appendix 1: Objective, Scope, and Methodology ............................................. 13

Appendix 2: TIGTA’s Assessment of IRS Compliance with the Improper Payment

Reporting Requirements in Fiscal Year 2015 ................................. 15

Appendix 3: Management Response ............................................................... 50

Appendix 4: Major Contributors to this Report ................................................. 52

Appendix 5: Report Distribution ..................................................................... 53

Abbreviations

ACTC Additional Child Tax Credit

AOTC American Opportunity Tax Credit

DO Departmental Offices

EITC Earned Income Tax Credit

EO Executive Order

IPERA Improper Payments Elimination and Recovery Act of 2010

IPERIA Improper Payments Elimination and Recovery Improvement

Act of 2012

IPIA Improper Payments Information Act of 2002

IRS Internal Revenue Service

OIG Office of Inspector General
Contents

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OMB Office of Management and Budget

TIGTA Treasury Inspector General for Tax Administration

Treasury Department of the Treasury
OIG Audit

Report

The Department of the Treasury

Office of Inspector General

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May 13, 2016

Brodi L. Fontenot

Assistant Secretary for Management 

This report presents the results of our audit of the Department of 

the Treasury’s (Treasury) compliance with improper payment 

reporting requirements for fiscal year 2015. The objective of our 

audit was to assess and report on Treasury’s overall compliance 

with requirements contained in the Improper Payments Elimination 

and Recovery Act of 2010 (IPERA),1 enacted to help Federal 

agencies strengthen the framework for reducing and reporting 

improper payments. As part of our audit, we also assessed 

Treasury’s compliance with additional improper payment reporting 

requirements set forth in Executive Order (EO) 13520, Reducing 

Improper Payments and Eliminating Waste in Federal Programs, and 

the Improper Payments Elimination and Recovery Improvement Act 

of 2012 (IPERIA).2 Appendix 1 provides more detail of the 

objective, scope, and methodology of our audit.

This report also incorporates the results of the Treasury Inspector 

General for Tax Administration’s (TIGTA) assessment of the 

Internal Revenue Service’s (IRS) compliance with improper payment 

reporting requirements in fiscal year 2015. TIGTA issued its report 

on April 27, 2016, which is included as appendix 2 of this report. 

The results of our audit, insofar as they relate to IRS, are based 

solely on the results of TIGTA’s review.

Results in Brief

Treasury was not in compliance with IPERA for fiscal year 2015

due to IRS not reporting an overall improper payment rate of less 

than 10 percent for the Earned Income Tax Credit (EITC) program. 

IRS estimates that 23.8 percent ($15.6 billion) in EITC payments 

 1 Pub. L. No. 111-204, 124 Stat. (July 22, 2010) 2 Pub. L. No. 112-248, 126 Stat. (Jan.10, 2013)
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were issued improperly in fiscal year 2015. This is the 5th

consecutive year that we have determined that Treasury is 

noncompliant with IPERA due to IRS’s EITC reporting deficiencies.

We determined that Treasury was in compliance with all other 

IPERA, EO 13520, and IPERIA improper payment reporting 

requirements.

Treasury’s payment recapture audit reporting needs additional 

improvements. That is, Treasury did not fully comply with the 

Office of Management and Budget’s (OMB) reporting requirements 

for payment recapture audits. We are recommending the Assistant 

Secretary for Management ensure that (1) Treasury update its 

IPERA guidance to clarify the reporting requirements for Treasury 

bureaus and Departmental Offices’ (DO) subcomponents (hereafter 

we refer to bureaus and DO subcomponents collectively as 

“components”) payment recapture audits; and (2) the Risk and 

Control Group within the Office of the Deputy Chief Financial 

Officer strengthen its review and oversight of the data reported by 

components on payment recapture audits to accurately reflect the 

results of recapture audits.

In addition, we included as a finding in our report, TIGTA’s 

determination that Treasury’s annual risk assessment process did 

not provide a valid assessment of refundable credit improper 

payments. We are recommending that the Assistant Secretary for 

Management work with IRS as necessary to ensure TIGTA’s 

recommendations related to the Additional Child Tax Credit (ACTC) 

and American Opportunity Tax Credit (AOTC) improper payments 

risk assessment processes are implemented, and appropriate action 

is taken to report on and reduce improper payments associated 

with these refundable tax credit programs.

