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October 6, 2009
Li-Yun Chien
TIGTA-PAO@tigta.treas.gov
(202) 622-6500

TIGTA Releases Evaluation of 2008 Stimulus Recovery Rebate Credit

The Treasury Inspector General for Tax Administration (TIGTA) today publicly released its evaluation of the Internal Revenue Service's (IRS) issuance of the recovery rebate credit established by the Economic Stimulus Act of 2008.

The recovery rebate credit is provided to those eligible individuals who may not have received an economic stimulus payment in 2008 or may be entitled to an additional credit.

TIGTA found that the IRS correctly calculated the credit on 99.6 percent of the tax returns processed through April 17, 2009, and issued approximately $8.5 billion in recovery rebate credits to almost 21 million taxpayers. However, TIGTA also identified 258,550 taxpayers who did not receive payments totaling $84.6 million to which they were entitled and 140,549 taxpayers who received a total of $60.6 million to which they were not entitled. These mistakes were the result of errors in IRS computer programming and in procedures used to resolve IRS and taxpayer computation errors.

During its audit, TIGTA notified the IRS of a programming error that could have allowed almost 6.4 million taxpayers to receive approximately $1.6 billion in recovery rebate credits to which they were not entitled. The Economic Stimulus Act of 2008 specifically prohibits a taxpayer who can be claimed as a dependent on someone else's return from receiving the credit. However, initial programming for the recovery rebate credit did not disallow the credit when a taxpayer indicated he or she can be claimed as a dependent on someone else's return. The IRS has since corrected this error.

Furthermore, the IRS erroneously provided more than $27 million in recovery rebate credits to more than 44,000 taxpayers who did not have valid Social Security numbers.

"Overall the IRS successfully implemented the recovery rebate credit and provided billions of dollars to millions of Americans as Congress intended," commented J. Russell George, the Treasury Inspector General for Tax Administration. "However, taxpayer confusion in calculating the recovery rebate credit and programming errors presented significant challenges," added Inspector General George.

TIGTA recommended that the IRS issue recovery payments to individuals who did not receive the rebate credit to which they were entitled. The IRS is currently reviewing data provided by TIGTA and plans to provide taxpayer assistance, if warranted.