TIGTA: IRS unable to prevent $213 million in improper EITC payments to individuals with nonwork SSNs

For tax years 2023 and 2024, TIGTA identified approximately 67,000 tax returns with a nonwork SSN claiming nearly $219 million in EITC, of which approximately $213 million was paid. The report highlights a fundamental interagency data-sharing gap between the IRS and the Social Security Administration (SSA) that limits the IRS to manual, resource-intensive reviews that are capable of addressing only a fraction of potentially improper claims.

Background: The EITC had a maximum amount of $7,830 for tax year 2024. As of July 2025, approximately 22.5 million workers and families had received the EITC for tax year 2024, totaling $66 billion, with an average credit of $2,900. The IRS has repeatedly identified the EITC as susceptible to significant improper payments, with error rates remaining consistently above 20% from fiscal year 2006 through fiscal year 2025. In fiscal year 2025, the IRS estimated that approximately 33% — $21.1 billion of the $64.7 billion in total EITC payments — were improper.

To claim the EITC, the taxpayer, spouse (if filing jointly), and each qualifying child must have a valid SSN. An SSN is invalid for EITC purposes if it was issued solely to apply for or receive a federally funded benefit and does not authorize the holder to work. The SSA issues nonwork SSNs to noncitizens who are not authorized to work in the United States but require an SSN to access specific benefits or services, such as international students needing to access certain programs. As of March 2025, approximately 2.4 million nonwork SSNs had been assigned. Importantly, not all nonwork SSNs render the holder ineligible for the EITC. Individuals who obtained a nonwork SSN for reasons other than collecting a federally funded benefit — for example, to access a state- or locally-funded program — remain eligible. The distinction turns on the specific reason the nonwork SSN was issued.

To help administer the EITC, the IRS maintains a database with information the SSA provides weekly. This database includes citizenship codes that reflect the individual’s status at the time of the original SSN application. However, TIGTA’s review found that this data has significant limitations that undermine the IRS’s ability to distinguish eligible from ineligible nonwork SSN holders.

Findings: TIGTA identified two principal data deficiencies that prevent the IRS from systemically disallowing improper EITC claims associated with nonwork SSNs. First, the SSA data shared with the IRS does not indicate the reason a nonwork SSN was issued. TIGTA found that when an SSA technician processes a nonwork SSN application, the technician selects a reason from a drop-down menu in the SSA’s internal system. The field containing this information, however, is not included in the database shared with the IRS. TIGTA noted that most of the available reasons correspond to federally funded programs such as Medicaid and food stamps, meaning that if the IRS had access to this field, it could potentially use it to more effectively administer the EITC for individuals with nonwork SSNs. TIGTA had previously reported on this issue in 2017, recommending that the IRS work with the SSA to evaluate additional data fields.

Second, the SSA data reflects the individual’s citizenship and work status only as of the date the nonwork SSN was originally issued. An individual’s immigration or work status can change after that date. For example, an individual may become a citizen or receive work authorization from the Department of Homeland Security (DHS), which would make them eligible for the EITC. There is no requirement for individuals or the DHS to notify either the SSA or the IRS of such changes. The SSA database is updated only if the individual contacts the SSA directly or, in limited circumstances, consents to DHS data sharing. As a result, the IRS cannot rely solely on the SSA data to accurately determine current eligibility.

TIGTA further observed that if the IRS had sufficient and reliable data, it could consider using math error authority under Sec. 6213 to systemically deny EITC claims with ineligible nonwork SSNs during return processing. Math error authority allows the IRS to bypass standard procedures and proactively correct certain errors on tax returns. However, managers in the IRS Office of Chief Counsel and Taxpayer Services Division indicated that having the authority to use math error procedures does not mean the IRS should wield that authority without reliable underlying data, given the risk of incorrectly denying claims to individuals whose status has changed since their nonwork SSN was issued.

In the absence of systemic tools, the IRS relies on risk-based identification and manual review through its Automated Questionable Credit (AQC) program. For processing years 2023 and 2024, the IRS identified more than 12,600 tax returns meeting its risk-based criteria. The AQC program reviewed approximately 40% of those returns, issuing roughly 5,100 letters to taxpayers. Nearly 90% of the returns selected for review were found to be ineligible for the EITC, and the program protected approximately $11 million in revenue over that two-year period. While effective on a per-case basis, these manual reviews addressed only a small fraction of the estimated 67,000 returns at issue.

TIGTA separately noted that it is conducting related reviews of IRS enforcement efforts directed at return preparers who facilitate ineligible EITC claims, the IRS’s use of bans on taxpayers who recklessly or fraudulently disregard EITC rules, and the process and procedures for implementing a data-sharing agreement between the IRS and DHS Immigration and Customs Enforcement.

• TIGTA Rep’t No. 2026-4S0-022, Reliable Data Is Needed to Effectively Reduce Improper Earned Income Tax Credit Payments for Nonwork Social Security Numbers (May 4, 2026)

— Thomas Godwin, CPA, CGMA, Ph.D., and John McKinley, CPA, CGMA, J.D., LL.M., are both professors of the practice in accounting and taxation in the SC Johnson College of Business at Cornell University in Ithaca, N.Y. To comment on this column, contact Paul Bonner, the JofA‘s tax editor.