Department of the Treasury

In accordance with the Payment Integrity Information Act of 2019 (PIIA), Treasury requires programs in Phase 1 to conduct an improper payment risk assessment for all programs a with annual outlays greater than $10 million for improper payment risk at least once every three years to determine whether the total annual improper payments plus the unknown payments are collectively likely to be above the statutory threshold for the given year. In addition, Treasury requires an off-cycle improper payment risk assessment for new programs and for programs that had a significant change in legislation or funding levels. For off-cycle years, Treasury requires programs to complete a certification that states there have been no major changes to program funding or legislation that could impact the risk of improper payments. In fiscal year (FY) 2025, 37 programs completed an improper payment risk assessment and all were determined to be not susceptible to significant improper payments. Treasury reports error rates as outlined in PIIA and the Office of Management and Budget’s (OMB) Circular A-123, Appendix C, for four Internal Revenue Service (IRS) refundable tax credits (RTCs): 1. Earned Income Tax Credit (EITC), 2. American Opportunity Tax Credit (AOTC), 3. Additional Child Tax Credit (ACTC), and 4. Net Premium Tax Credit (net PTC). The root cause of the errors for these RTCs is not the result of internal control deficiencies, but rather they are largely the result of factors beyond the IRS’s control, such as the statutory design of the RTCs, the complexity of the eligibility requirements, the lack of comprehensive third-party data for verification, and the IRS’s reliance on taxpayers’ self-certification of the accuracy of their returns. The IRS has continuously deployed various tools in an effort to lower the improper payment error rate. These tools include training, such as the nationwide tax forum, due diligence training module and webinars, cross enterprise sharing with other Federal agencies, and change processes such as hosting annual Dependent Database meetings with stakeholders to adjust the value of prior-year compliance filters for audit selection of returns claiming the RTCs and identifying improvement opportunities for the filing season. Deployment of enforcement tools has had minimal impact on lowering the error rate. The IRS continues significant efforts to bring its improper payment rate for these RTC programs to less than 10 percent. The estimated improper payment rates for the RTCs for FY 2024 and FY 2025 were not statistically different. In addition to the four IRS RTC programs, the following COVID-19 pandemic relief programs were determined to be susceptible to significant improper payments based on prior IP risk assessments: 1. IRS Coronavirus Refundable Credits in FY 2021, 2. IRS Coronavirus Payments in FY 2021, and 3. Office of Capital Access’ Emergency Rental Assistance (ERA) Program in FY 2023. In August 2022, Treasury determined that due to the short-term nature of COVID-19 pandemic relief programs, quantifying the amount and rate of improper payments, assessing the root cause, and developing corrective action plans to reduce payment errors in the future would provide minimal value and be an ineffective use of resources. Therefore, for its COVID-19 pandemic relief programs, Treasury decided it would not report an improper payment estimate in its Agency Financial Report or on paymentaccuracy.gov. These programs remain in the improper payment risk assessment rotation, and Treasury has other recovery activities and mechanisms in place to identify and recover improper payments for these programs. In FY 2024, Treasury’s Office of Inspector General concluded that Treasury was non-compliant with one of the 10 PIIA reporting requirements. Specifically, Treasury did not comply with the requirement to report an improper payment rate of less than 10 percent for four the IRS RTC programs mentioned above (EITC, AOTC, ACTC, and net PTC). Without significant legislative action and restructuring, meeting a target compliance date is a significant challenge.

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Agency level Payment Integrity results

  • Payment accuracy rate

    (Based on federal funding spent by programs determined by agencies as susceptible to improper payments)

  • Improper payments rate

    (Based on federal funding spent by programs determined by agencies as susceptible to improper payments)

  • Unknown payments rate

    (Based on federal funding spent by programs determined by agencies as susceptible to improper payments)

  • Department of the Treasury improper payment estimates over time
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    Proper payments
    Overpayment
    Underpayment
    Technically improper
    Unknown

Recovery information

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Chart toggle amounts:
Overpayment amount identified for recapture
Overpayment amount recovered

Recovery of overpayments

Please note: Overpayment amounts recovered are reported in the year they were recovered, not the year they were identified. Therefore it is possible in some years to have a recovery rate greater than 100%.

Overpayment amount identified through recovery activities $1,872.58 M
Overpayment amount recovered through recovery activities $34.49 M
Recovery activities recovery rate 1.84 %
Overpayment amount identified through recovery audits $5.09 M
Overpayment amount recovered through recovery audits $0.2 M
Recovery audit recovery rate 3.93 %
Overpayment amount identified for recapture $1,877.67 M
Overpayment amount recovered $34.69 M
Overpayment recovery rate 1.85 %

Conditions giving rise to improper payments identified in recovery audits, how those conditions are being resolved, and the methods used to recover those payments

Accounts payable, pension, grants, and loan payments use pre-payment and post payment reviews to recoup overpayments. Invoices processed through the Invoice Processing Platform (IPP) are subject to a monthly post payment audit of 10% of the total paid IPP invoices for that month. Invoices not processed through the IPP in excess of $2,500.00 are subject to secondary review before being paid. Invoices under$2,500.00 are subject to review through statistical sampling procedures. Travel vouchers processed through the Concur Government Edition (CGE) travel system are subject to a post payment audit based on a random sample of all reimbursements under $2,500.00. All payments $2,500.00 require a 100% post payment audit review. Relocation vouchers processed through the MoveLINQ system are subject to 100% pre-payment audit and review. Relocation periodically reconciles moveLINQ advances (feeder) to Oracle (financial system) advances to ensure the two systems are in sync. They validate W-2's to ensure estimated accruals reconcile to actual accruals to verify the correct amount of taxes were deducted. Accruals are balanced by accounting string under general ledger to ensure accruals collected were paid. Relocation also balances moveLINQ to Oracle each tax period to ensure wages and taxes reconcile between the two systems. They also verify outstanding balances and billed amounts on obligations within the moveLINQ system reconciles to outstanding balances and billed amounts in Oracle. These efforts confirm there are no duplicate payments and taxes are collected and paid at the appropriate rate. Furthermore, the Do Not Pay (DNP) portal implementation has provided a way for bureau's/office's procurement and payable offices to review vendor files prior to disbursement. It has also given them an opportunity to review the monthly payment file results to identify any improper payments made to a vendor in the DNP portal.
Why recovery audits are not cost effective in certain programs

