WASHINGTON -- The Internal Revenue Service (IRS) is not fully compliant with a Federal law that requires it to eliminate and report improper payments made to taxpayers, according to a new report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).

The Improper Payments Elimination and Recovery Act of 2010 increased agency accountability for reducing improper payments in all Federal programs. That law requires TIGTA to assess the IRS's compliance with improper payment requirements.

TIGTA found that the only program the IRS has identified for improper payment reporting is the Earned Income Tax Credit (EITC) Program. The IRS estimates that 21 to 26 percent of EITC payments were issued improperly in Fiscal Year 2011. This equates to $13.7 to $16.7 billion in EITC improper payments.

"The IRS's failure to fully comply with this important Federal law is troubling," said J. Russell George, the Treasury Inspector General for Tax Administration. "The law requires the IRS to establish annual reduction targets for improper payments; however, it has not done so."

TIGTA determined that the IRS did not comply with all of the improper payment requirements included in the Improper Payments Elimination and Recovery Act. The IRS has not established annual EITC improper payment reduction targets and has not computed a gross estimate of EITC improper payments as the estimate does not include underpayments. The IRS has plans in place to establish EITC reduction targets and is exploring the feasibility of computing an improper payment estimate for EITC underpayments.

TIGTA made no recommendations in its report.