The Internal Revenue Service has not yet satisfied the goal of the Payment Integrity Information Act to reduce improper payment rates to less than 10%, according to a new report.

The report, released Monday by the Treasury Inspector General for Tax Administration, found the total amount of improper payments for four of its refundable tax credits — Additional Child Tax Credit, American Opportunity Tax Credit, Earned Income Tax Credit and Net Premium Tax Credit — totaled $21.4 billion in fiscal year 2024.

In accordance with the Payment Integrity Information Act of 2019, TIGTA has to annually assess and report on improper payment requirements and determine whether the IRS complained with them. The IRS calculated improper payment estimates for four programs that were considered to be high risk because they have improper payments exceeding $100 million annually.

The four programs and their improper payment rates are:

• Net Premium Tax Credit (29%);
• American Opportunity Tax Credit (28%);
• Earned Income Tax Credit (27%); and,
• Additional Child Tax Credit (11%).

The Treasury Department attributed the causes behind the errors to factors such as the complexity of the eligibility rules, inability to verify taxpayer-provided information prior to issuing refunds, lack of correctable error authority, and a requirement to issue refunds within 45 days.

“For example, when there are taxpayers who claim the same dependent, the IRS cannot determine which taxpayer is eligible at the time a tax return is filed, and the IRS must process both claims and complete post-filing activities such as issuing notices or conducting audits to determine eligibility,” said the report.

For the 2025 filing season, the IRS made a change in its Identity Protection PIN process that will accept electronically filed individual tax returns when a dependent has already been claimed on another return to reduce the burden on taxpayers and issue their refunds timely. But there was minimal impact of the duplicate dependent condition on total improper payments. 

The IRS isn’t reporting improper payment rates for pandemic-related programs because they believe it would be an inefficient use of resources given the short-term nature of  pandemic programs, according to the report, though the IRS is continuing to assess risks for pandemic-related programs, such as the Employee Retention Credit. 

TIGTA made three recommendations in the report, suggesting the IRS should request additional legislative considerations to help reduce improper payments and analyze the impact of the new processing procedures for returns claiming duplicate dependents. The IRS agreed with all three of TIGTA’s recommendations.

“The refundable tax credit (RTC) programs examined in this report are designed to provide critical financial support to eligible taxpayers,” wrote IRS CFO Teresa Hunter in response to the report. “The IRS is committed to administering these programs effectively, ensuring that eligible taxpayers receive the credits to which they are entitled while maintaining program integrity and compliance with improper payment reporting requirements.”

She argued that the RTC errors are not a result of internal control weaknesses within the IRS’s processes, but the complexity of the eligibility requirements and the IRS’s reliance on taxpayer self-certification of accurate RTC claims put them outside the traditional improper payment framework.

The Financial Accounting Standards Board released an accounting standards update Monday to improve the requirements for identifying the accounting acquirer in business combinations such as mergers and acquisitions.

The update applies to Topic 805, Business Combinations, and Topic 810, Consolidations, in FASB’s Accounting Standards Codification, and is based on a recommendation of FASB’s Emerging Issues Task Force.

In a business combination, FASB noted, the determination of the accounting acquirer can significantly affect the carrying amounts of the combined entity’s assets and liabilities. The update will revise the current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business. The amendments require an entity to consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions.  

“The new ASU is the first recommendation from the recently reconstituted EITF to be issued as a final standard, and we thank the group for providing a path forward in making financial reporting in this area more comparable and decision useful for investors,” said FASB chair Richard Jones in a statement Monday.

The amendments are effective for all entities for annual reporting periods starting after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. The amendments require an entity to apply the new guidance prospectively to any acquisition transaction that occurs after the initial application date. Early adoption is permitted as of the beginning of an interim or annual reporting period. 

The House Ways and Means Committee on Friday night released a partial version of President Donald Trump’s tax proposal that calls for increasing the maximum child tax credit to $2,500 and raising the estate tax exemption to $15 million.

“Ways and Means Republicans have spent two years preparing for this moment, and we will deliver for the American people,” Representative Jason Smith of Missouri, the committee’s chairman, said in a statement.

The 28-page document is slated to be expanded before the committee votes on it this week. It provides a framework to achieve Trump’s campaign promise to extend his 2017 tax overhaul. 

It was notable, however, for what it didn’t address: Raising the deduction for state and local taxes and a tax on wealthy Americans that Trump has indicated he might consider.

For now, the text keeps the top rate at 37% rather than creating a new 39.6% rate for those individuals making more than $2.5 million, as has been discussed by Republicans behind closed doors. 

The text, with subtitles including “Make Rural America and Main Street Grow Again” has some other expensive new tax cuts. It temporarily elevates the standard deduction by $2,000 for joint filers and $1,000 for individuals through 2028. The proposal also would increase a carveout for qualified small business income from 20% to 22% and expand the types of activities that qualify.

Multinational companies would get an extension of current lower rates on foreign profits that they have been seeking. 

There is no text yet on top Trump pledges to end taxes on tips, overtime and Social Security benefits as well as to give tax credits for auto loans and building domestic factories. The questions of whether to repeal green energy tax credits or the tax credit for buying electric vehicles are also not resolved. Discussed tax increases such as on carried interest and executive compensation are also absent for now. 

Buried in the text, the bill text purports to tighten the eligibility of immigrants to receive Medicare and to create new obstacles to claiming a de minimis exemption to import tariffs.

The question of how much to increase the SALT deduction, which was capped at $10,000 in 2017, has created a dilemma for Speaker Mike Johnson and put him in the middle of Republican lawmakers from swing districts and conservatives who insist that tax relief must be paid for. 

Earlier Friday, Representative Nicole Malliotakis said increasing the cap to $30,000 would reduce the tax burden of the vast majority of people in her district, which includes Staten Island and part of Brooklyn. But five other members of the GOP conference have rejected the proposal.