Treasury has several Components that have approved justifications for the determination that recovery auditing is not cost-effective for their programs. Majority of these justifications stated that these programs are consistently determined to be low risk for significant improper payments through their improper payment risk assessments. These programs conduct recovery activities such as pre-payment and post-payment reviews, ongoing monitoring and enforcement, reviews of Single Audit Act reports, compliance testing procedures, and desk reviews, and the results of analyses determined that the employee/contractor costs to conduct recovery auditing outweighed the amount recovered.

Per the Office of Management and Budget's (OMB) letter to the Treasury Assistant Secretary for Management, dated March 20, 2014, the Internal Revenue Service (IRS) custodial/bond programs are exempt from recovery auditing. Treasury considers these payments negative revenue receipts, not outlays, and thereby exempts them from improper payment requirements. OMB agreed that this is a reasonable approach, however these custodial/bond programs are still required to conduct improper payment risk assessments. Additionally, the IRS submitted a cost-effective justification for recovery auditing for their administrative programs, which conduct recovery activities, as stated above, in lieu of recovery audits.

Treasury follows the rules of disposition of overpayments recovered with a recovery audit as outlined by OMB Circular A-123, Appendix C. Majority of the recovered amounts were returned to Treasury or returned to the original purpose. We also had amounts disposed to the Office of the Inspector General and to financial management improvement program (FMIP).
Recovery audit amount identified this reporting period that remains outstanding $4.89 M
Recovery audit amount rate outstanding 96.07 %
Recovery audit amount this reporting period that remains outstanding for 0-6 months $4.85 M
Recovery audit amount identified this reporting period that remains outstanding for 6 months to 1 year $0.04 M
Recovery audit amount identified in this reporting period determined not collectible during this reporting period $0.08 M
Recovery audit rate identified in this reporting period determined not collectible during this reporting period 1.57 %

Justification for the Determination that the recovery audit amount is not collectable

Majority of these cases were erroneous personnel actions that when corrected resulted in overpayment to the employee. 5 U.S.C. Section 5584 authorizes waivers of debt claims due to the United States if it can be shown there is no indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee. Since the debt was established due to a corrected personnel action, the decision to grant or deny the waiver turns on fault. Fault exists if, in light of all the circumstances, it is found that the individual knew or should have known that they received an erroneous payment.

Intentional monetary loss improper payments are more commonly referred to as financial fraud and are overpayments that occur on purpose. This agency reported $349.94M of confirmed fraud in this reporting cycle.

Supplemental Information

The Do Not Pay (DNP) portal implementation provides Treasury with the ability to prevent improper payments by reviewing vendor files and verifying recipient eligibility before federal funds are disbursed. The use of DNP is considered on Treasury's IP risk assessments. In fiscal year 25, all applicable fund groups who completed risk assessments indicated that they used the DNP portal prior to payment disbursement. Additionally, with the exception of a few Treasury programs, Treasury data is verified through the DNP portal at the payment integration level, which matches payments against death data at the time of disbursement. The DNP portal returns back to the Treasury payment systems any entities that should not receive payment if there is a positive match. Weekly, the Vendor Supply Group submits a list of all active suppliers to the DNP to verify eligibility. Most results that return from DNP as ineligible are related to deceased individuals or suppliers that do not have a current SAM.gov registration. All suppliers determined to be ineligible for payment are immediately deactivated (end dated) so they cannot be used. If the system flagged the vendor as ineligible for payment for reasons other than those listed above, the Customer Care accountant is notified to follow up with the customer.

The Working System has reduced/prevented improper payments:

TREASURY has not identitied incorrect information in the Working System.

TREASURY was found non-compliant during the most recent PIIA compliance review.

Non-compliant programs:

Show full list of compliant programs Expand

Compliant programs:

