The Internal Revenue Service correctly determined the allowable amount of the ObamaCare-related premium tax credit on most tax returns, a report made public Tuesday found.
The tax credit, created by the Affordable Care Act, is designed to help offset the costs of health insurance for low- and moderate-income people. People can receive their credit in advance or can claim it on their tax return. If taxpayers receive the credit in advance, they have to reconcile the amount they received with the amount they are allowed on their tax return.
The Treasury Inspector General for Tax Administration (TIGTA) analyzed more than 2.6 million tax returns filed from January to May 2015 that claimed the credit. The watchdog said in its report that it determined that the IRS accurately calculated the allowable credit on 93 percent of the returns.
There were nearly 183,000 returns where there were differences between the calculations between the TIGTA and the IRS.
The IRS calculated an incorrect amount for the allowable credit for almost 28,000 returns as a result of computer programming errors, and the agency didn’t have the authority to correct incorrect credit claims during processing for nearly 4,700 returns, the TIGTA said.
The inspector general is still working with the IRS to figure out the cause of the calculation differences for about 150,000 returns.
The processes the IRS uses identify potentially fraudulent credit claims are operating as intended, the TIGTA said. When the TIGTA identified programming errors that led to tax returns not being identified for further review during processing, the IRS corrected the errors.
The IRS sent letters to those who received credits in advance but did not file tax returns to remind them to do a reconciliation. But the IRS processes to identify those taxpayers didn’t use the most recent data, the TIGTA found.