The Internal Revenue Service sent nearly $30 million too much in tax credits to Obamacare customers, a federal watchdog found.
The Treasury Department’s Inspector General found in a report Monday that 7,895 taxpayers received $21 million more in tax credits than they were entitled to and 46 taxpayers got $5,390 less during the 2015 tax filing season. The improper calculation was due to “systemic problems with the computer hardware.”
The review of the IRS’ verification system for Obamacare came at the behest of the House Appropriations Committee concerned with oversight of the taxpayer-funded subsidies.
The nearly 8,000 taxpayers were part of a group of 27,827 who received the wrong Obamacare subsidy.
Another 4,672 taxpayers got $6.5 million that they were not supposed to. Those taxpayers got advanced tax credits, meaning they got money from the federal government before they filed their taxes.
They are supposed to report if their income changes from the time they file their taxes to when they got the tax credits. For instance, if someone got an advanced credit earlier in the year but got a higher-paying job later that year, he would have to pay back the federal government part of the tax credit.
However, the IRS did not “require the taxpayers to repay all of the [advanced tax credits] they received,” the report said.
The IRS says it didn’t have the authority to force the taxpayers to repay the money due to a quirk in the law. The Department of Treasury has asked Congress to expand the IRS’ authority to recoup the money.
Another 19,561 tax returns got the wrong payment for December due to a computing problem at the IRS. The agency essentially used the wrong data to determine the advance tax credit payments for that month.
In addition, 281 taxpayers received an extra $777,105 in tax credits even though they didn’t claim an exemption for themselves on their tax return. The Affordable Care Act says that an individual has to “claim themselves on their tax return” to receive a tax credit, according to the report.
However, a programming error found that some taxpayers filed their paper return were allowed the tax credit even though they didn’t claim a personal exemption, the report said.
The IG called on the IRS to review the 27,827 returns, and the agency agreed to review the tax returns and move them to the front of the line.
The watchdog found that the processes used during the 2015 tax filing season to verify if Obamacare customers got the right subsidy are working as intended, but some problems remain.
The watchdog analyzed more than 2.6 million returns that filed a claim to get a tax credit to help pay for the costs for Obamacare. The IRS was able to accurately determine the right subsidy for 93 percent of those returns.