  • Accelerated depreciation of machinery and equipment (normal tax method)
  • Accelerated depreciation on rental housing (normal tax method)
  • Additional deduction for the blind
  • Additional deduction for the elderly
  • Adoption credit and exclusion
  • Advanced nuclear power production credit
  • Alcohol and Tobacco Tax and Trade Bureau - Internal Revenue Collection Puerto Rico
  • Alcohol and Tobacco Tax and Trade Bureau - Salaries and Expenses
  • Alcohol fuel credits
  • Allow 20-percent deduction to certain pass-through income
  • Allowance of deduction for certain energy efficient commercial building property
  • Amortize all geological and geophysical expenditures over 2 years
  • Assistance for adopted foster children
  • Bio-Diesel and small agri-biodiesel producer tax credits
  • Bureau of Engraving and Printing - Bureau of Engraving and Printing Fund
  • Capital gains (except agriculture, timber, iron ore, and coal)
  • Capital gains exclusion of small corporation stock
  • Capital gains exclusion on home sales
  • Capital gains treatment of certain agriculture income
  • Capital gains treatment of certain timber income
  • Capital gains treatment of royalties on coal
  • Carryover basis of capital gains on gifts
  • Community Development Financial Institutions - Emergency Support Program - Equitable Recovery Program
  • Community Development Financial Institutions - Emergency Support Program - Non Federal Financial Assistance Related Payments
  • Community Development Financial Institutions - Emergency Support Program - Rapid Response Program
  • Community Development Financial Institutions Fund - CDFI BGP Financing Fund
  • Community Development Financial Institutions Fund - CDFI BGP Financing Fund - Non Financial Assistance Related Payments
  • Community Development Financial Institutions Fund - CDFI Program Loan
  • Community Development Financial Institutions Fund - CDFI Program Loan - Non Federal Financial Assistance Related Payments
  • Community Development Financial Institutions Fund - Capital Magnet Fund
  • Community Development Financial Institutions Fund - Capital Magnet Fund - Non Financial Assistance Related Payments
  • Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program
  • Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program- Bank Enterprise Award Program
  • Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program- Native Initiatives
  • Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program- Non-Federal Financial Assistance Payments
  • Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program- Small Dollar Loan Program
  • Credit for construction of new energy efficient homes
  • Credit for disabled access expenditures
  • Credit for employee health insurance expenses of small business
  • Credit for energy efficiency improvements to existing homes
  • Credit for family and sick leave taken by self-employed individuals
  • Credit for increasing research activities
  • Credit for low-income housing investments
  • Credit for residential energy efficient property
  • Credit to holders of Gulf and Midwest Tax Credit Bonds .
  • Deductibility of State and local property tax on owner-occupied homes
  • Deductibility of casualty losses
  • Deductibility of charitable contributions to educational institutions
  • Deductibility of charitable contributions to health institutions
  • Deductibility of charitable contributions, other than education and health
  • Deductibility of medical expenses
  • Deductibility of mortgage interest on owner-occupied homes
  • Deductibility of nonbusiness State and local taxes other than on owner-occupied homes
  • Deductibility of student-loan interest
  • Deduction for endangered species recovery expenditures
  • Deduction for foreign-derived intangible income derived from trade or business within the United States
  • Deferral of capital gains from like-kind exchanges
  • Deferral of gain on sale of farm refiners
  • Deferral of income from installment sales
  • Deferral of interest on U.S. savings bonds
  • Deferral of tax on shipping companies
  • Departmental Offices - Coronavirus Capital Projects Fund
  • Departmental Offices - Coronavirus Relief Fund
  • Departmental Offices - Cybersecurity Enhancement Account
  • Departmental Offices - Economic Stabilization Direct Loan Financing
  • Departmental Offices - Economic Stabilization Program
  • Departmental Offices - Emergency Capital Investment Fund
  • Departmental Offices - Emergency Rental Assistance
  • Departmental Offices - Federal Research Fund
  • Departmental Offices - Homeowners Assistance Fund
  • Departmental Offices - International Affairs Technical Assistance
  • Departmental Offices - Local Assistance and Tribal Consistency Fund
  • Departmental Offices - Office of Terrorism and Financial Intelligence
  • Departmental Offices - Salaries and Expenses
  • Departmental Offices - State Small Business Credit Initiative- Non- Federal Financial Assistance Payments
  • Departmental Offices - State Small Business Credit Initiative- Technical Assistance Grant Program
  • Departmental Offices - Transportation Services Economic Relief
  • Departmental Offices - Treasury Forfeiture Fund- Equitable Sharing
  • Departmental Offices- Air Carrier Worker Support
  • Departmental Offices- Coronavirus Relief Fund -Coronavirus State and Local Fiscal Recovery Funds
  • Departmental Offices- Department-Wide Systems and Capital Investments Programs
  • Departmental Offices- Gifts and Bequests, Treasury
  • Departmental Offices- MBS Purchase Program Account
  • Departmental Offices- Small Business Lending Fund Program
  • Departmental Offices- Social Impact Demonstration Projects
  • Departmental Offices- State Small Business Credit Initiative- Competitive Technical Assistance
  • Departmental Offices- Terrorism Insurance Program
  • Depreciation of buildings other than rental housing (normal tax method)
  • Disaster employee retention credit
  • Discharge of business indebtedness
  • Discharge of mortgage indebtedness
  • Discharge of student loan indebtedness
  • Distributions from retirement plans for premiums for health and long-term care insurance
  • District of Columbia (DC) Pensions - DC Federal Pension Fund
  • District of Columbia Pensions - DC Judicial Retirement & Survivors Annuity Fund
  • Employer provided child care exclusion
  • Employer-provided child care credit
  • Employer-provided paid family and medical leave credit
  • Empowerment zones
  • Enhanced oil recovery credit
  • Exception from passive loss limitation for working interests in oil and gas properties
  • Exception from passive loss rules for $25,000 of rental loss
  • Exceptions from imputed interest rules
  • Excess of percentage over cost depletion, coal
  • Excess of percentage over cost depletion, nonfuel minerals
  • Excess of percentage over cost depletion, oil and gas
  • Exclusion for employer-provided transit passes
  • Exclusion of GI bill benefits
  • Exclusion of benefits and allowances to armed forces personnel
  • Exclusion of certain allowances for Federal employees abroad
  • Exclusion of certain foster care payments
  • Exclusion of employee meals and lodging (other than military)
  • Exclusion of employer contributions for medical insurance premiums and medical care
  • Exclusion of employer-provided educational assistance
  • Exclusion of income earned abroad by U.S. citizens
  • Exclusion of interest for airport, dock, and similar bonds
  • Exclusion of interest on bonds for Highway Projects and rail-truck transfer facilities
  • Exclusion of interest on bonds for private nonprofit educational facilities
  • Exclusion of interest on bonds for water, sewage, and hazardous waste facilities
  • Exclusion of interest on energy facility bonds
  • Exclusion of interest on hospital construction bonds
  • Exclusion of interest on owner-occupied mortgage subsidy bonds
  • Exclusion of interest on public purpose State and local bonds
  • Exclusion of interest on rental housing bonds
  • Exclusion of interest on savings bonds redeemed to finance educational expenses
  • Exclusion of interest on small issue bonds
  • Exclusion of interest on student-loan bonds
  • Exclusion of interest on veterans housing bonds
  • Exclusion of interest spread of financial institutions
  • Exclusion of life insurance death benefits
  • Exclusion of military disability pensions
  • Exclusion of net imputed rental income
  • Exclusion of other employee benefits: Premiums on accident and disability insurance
  • Exclusion of other employee benefits: Premiums on group term life insurance
  • Exclusion of parsonage allowances
  • Exclusion of public assistance benefits (normal tax method)
  • Exclusion of railroad retirement (Social Security equivalent) benefits
  • Exclusion of reimbursed employee parking expenses