In a written response, management agreed with our three 

recommendations to address the improper payments reporting 

deficiencies identified in our report. Management noted that it will 

continue to improve its annual IPERA guidance to facilitate bureaus 

and offices’ submission of the necessary improper payments 

information and ensure that recaptured improper payments are 

disposed of in accordance with OMB Circular A-123, Appendix C 

requirements. Management also noted that Treasury and IRS have 
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begun taking steps to improve the risk assessment related to the 

ACTC and AOTC.

Management’s response is provided in appendix 3.

Background

Improper Payments Compliance and Reporting Requirements

Under the Improper Payments Information Act of 2002 (IPIA),

3

Federal agencies were required to review and identify programs and 

activities susceptible to improper payments on an annual basis and 

report estimates of improper payments to Congress along with 

actions to reduce estimated improper payments that exceeded 

$10 million.

In 2009, EO 13520 required Federal agencies to intensify their

efforts to eliminate payment error, waste, fraud, and abuse in 

major Federal programs while continuing to ensure that these 

programs serve and provide access to their intended beneficiaries. 

It increased Federal agencies’ accountability and required that

Federal agencies provide their agency Inspector General with 

detailed information on efforts to identify and reduce the number of 

improper payments in Federal programs with the highest dollar 

value of improper payments.

Following EO 13520, IPERA amended IPIA, strengthening agencies’ 

program reviews and reporting requirements. IPERA expanded the 

types of payments to be reviewed and established the requirement 

for agencies to conduct recovery audits if cost-effective. IPERA 

also required Inspectors General to report on respective agencies’ 

compliance with IPERA each fiscal year.

IPERIA further expanded agency improper payment requirements to 

foster greater agency accountability. IPERIA requires the OMB 

Director to identify a list of high-priority Federal programs for 

greater levels of oversight and review. For those high-priority 

programs, IPERIA requires OMB to coordinate with agencies to 

establish annual targets and semi-annual or quarterly actions for

 3 Pub. L. No. 107-300, 116 Stat. (Nov. 26, 2002)
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reducing improper payments. Agencies are required to submit an 

annual report to the Inspector General on actions (1) taken or 

planned to take to recover improper payments and (2) intended to 

take to prevent future improper payments. The report is also 

required to be available to the public on a central website.

For fiscal year 2015, EITC was Treasury’s only OMB-identified 

high-priority program.

In accordance with IPERIA and EO 13520, Offices of Inspector 

General (OIG) are required to review and report on their respective 

agencies’ OMB designated high priority programs, if any. 

Specifically, OIGs are to review management’s assessment of the 

level of risk, the quality of the improper payment estimates and 

methodology, and the oversight and financial controls in place to 

identify and prevent improper payments. Recommendations, if any, 

are to be provided for modifying agency plans related to its high 

priority programs to include improvements for determining and 

estimating improper payments.

In Memorandum 15-02 dated October 20, 2014, OMB issued 

revisions to OMB Circular No. A-123, Appendix C, to provide 

agencies guidance on implementing all improper payment 

compliance and reporting requirements.

Treasury’s Improper Payment Risk Assessment

The Risk and Control Group issued Treasury-Wide Guidance for the 

FY 2015 Implementation of Circular A-123, Appendix C, 

Requirements for the Effective Estimation and Remediation of 

Improper Payments (Treasury’s IPERA Guidance) to all 

components. The Risk and Control Group also provided the 

Treasury components with a tool—the Improper Payments 

Elimination and Recovery Risk Assessment Questionnaire—to 

assess the level of risk for each payment type, such as Federal 

employee payments, grants, and travel cards. After Treasury 

components complete and review the risk assessment, the results 

are provided to the Risk and Control Group. For any program 

identified as having a high risk for improper payment, the 

responsible component was also required to provide the following 

information for inclusion in Treasury’s Annual Financial Report:
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• The rate and amount of improper payment;

• The root causes of improper payments;

• Actions taken to address the root causes;

• A discussion of internal controls over payments;

• Annual improper payment reduction targets; and 

• A discussion of any limitations to the component’s ability to 

reduce improper payments.

