The Washington Examiner reports that the IRS failed its own audit, having been found to have made billions in refunds to people who don't deserve them using a program that by 2014 could result in $65 billion being given away to unqualified recipients.

Federal auditors say a quarter of all checks sent out by the Earned Income Tax Credit program are undeserved, making it the second highest source of improper payments from the federal government.

The EITC is a kind of reverse-tax program for low- and moderate- income individuals. If the federal tax credit is more than the amount of taxes owed, the individual gets a "refund" check. In tax year 2010, the maximum EITC for a single individual was $457, going up to $5,666 for a couple with three or more qualifying children.

The loss to taxpayers from the IRS's lackadaisical enforcement of its own rules was a staggering $11 to $13 billion in FY 2009 alone, reports the Treasury Inspector General for Tax Administration.[snip]

 "Using IRS estimates for Fiscal Year 2009, it is likely that the IRS will have issued anywhere from $55 billion to $65 billion in improper payments by Fiscal Year 2014"....