  • Exclusion of scholarship and fellowship income (normal tax method)
  • Exclusion of social security benefits: Credit for certain employer contributions to social security
  • Exclusion of social security benefits: Social Security benefits for retired and disabled workers and spouses, dependents and survivors
  • Exclusion of special benefits for disabled coal miners
  • Exclusion of utility conservation subsidies
  • Exclusion of veterans death benefits and disability compensation
  • Exclusion of veterans pensions
  • Exclusion of workers' compensation benefits
  • Exemption of certain mutuals' and cooperatives' income
  • Exemption of credit union income
  • Exemption or special alternative tax for small property and casualty insurance companies
  • Expensing of certain capital outlays
  • Expensing of certain multiperiod production costs
  • Expensing of certain small investments (normal tax method)
  • Expensing of exploration and development costs, coal
  • Expensing of exploration and development costs, nonfuel minerals
  • Expensing of exploration and development costs, oil and gas
  • Expensing of multiperiod timber growing costs
  • Expensing of reforestation expenditures
  • Expensing of research and experimentation expenditures (normal tax method)
  • Financial Crimes Enforcement Network - Salaries and Expenses
  • Fiscal Service - American Indian & Alaskan Native
  • Fiscal Service - Check Forgery Insurance Fund
  • Fiscal Service - Claims for Contract Disputes
  • Fiscal Service - Corporation for Public Broadcasting
  • Fiscal Service - DC Water & Sewer
  • Fiscal Service - Debt Collection Special Fund
  • Fiscal Service - Emergency Planning & Security
  • Fiscal Service - Federal Payment of School Improvement
  • Fiscal Service - Federal Reserve Bank Reimbursement Fund
  • Fiscal Service - Financial Agent Services
  • Fiscal Service - Fiscal Service Administrative Salaries and Expenses
  • Fiscal Service - Interest on Uninvested Funds
  • Fiscal Service - Interest on the Public Debt (indefinite)
  • Fiscal Service - Judgements, Court of Claims
  • Fiscal Service - Judgements, U.S. Courts
  • Fiscal Service - Payment to Legal Services Corporation
  • Fiscal Service - Payment to Resolution Funds Corporation
  • Fiscal Service - Refund Money Erroneously Received
  • Fiscal Service - Reimbursements to Federal Reserve Banks
  • Fiscal Service - Resident Tuition Sup
  • Fiscal Service - Travel Promotion Fund, Corp for Travel Promotion
  • Fiscal Service- CMIA, Net Interest Pd to States
  • Fiscal Service- Cheyenne River Sioux TWHRF
  • Fiscal Service- Claims for Damages
  • Fiscal Service- Criminal Justice C C
  • Fiscal Service- Federal Payment for Testing and Treatment of HIV/Aids
  • Fiscal Service- Federal Payments For Judicial Commissions
  • Fiscal Service- Federal Payments for the DC National Guard
  • Fiscal Service- Guam World War II Claims Fund
  • Fiscal Service- Gulf Coast Restoration Trust Fund- Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States
  • Fiscal Service- Lower Brule Sioux Tribe TWHRTF
  • Fiscal Service- Presidential Election Campaign
  • Income averaging for farmers
  • Income of trusts to finance supplementary unemployment benefits
  • Income of trusts to finance voluntary employee benefits associations
  • Indian employment credit
  • Interest Charge Domestic International Sales Corporations (IC-DISCs)
  • Internal Revenue Service - Advanced Manufacturing Investment Credit
  • Internal Revenue Service - Build American Bond Payments, Recovery Act
  • Internal Revenue Service - Business Systems Modernization
  • Internal Revenue Service - Child and Dependent Care Tax Credit
  • Internal Revenue Service - Clean Vehicle Credit
  • Internal Revenue Service - Credit for Previously Owned Clean Vehicles
  • Internal Revenue Service - Elective Payment for Energy Prop and Electricity Produced
  • Internal Revenue Service - Energy Security
  • Internal Revenue Service - Healthcare Credit Exceeds Liability
  • Internal Revenue Service - Informant Reimbursement
  • Internal Revenue Service - Operations Support
  • Internal Revenue Service - Payment to Issuer of New Clean Renewable Energy Bonds
  • Internal Revenue Service - Payment to Issuer of Qualified Energy Conservation Bond
  • Internal Revenue Service - Payment to Issuer of Qualified School Construction Bonds
  • Internal Revenue Service - Payment to Issuer of Qualified Zone Academy Bonds
  • Internal Revenue Service - Private Collection Agent Program
  • Internal Revenue Service - Refund - Corporations
  • Internal Revenue Service - Refund Collection - Interest
  • Internal Revenue Service - Special Compliance Personnel Program Account
  • Internal Revenue Service - Tax Law Enforcement
  • Internal Revenue Service - Taxpayer Services- Exchange of Federal Information with State Agencies
  • Internal Revenue Service - Taxpayer Services- Lower Income Taxpayer Clinics
  • Internal Revenue Service - Taxpayer Services- Non- Federal Financial Assistance Payments
  • Internal Revenue Service - Taxpayer Services- Tax Counseling for the Elderly
  • Internal Revenue Service - Taxpayer Services- Volunteer Income Tax Assistance Matching Grant Program
  • Internal Revenue Service - US Coronavirus Payments
  • Internal Revenue Service - US Coronavirus Refundable Credits
  • Internal Revenue Service- Direct E-file Taskforce
  • Internal Revenue Service- FHWA Allocation
  • Internal Revenue Service- Federal Tax Lien Revolving Fund
  • Internal Revenue Service- Miscellaneous retained funds
  • Internal Revenue Service- No Surprise Implementation Fund
  • Internal Revenue Service- Small Business Insurance Tax Credit
  • Marginal wells credit
  • Medical Savings Accounts / Health Savings Accounts
  • Net exclusion of pension contributions and earnings: Defined benefit employer plans
  • Net exclusion of pension contributions and earnings: Defined contribution employer plans
  • Net exclusion of pension contributions and earnings: Individual Retirement Accounts
  • Net exclusion of pension contributions and earnings: Low and moderate income savers credit
  • Net exclusion of pension contributions and earnings: Self-Employed plans
  • New markets tax credit
  • Office of Financial Stability - Salaries and Expenses
  • Office of International Assistance - Clean Tech Fund Loans Financing Acct
  • Office of International Assistance - Contribution to African Development Bank
  • Office of International Assistance - Contribution to African Development Fund
  • Office of International Assistance - Contribution to European Bank for Reconstruction
  • Office of International Assistance - Contribution to International Bank Reconstruction
  • Office of International Assistance - Contribution to International Development Association
  • Office of International Assistance - Contribution to Multilat INV Guar
  • Office of International Assistance - Contribution to the Asian Development Fund
  • Office of International Assistance - Global Environment Facility
  • Office of International Assistance - Global Food Security
  • Office of International Assistance - International Fund for Agriculture Development
  • Office of the Comptroller of the Currency - Assessment Funds
  • Office of the Inspector General - Salaries and Expenses
  • Opportunity Zones
  • Ordinary income treatment of loss from small business corporation stock sale
  • Other Dependent Tax Credit
  • Parental personal exemption for students age 19 or over
  • Premiums for mortgage insurance deductible as interest
  • Qualified tuition programs (includes Education IRA)
  • Reduced tax rate for nuclear decommissioning funds
  • Reduced tax rate on active income of controlled foreign corporations (normal tax method)
  • Self-employed medical insurance premiums
  • Small employer pension plan startup credit
  • Special Blue Cross/Blue Shield tax benefits
  • Special Employee Stock Ownership Plan (ESOP) rules
  • Special Inspector General for Pandemic Recovery
  • Special Inspector General for Troubled Asset Relief Program
  • Special deduction for teacher expenses
  • Special rules for certain film and TV production
  • Step-up basis of capital gains at death
  • Tax credit for certain expenditures for maintaining railroad tracks
  • Tax credit for orphan drug research
  • Tax credits for clean-fuel burning vehicles and refueling property
  • Tax exemption of insurance income earned by tax-exempt organizations
  • Tax incentives for preservation of historic structures
  • The Mint - United States Mint Public Enterprise Fund
  • Tonnage tax
  • Treasury Franchise Fund
  • Treasury Inspector General for Tax Administration
  • Treatment of loans forgiven for solvent farmers
  • Treatment of qualified dividends
  • Tribal Economic Development Bonds
  • Work opportunity tax credit