For fiscal year 2015, Treasury identified EITC as its only high risk 

program.

Payment Recapture Audits

IPERA requires agencies to conduct recovery audits (also referred 

to as payment recapture audits) to prevent, detect, and recover 

overpayments, if conducting such audits would be cost-effective, 

for each program and activity that expends $1 million or more 

annually. A payment recapture audit is a review and analysis of an 

agency’s or program’s accounting and financial records, and other 

pertinent information supporting its payments that is specifically 

designed to identify overpayments.

Treasury’s IPERA Guidance requires each component to complete 

and submit a worksheet providing a consistent reporting format 

that includes information on the results of component’s payment 

recapture audits. The worksheets are submitted to the Risk and 

Control Group for review and the data are consolidated and 

reported in the Annual Financial Report.

Treasury’s Improper Payment Reporting

On November 16, 2015, Treasury published and posted to its 

website the fiscal year 2015 Annual Financial Report. Included in 

that report was the required improper payments information with 

the following accompanying information:

• Treasury-wide assessment for all program and activities;

• improper payment dollar estimates for the EITC program;

• statistical sampling methodology used to arrive at the 

estimated improper payments for fiscal year 2015;
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• improper payment reduction outlook estimates for the EITC 

program through fiscal year 2018;

• description of the corrective action plans for the EITC 

program, including the root causes and projected results;

• overview of internal control framework for the EITC program; 

• discussion of its annual payment recapture audit efforts; and

• results of Treasury’s Do Not Pay Initiative operation.

Audit Results

Finding 1 Treasury Was Not in Compliance with IPERA for Fiscal 

Year 2015

We determined that Treasury was not in compliance with IPERA for 

fiscal year 2015 due to IRS not reporting an overall improper 

payment rate of less than 10 percent for the EITC program. IRS 

estimates that 23.8 percent (or $15.6 billion) in EITC payments 

were issued improperly in fiscal year 2015. This is the 5th

consecutive year we have determined that Treasury is not in 

compliance with IPERA due to IRS’ EITC improper payments 

reporting deficiencies.

Under IPERA, Treasury was required to submit a comprehensive 

plan to Congress describing the actions that it is going to take to 

bring Treasury into compliance with IPERA. Although Treasury 

submitted a plan in fiscal year 2012, it only addressed deficiencies 

associated with its reporting on payment recapture audits, which 

were identified in our report on compliance with IPERA for fiscal 

year 20114

; the plan did not address non-compliance with IPERA 

due to EITC deficiencies.

On June 15, 2015, Treasury notified Congress of several proposed 

statutory changes to reduce the improper payment rate of EITC 

program. As part of its notification, Treasury informed Congress 

that the Administration’s fiscal year 2016 budget includes 

proposals that are intended to help improve EITC compliance by:

 4 The Department of the Treasury Was Not in Compliance With the Improper Payments Elimination and 

Recovery Act for Fiscal Year 2011 (OIG-12-044; issued March 15, 2012)
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• Accelerating due dates for filing information returns, 

including Form W-2, Wage and Tax Statement (W-2), to 

facilitate early detection of income misreporting and fraud, 

including identity theft. This would allow the IRS to identify 

erroneous EITC claims and stop the refunds before they are 

paid;

• Regulating tax return preparers, which would help reduce 

erroneous EITC claims by weeding out unscrupulous and 

incompetent preparers;

• Providing more flexible correctable error authority, which 

would help the IRS to deny certain erroneous claims, 

including erroneous EITC claims, before refunds are paid;

• Increasing civil and criminal penalties for tax-related identity 

theft, which would prevent some erroneous EITC claims; and

• Simplifying the rules for claiming the EITC for taxpayers who 

reside with a child that they do not claim as a dependent, 

which would reduce taxpayer burden and improve EITC 

compliance.

