P. M. BRIEFING : Ineligibles Claim Tax Benefit: IRS

As much as 40% of a special tax benefit for low-income families with children is being claimed by ineligible persons, the Internal Revenue Service estimated today.

As part of its audit program, the IRS found that in 1985, $818 million of the total $2.1 billion earned-income credit went to people who were found to be ineligible. Credits totaling $6 billion are expected to be claimed this year by more than 10 million working families.

The credit has strong support in both political parties. President Bush has supported increases in the credit, and both houses of Congress have agreed to boost the benefit as part of rival child-care bills. Congressional leaders say the new IRS study clouds those efforts.

Steve Pyrek, an IRS spokesman, said the 40% error rate first reported by the Washington Post is accurate but pointed out that the estimate is based on a very limited sample of tax returns. “The credit is an area where there are lots of errors in computation because it is a very complex calculation,” Pyrek said.