Actions recommended and planned to achieve compliance

Treasury was not in compliance with PIIA for FY 2024 for not reporting an improper payment error rate of less than 10% for the IRS Earned Income Tax Credit, Additional Child Tax Credit, American Opportunity Tax Credit, and the refundable Premium Assistance Tax Credit. OIG did not provide any recommendations regarding this non-compliant criteria. Refundable tax credit overclaims are not the result of internal control weaknesses that the IRS can remediate internally, but are in fact the result of factors beyond the Agency's control under the current law and existing authority.


Official(s) accountable for the progress of the agency coming into compliance

Ishmael Alejo, Director, IRS Refund Integrity and Compliance Services (RICS), Refundable Credits Program Management (RCPM)


Accountability mechanism tied to the success of the official designated in leading the efforts to come Into compliance

The IRS continues significant efforts to bring its payment programs to an improper rate of less than 10 percent. The IRS captures metrics related to pre-refund activities and works closely with internal and external partners to expand outreach efforts. Many of these metrics are tied to the pre-refund examination program and IRS's continued approach to improve refundable tax credit audits. The Refund Integrity and Compliance Services (RICS) Director conducts quarterly operational reviews with Refundable Credits Examination Operations (RCEO) and Refundable Credits Program Management (RCPM) on the refundable credits program. The RICS and RCPM Directors and managers have performance plan commitments that address enhancements emphasizing tax return accuracy and reducing improper payments. Proactive actions are being taken to improve the audit response rates and taxpayer’s filing behavior for refundable credits to decrease the audit selection volume. The IRS performance plans have a balanced approach which include outreach and compliance. The IRS looks to find ways to enhance the taxpayer experience and improve the knowledge of taxpayers and paid return preparers on the eligibility and criteria for RTCs. Without significant legislative action and restructuring of programs, meeting a target compliance date will be a significant challenge.


The agency made substantial changes to the methodology of the review conducted for risk for improper payments for the reporting cycle.