Congress passed the Consolidated Appropriations Act of 2016,

which became law on December 18, 2015.5 The law provides the 

IRS with additional tools to reduce EITC improper payments. The 

provisions include:

• Effective for tax returns filed after December 18, 2015, 

individuals (primary, secondary, and dependent) must have a 

valid Social Security Number issued on or before the due 

date of the tax return to be eligible to claim the EITC.

• Beginning in January 2017, employers and third-parties will 

be required to file W-2s, and report on employee income by 

January 31 each year. These forms were previously due no 

later than March 31 (February 28 for paper filed forms) each 

year. The Act also prohibits the IRS from issuing tax refunds 

prior to February 15 when the tax return includes the EITC.

However, the Act did not expand the IRS’ authority to 

systematically correct the erroneous claims that are identified when 

tax returns are processed. According to TIGTA’s report, without 

 5 Pub. L. No. 114-113, 129 Stat. 2242 (Dec. 18, 2015)
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expanded error correction authority, IRS will not be able to prevent 

the issuance of billions of dollars in improper EITC payments. 

IRS has submitted a legislative proposal requesting correctable 

error authority as part of its fiscal year 2017 budget submission. 

Finding 2 Payment Recapture Audit Reporting Needs Additional 

Improvements

Treasury did not fully comply with OMB’s reporting requirements for 

payment recapture audits. Specifically, Treasury’s fiscal year 2015 

Annual Financial Report contained inaccurate and incomplete 

information, as follow:

• OMB Circular No. A-136 Revised, Financial Reporting 

Requirements (OMB Circular No. A-136) requires that an 

agency’s reporting of payment recapture audit efforts in the 

Annual Financial Report include a justification of any 

overpayments that have been determined not to be collectible.

Treasury’s IPERA Guidance did not provide instructions to 

components on submitting justifications for write-offs of 

uncollectible improper payments. As a result, justifications were 

not provided for overpayments of approximately $94,000 that 

were written off as uncollectible for Fiscal Service - Admin 

(FSA),6 Departmental Offices, U.S. Mint, and the Office of D.C. 

Pensions.

• According to OMB Circular No. A-123, Appendix C, recaptured 

overpayments from expired discretionary fund accounts that 

were appropriated after enactment of IPERA and are not used to 

reimburse expenses of the agency or pay payment recapture 

audit contractors may be used for a financial management 

improvement program, the original purpose of the funds, 

Inspector General activities, or returned to the Treasury as 

miscellaneous receipts or returned to trust or special fund 

accounts. Each agency shall determine the actual percentage of 

 6 FSA is a reporting entity of the Bureau of Fiscal Service that accounts for salaries and other 

administrative expenses of the bureau. 
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recovered overpayments used for the purposes outlined (up to 

the maximum amount allowed in the law and this guidance). 

Specifically, up to 25 percent of the recaptured funds may be 

used for the original purpose.

Treasury reported that recaptured overpayments of 

approximately $52,200 were used for the original purpose of 

the funds. However, our review found that this was not the 

case. That is, the recaptured funds had not been used for the 

original purpose of the funds at the time of reporting and had 

been credited instead to the original expired account from which 

the overpayment was made.

• OMB Circular No. A-136 requires that agencies report certain 

information on their overpayments recaptured through payment 

recapture audits. The information should include a summary of 

how amounts recaptured in the current year have been disposed 

of and an aging schedule of the amount of overpayments that 

are outstanding. Only overpayments are reported on these 

tables.

The Office of Financial Stability (OFS) incorrectly included and 

reported the improper underpayments of $1.24 million in the 

Disposition of Funds Recaptured Through Payment Recapture 

Audits table. In addition, OFS incorrectly reported the improper 

underpayments of $2,500 in the Aging of Outstanding 

Overpayments Identified in the Payment Recapture Audits table. 

These errors were caused by misinterpretation of payment 

recapture audit reporting requirements. 

• We also noted two computation errors in the recapture audits 

reporting. The recapture rate for fiscal year 2015 was 

incorrectly calculated and reported as 10 percent for FSA and 

95 percent for Treasury in total. The correct percentages were 

105 percent for FSA and 87 percent for Treasury in total.
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Recommendations

We recommend the Assistant Secretary for Management ensure that:

1. Treasury update its IPERA guidance to clarify the reporting 

requirements for components’ payment recapture audits.