Program name When was the last improper payment risk assessment conducted? Likely to be susceptible to significant improper payments? Substantial changes made to the assessment methodology used for the reporting cycle
Accelerated depreciation of machinery and equipment (normal tax method) *
Accelerated depreciation on rental housing (normal tax method) *
Additional deduction for the blind *
Additional deduction for the elderly *
Adoption credit and exclusion *
Advanced nuclear power production credit *
Alcohol and Tobacco Tax and Trade Bureau - Internal Revenue Collection Puerto Rico 2023 No No
Alcohol and Tobacco Tax and Trade Bureau - Salaries and Expenses 2024 No No
Alcohol fuel credits *
Allow 20-percent deduction to certain pass-through income *
Allowance of deduction for certain energy efficient commercial building property *
Amortize all geological and geophysical expenditures over 2 years *
Assistance for adopted foster children *
Bio-Diesel and small agri-biodiesel producer tax credits *
Bureau of Engraving and Printing - Bureau of Engraving and Printing Fund 2025 No No
Capital gains (except agriculture, timber, iron ore, and coal) *
Capital gains exclusion of small corporation stock *
Capital gains exclusion on home sales *
Capital gains treatment of certain agriculture income *
Capital gains treatment of certain timber income *
Capital gains treatment of royalties on coal *
Carryover basis of capital gains on gifts *
Community Development Financial Institutions - Emergency Support Program - Equitable Recovery Program 2024 No No
Community Development Financial Institutions - Emergency Support Program - Non Federal Financial Assistance Related Payments 2024 No No
Community Development Financial Institutions - Emergency Support Program - Rapid Response Program 2024 No No
Community Development Financial Institutions Fund - Capital Magnet Fund 2025 No No Yes
Community Development Financial Institutions Fund - Capital Magnet Fund - Non Financial Assistance Related Payments 2025 No No Yes
Community Development Financial Institutions Fund - CDFI BGP Financing Fund 2024 No No
Community Development Financial Institutions Fund - CDFI BGP Financing Fund - Non Financial Assistance Related Payments 2024 No No
Community Development Financial Institutions Fund - CDFI Program Loan *
Community Development Financial Institutions Fund - CDFI Program Loan - Non Federal Financial Assistance Related Payments *
Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program 2025 No No Yes
Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program- Bank Enterprise Award Program 2025 No No Yes
Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program- Native Initiatives 2025 No No Yes
Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program- Non-Federal Financial Assistance Payments 2025 No No Yes
Community Development Financial Institutions Fund - Community Development Financial Institutions (CDFI) Program- Small Dollar Loan Program 2025 No No Yes
Credit for construction of new energy efficient homes *
Credit for disabled access expenditures *
Credit for employee health insurance expenses of small business *
Credit for energy efficiency improvements to existing homes *
Credit for family and sick leave taken by self-employed individuals *
Credit for increasing research activities *
Credit for low-income housing investments *
Credit for residential energy efficient property *
Credit to holders of Gulf and Midwest Tax Credit Bonds . *
Deductibility of casualty losses *
Deductibility of charitable contributions to educational institutions *
Deductibility of charitable contributions to health institutions *
Deductibility of charitable contributions, other than education and health *
Deductibility of medical expenses *
Deductibility of mortgage interest on owner-occupied homes *
Deductibility of nonbusiness State and local taxes other than on owner-occupied homes *
Deductibility of State and local property tax on owner-occupied homes *
Deductibility of student-loan interest *
Deduction for endangered species recovery expenditures *
Deduction for foreign-derived intangible income derived from trade or business within the United States *
Deferral of capital gains from like-kind exchanges *
Deferral of gain on sale of farm refiners *
Deferral of income from installment sales *
Deferral of interest on U.S. savings bonds *
Deferral of tax on shipping companies *
Departmental Offices - Coronavirus Capital Projects Fund 2025 No No Yes
Departmental Offices - Coronavirus Relief Fund 2022 No No
Departmental Offices - Cybersecurity Enhancement Account 2025 No No Yes
Departmental Offices - Economic Stabilization Direct Loan Financing 2021 No No
Departmental Offices - Economic Stabilization Program 2022 No No
Departmental Offices - Emergency Capital Investment Fund 2023 No No
Departmental Offices - Emergency Rental Assistance 2024 No Yes
Departmental Offices - Federal Research Fund 2025 No No Yes
Departmental Offices - Homeowners Assistance Fund 2024 No No
Departmental Offices - International Affairs Technical Assistance 2023 No No
Departmental Offices - Local Assistance and Tribal Consistency Fund 2024 No No
Departmental Offices - Office of Terrorism and Financial Intelligence 2025 No No Yes
Departmental Offices - Salaries and Expenses 2025 No No Yes
Departmental Offices - State Small Business Credit Initiative- Non- Federal Financial Assistance Payments *
Departmental Offices - State Small Business Credit Initiative- Technical Assistance Grant Program 2023 No No
Departmental Offices - Transportation Services Economic Relief 2022 No No
Departmental Offices - Treasury Forfeiture Fund- Equitable Sharing 2024 No No
Departmental Offices- Air Carrier Worker Support *
Departmental Offices- Coronavirus Relief Fund -Coronavirus State and Local Fiscal Recovery Funds 2022 No No
Departmental Offices- Department-Wide Systems and Capital Investments Programs *
Departmental Offices- Gifts and Bequests, Treasury *
Departmental Offices- MBS Purchase Program Account *
Departmental Offices- Small Business Lending Fund Program *
Departmental Offices- Social Impact Demonstration Projects *
Departmental Offices- State Small Business Credit Initiative- Competitive Technical Assistance 2023 No No
Departmental Offices- Terrorism Insurance Program *
Depreciation of buildings other than rental housing (normal tax method) *
Disaster employee retention credit *
Discharge of business indebtedness *
Discharge of mortgage indebtedness *
Discharge of student loan indebtedness *
Distributions from retirement plans for premiums for health and long-term care insurance *
District of Columbia (DC) Pensions - DC Federal Pension Fund 2025 No No Yes
District of Columbia Pensions - DC Judicial Retirement & Survivors Annuity Fund 2025 No No Yes
Employer provided child care exclusion *
Employer-provided child care credit *
Employer-provided paid family and medical leave credit *
Empowerment zones *
Enhanced oil recovery credit *
Exception from passive loss limitation for working interests in oil and gas properties *
Exception from passive loss rules for $25,000 of rental loss *
Exceptions from imputed interest rules *
Excess of percentage over cost depletion, coal *
Excess of percentage over cost depletion, nonfuel minerals *
Excess of percentage over cost depletion, oil and gas *
Exclusion for employer-provided transit passes *
Exclusion of benefits and allowances to armed forces personnel *
Exclusion of certain allowances for Federal employees abroad *
Exclusion of certain foster care payments *
Exclusion of employee meals and lodging (other than military) *
Exclusion of employer contributions for medical insurance premiums and medical care *
Exclusion of employer-provided educational assistance *
Exclusion of GI bill benefits *
Exclusion of income earned abroad by U.S. citizens *
Exclusion of interest for airport, dock, and similar bonds *
Exclusion of interest on bonds for Highway Projects and rail-truck transfer facilities *
Exclusion of interest on bonds for private nonprofit educational facilities *
Exclusion of interest on bonds for water, sewage, and hazardous waste facilities *
Exclusion of interest on energy facility bonds *
Exclusion of interest on hospital construction bonds *
Exclusion of interest on owner-occupied mortgage subsidy bonds *
Exclusion of interest on public purpose State and local bonds *
Exclusion of interest on rental housing bonds *
Exclusion of interest on savings bonds redeemed to finance educational expenses *
Exclusion of interest on small issue bonds *
Exclusion of interest on student-loan bonds *
Exclusion of interest on veterans housing bonds *
Exclusion of interest spread of financial institutions *
Exclusion of life insurance death benefits *
Exclusion of military disability pensions *
Exclusion of net imputed rental income *
Exclusion of other employee benefits: Premiums on accident and disability insurance *
Exclusion of other employee benefits: Premiums on group term life insurance *
Exclusion of parsonage allowances *
Exclusion of public assistance benefits (normal tax method) *
Exclusion of railroad retirement (Social Security equivalent) benefits *
Exclusion of reimbursed employee parking expenses *
Exclusion of scholarship and fellowship income (normal tax method) *
Exclusion of social security benefits: Credit for certain employer contributions to social security *
Exclusion of social security benefits: Social Security benefits for retired and disabled workers and spouses, dependents and survivors *
Exclusion of special benefits for disabled coal miners *
Exclusion of utility conservation subsidies *
Exclusion of veterans death benefits and disability compensation *
Exclusion of veterans pensions *
Exclusion of workers' compensation benefits *
Exemption of certain mutuals' and cooperatives' income *
Exemption of credit union income *
Exemption or special alternative tax for small property and casualty insurance companies *
Expensing of certain capital outlays *
Expensing of certain multiperiod production costs *
Expensing of certain small investments (normal tax method) *
Expensing of exploration and development costs, coal *
Expensing of exploration and development costs, nonfuel minerals *
Expensing of exploration and development costs, oil and gas *
Expensing of multiperiod timber growing costs *
Expensing of reforestation expenditures *
Expensing of research and experimentation expenditures (normal tax method) *
Financial Crimes Enforcement Network - Salaries and Expenses 2023 No No
Fiscal Service - American Indian & Alaskan Native 2024 No No
Fiscal Service - Check Forgery Insurance Fund 2025 No No Yes
Fiscal Service - Claims for Contract Disputes 2025 No No Yes
Fiscal Service - Corporation for Public Broadcasting 2025 No No Yes
Fiscal Service - DC Water & Sewer 2023 No No
Fiscal Service - Debt Collection Special Fund 2025 No No Yes
Fiscal Service - Emergency Planning & Security 2025 No No Yes
Fiscal Service - Federal Payment of School Improvement *
Fiscal Service - Federal Reserve Bank Reimbursement Fund 2023 No No
Fiscal Service - Financial Agent Services 2025 No No Yes
Fiscal Service - Fiscal Service Administrative Salaries and Expenses 2025 No No Yes
Fiscal Service - Interest on the Public Debt (indefinite) 2024 No No
Fiscal Service - Interest on Uninvested Funds 2024 No No
Fiscal Service - Judgements, Court of Claims 2025 No No Yes
Fiscal Service - Judgements, U.S. Courts 2022 No No
Fiscal Service - Payment to Legal Services Corporation 2025 No No Yes
Fiscal Service - Payment to Resolution Funds Corporation 2025 No No Yes
Fiscal Service - Refund Money Erroneously Received 2024 No No
Fiscal Service - Reimbursements to Federal Reserve Banks 2023 No No
Fiscal Service - Resident Tuition Sup 2025 No No Yes
Fiscal Service - Travel Promotion Fund, Corp for Travel Promotion 2025 No No Yes
Fiscal Service- Cheyenne River Sioux TWHRF *
Fiscal Service- Claims for Damages *
Fiscal Service- CMIA, Net Interest Pd to States *
Fiscal Service- Criminal Justice C C *
Fiscal Service- Federal Payment for Testing and Treatment of HIV/Aids *
Fiscal Service- Federal Payments For Judicial Commissions *
Fiscal Service- Federal Payments for the DC National Guard *
Fiscal Service- Guam World War II Claims Fund *
Fiscal Service- Gulf Coast Restoration Trust Fund- Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States 2024 No No
Fiscal Service- Lower Brule Sioux Tribe TWHRTF *
Fiscal Service- Presidential Election Campaign *
Income averaging for farmers *
Income of trusts to finance supplementary unemployment benefits *
Income of trusts to finance voluntary employee benefits associations *
Indian employment credit *
Interest Charge Domestic International Sales Corporations (IC-DISCs) *
Internal Revenue Service - Additional Child Tax Credit 2025 No Yes
Internal Revenue Service - Advanced Manufacturing Investment Credit 2025 No No
Internal Revenue Service - American Opportunity Tax Credit 2025 No Yes