2. The Risk and Control Group strengthen its review and oversight of

the data reported by components on payment recapture audits to 

accurately reflect the results of recapture audits.

Management Response for Recommendations 1 and 2

Treasury intends to reinforce and enhance the current departmentwide guidance concerning disposition of recaptured improper 

payments. Consistent with the recommendation, Management will 

continue to ensure that recaptured improper payments are disposed 

of in accordance with OMB Circular No. A-123, Appendix C 

requirements. The implementation date for its corrective actions is 

September 30, 2016.

OIG Comment

Management’s response meets the intent of our recommendations.

Finding 3 Annual Risk Assessments Underestimate the Risk of 

Improper Payments in IRS Tax Refund Programs

TIGTA reported that Treasury’s annual risk assessment process did

not provide a valid assessment of improper tax refund payments. 

Although IRS performed its annual risk assessment in accordance 

with Treasury’s IPERA guidance, TIGTA found that IRS continues 

to assess the risk of improper payments associated with the ACTC 

and AOTC as low. TIGTA’s analysis shows that the estimated 

improper payments for both the ACTC and AOTC exceed the 

IPERA criteria for significant risk of improper payments. IPERA 

defines significant improper payments as improper payments that 

exceeded $10 million during the fiscal year and 1.5 percent of 

program outlays, or $100 million regardless of improper payment 
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percentage of program outlays. TIGTA estimates the potential 

ACTC improper payments rate for fiscal year 2015 is 24.2 percent 

with potential improper payments totaling $5.7 billion, and the 

potential AOTC improper payments rate for fiscal year 2015 is 

30.7 percent with improper payments totaling $1.8 billion.

IRS is currently re-evaluating the improper payment risk 

assessment process for ACTC program.

Recommendation

In its report, TIGTA recommended to that IRS ensure that (1) the 

revised ACTC improper payment risk assessment process includes 

a quantitative assessment for ACTC improper payment risk using 

available enforcement data and (2) the results of the AOTC 

improper payment risk assessment accurately reflect the high risk 

associated with AOTC payments. Completion of the AOTC 

improper payment risk assessment should include a quantitative 

assessment of AOTC improper payment risk using available 

enforcement data. IRS agreed with TIGTA’s recommendations.

We recommend the Assistant Secretary for Management work with 

IRS as necessary to ensure TIGTA’s recommendations related to 

the ACTC and AOTC improper payments risk assessment 

processes are implemented, and appropriate action is taken to 

report on and reduce improper payments associated with these 

refundable tax credit programs.

Management Response

Treasury and IRS began taking steps to improve the risk 

assessment related to ACTC and AOTC programs. The 

implementation date is November 15, 2016.

OIG Comment

Management’s commitment to take steps to improve the risk 

assessment meets the intent of our recommendation.
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* * * * * *

We appreciate the courtesy and cooperation extended to our staff 

during this audit. Should you have any questions, you may contact 

me at (202) 927-0009, or Catherine Yi, Audit Manager, at 

(202) 927-5591. Major contributors to this report are listed in 

appendix 4. 

/s/

James Hodge

Director, Financial Statement and Procurement Audits
Appendix 1

Objective, Scope and Methodology

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The overall objective our audit was to determine whether the 

Department of the Treasury (Treasury) complied with the improper 

payment reporting requirements for fiscal year 2015. We assessed 

Treasury’s compliance with the reporting requirements set forth in 

the Improper Payments Elimination and Recovery Act of 2010 

(IPERA); Executive Order 13520, Reducing Improper Payments and 

Eliminating Waste in Federal Programs; and the Improper Payment 

Elimination and Recovery Improvement Act of 2012. Our audit 

scope did not include the review of programs and activities 

administered by the Internal Revenue Service (IRS). The Treasury 

Inspector General for Tax Administration (TIGTA) is responsible for 

the audit of IRS’ compliance with improper payment reporting 

requirements. TIGTA’s scope included an assessment of the Earned

Income Tax Credit information that IRS provided for inclusion in 

Treasury’s fiscal year 2015 Agency Financial Report and a review 

of IRS’ progress on previous recommendations.