Internal Revenue Service - Build American Bond Payments, Recovery Act 2025 No No
Internal Revenue Service - Business Systems Modernization 2024 No No
Internal Revenue Service - Child and Dependent Care Tax Credit 2024 No Yes
Internal Revenue Service - Clean Vehicle Credit 2025 No No
Internal Revenue Service - Credit for Previously Owned Clean Vehicles 2025 No No
Internal Revenue Service - Earned Income Tax Credit 2025 No Yes
Internal Revenue Service - Elective Payment for Energy Prop and Electricity Produced 2025 No No
Internal Revenue Service - Energy Security 2025 No No
Internal Revenue Service - Healthcare Credit Exceeds Liability 2022 No No
Internal Revenue Service - Informant Reimbursement 2024 No No
Internal Revenue Service - Operations Support 2024 No No
Internal Revenue Service - Payment to Issuer of New Clean Renewable Energy Bonds 2025 No No
Internal Revenue Service - Payment to Issuer of Qualified Energy Conservation Bond 2025 No No
Internal Revenue Service - Payment to Issuer of Qualified School Construction Bonds 2025 No No
Internal Revenue Service - Payment to Issuer of Qualified Zone Academy Bonds 2024 No No
Internal Revenue Service - Private Collection Agent Program 2024 No No
Internal Revenue Service - Refund - Corporations 2024 No No
Internal Revenue Service - Refund Collection - Interest 2024 No No
Internal Revenue Service - Refundable Premium Assistance Tax Credit 2025 No Yes
Internal Revenue Service - Special Compliance Personnel Program Account 2024 No No
Internal Revenue Service - Tax Law Enforcement 2024 No No
Internal Revenue Service - Taxpayer Services- Exchange of Federal Information with State Agencies 2024 No No
Internal Revenue Service - Taxpayer Services- Lower Income Taxpayer Clinics 2024 No No
Internal Revenue Service - Taxpayer Services- Non- Federal Financial Assistance Payments 2024 No No
Internal Revenue Service - Taxpayer Services- Tax Counseling for the Elderly 2024 No No
Internal Revenue Service - Taxpayer Services- Volunteer Income Tax Assistance Matching Grant Program 2024 No No
Internal Revenue Service - US Coronavirus Payments 2024 No Yes
Internal Revenue Service - US Coronavirus Refundable Credits 2024 No Yes
Internal Revenue Service- Direct E-file Taskforce *
Internal Revenue Service- Federal Tax Lien Revolving Fund *
Internal Revenue Service- FHWA Allocation *
Internal Revenue Service- Miscellaneous retained funds *
Internal Revenue Service- No Surprise Implementation Fund *
Internal Revenue Service- Small Business Insurance Tax Credit *
Marginal wells credit *
Medical Savings Accounts / Health Savings Accounts *
Net exclusion of pension contributions and earnings: Defined benefit employer plans *
Net exclusion of pension contributions and earnings: Defined contribution employer plans *
Net exclusion of pension contributions and earnings: Individual Retirement Accounts *
Net exclusion of pension contributions and earnings: Low and moderate income savers credit *
Net exclusion of pension contributions and earnings: Self-Employed plans *
New markets tax credit *
Office of Financial Stability - Salaries and Expenses 2024 No No
Office of International Assistance - Clean Tech Fund Loans Financing Acct 2025 No No Yes
Office of International Assistance - Contribution to African Development Bank 2025 No No Yes
Office of International Assistance - Contribution to African Development Fund 2023 No No
Office of International Assistance - Contribution to European Bank for Reconstruction 2023 No No
Office of International Assistance - Contribution to International Bank Reconstruction 2025 No No Yes
Office of International Assistance - Contribution to International Development Association 2023 No No
Office of International Assistance - Contribution to Multilat INV Guar 2025 No No Yes
Office of International Assistance - Contribution to the Asian Development Fund 2025 No No Yes
Office of International Assistance - Global Environment Facility 2023 No No
Office of International Assistance - Global Food Security 2023 No No
Office of International Assistance - International Fund for Agriculture Development 2023 No No
Office of the Comptroller of the Currency - Assessment Funds 2023 No No
Office of the Inspector General - Salaries and Expenses 2023 No No
Opportunity Zones *
Ordinary income treatment of loss from small business corporation stock sale *
Other Dependent Tax Credit *
Parental personal exemption for students age 19 or over *
Premiums for mortgage insurance deductible as interest *
Qualified tuition programs (includes Education IRA) *
Reduced tax rate for nuclear decommissioning funds *
Reduced tax rate on active income of controlled foreign corporations (normal tax method) *
Self-employed medical insurance premiums *
Small employer pension plan startup credit *
Special Blue Cross/Blue Shield tax benefits *
Special deduction for teacher expenses *
Special Employee Stock Ownership Plan (ESOP) rules *
Special Inspector General for Pandemic Recovery *
Special Inspector General for Troubled Asset Relief Program 2022 No No
Special rules for certain film and TV production *
Step-up basis of capital gains at death *
Tax credit for certain expenditures for maintaining railroad tracks *
Tax credit for orphan drug research *
Tax credits for clean-fuel burning vehicles and refueling property *
Tax exemption of insurance income earned by tax-exempt organizations *
Tax incentives for preservation of historic structures *
The Mint - United States Mint Public Enterprise Fund 2024 No No
Tonnage tax *
Treasury Franchise Fund 2023 No No
Treasury Inspector General for Tax Administration 2023 No No
Treatment of loans forgiven for solvent farmers *
Treatment of qualified dividends *
Tribal Economic Development Bonds *
Work opportunity tax credit *

* Assessment year is not displayed because one or more of the following statements is true:

  1. Not required to conduct a risk assessment under the Payment Integrity Information Act of 2019,
  2. Already assessed for improper payment risk under a different name in a prior reporting period, and/or
  3. New and planning to perform a risk assessment in the future.

The Risk Assessment Results table includes several Internal Revenue Service tax expenditures. Majority of those tax expenditures do not have federal outlays; therefore, the requirements of the Payment Integrity Information Act (PIIA) do not apply.

Confirmed Fraud:

Approximately $45.2 million of the Confirmed Fraud had been previously reported on the FY 24 report. FY25 reflects correct confirmed fraud amounts.