To accomplish our objective, we reviewed applicable laws, 

regulations, guidance issued by the Office of Management and 

Budget (OMB), and Treasury-wide Guidance for the FY 2015 

Implementation of Effective Estimation and Remediation of 

Improper Payments; reviewed Treasury’s fiscal year 2015 Annual 

Financial Report; interviewed Departmental Offices and component 

entities’ personnel; and performed testing of Treasury’s risk 

assessments and payment recapture audit programs.

To determine compliance with IPERA and OMB guidance, we 

reviewed the fiscal year 2015 Annual Financial Report and any 

accompanying information to assess whether Treasury had:

• published an Annual Financial Report for the most recent 

fiscal year and posted that report and any accompanying 

materials required by OMB on Treasury’s website;

• conducted a program specific risk assessment for each 

program or activity that conforms with IPERIA, if required;

• published improper payment estimates for all programs and 

activities identified as susceptible to significant improper 

payments under its risk assessment, if required;

• published programmatic corrective action plans in the Annual 

Financial Report, if required;
Appendix 1

Objective, Scope and Methodology

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• published, and is meeting, annual reduction targets for each 

program assessed to be at risk and estimated for improper 

payments, if required and applicable; and

• reported a gross improper payment rate of less than 

10 percent for each program and activity for which an 

improper payment estimate was obtained and published in 

the Annual Financial Report. 

To assess Treasury’s risk assessment process, we randomly 

selected a sample of 10 of 60 non-IRS programs identified by 

Treasury for risk assessment. To determine the reasonableness and 

accuracy of the information reported and compliance with the 

applicable guidance for the sample, we reviewed the program risk 

assessments and conducted interviews of personnel involved in 

their preparation and review.

To assess Treasury’s payment recapture audit program, we 

selected the entire population of 20 reporting entities due to our 

prior year audit finding on Treasury’s recapture audit.

7 To 

determine the reasonableness and accuracy of the information 

reported, and compliance with the applicable guidance, we

reviewed the components’ submissions and conducted interviews 

with component personnel, as well as reviewed supporting 

documentation.

We conducted our fieldwork in Washington, DC, from February

2016 to May 2016.

We conducted this performance audit in accordance with generally 

accepted government auditing standards. Those standards require 

that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 7 Treasury’s Improper Payment Reporting Needs Improvement (OIG-15-033; issued May 15, 2015)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

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Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 27

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 28

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 29

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 30

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 31

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 32

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 33

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 34

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 35

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 36

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 37

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 38

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 39

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 40

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 41

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 42

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 43

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 44

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 45

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 46

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 47

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 48

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 2

TIGTA’s Assessment of IRS’s Compliance With the Improper Payment Reporting 

Requirements in Fiscal Year 2015

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 49

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 3

Management Response

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 50

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)

MAY 13, 2016
Appendix 3

Management Response

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 51

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)
Appendix 4

Major Contributors to this Report

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 52

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)

James Hodge, Director, Financial Statement and Procurement Audits 

Catherine Yi, Audit Manager

Kenneth Harness, Auditor-in-Charge

Rufus Etienne, Auditor

Robert Hong, Auditor

Gerald Kelly, Referencer

Shiela Michel, Referencer
Appendix 5

Report Distribution

Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to Page 53

High Improper Payment Rate for the Earned Income Tax Credit Program

(OIG-16-041)

The Department of the Treasury

Secretary of the Treasury

Deputy Secretary of the Treasury

Assistant Secretary for Management 

Deputy Chief Financial Officer

Director, Risk and Control Group

Office of Management and Budget

Controller, Office of Federal Financial Management

OIG Budget Examiner

United States Senate

Chairman and Ranking Member

Committee on Homeland Security and Governmental Affairs 

U.S. House of Representative

Chairman and Ranking Member

Committee on Oversight and Government Reform

U.S. Government Accountability Office

Comptroller General of the United States
Treasury OIG Website

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