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The author discusses the high rate of error related to earned income tax credit payments received by the IRS in 1997.

The 1996 tax return filing season went smoothly for the IRS, although electronic returns were only up 8% over 1995, totaling 11.4 million returns through April 12, 1996, likely falling short of the projected goal of 16.1 million. Overall, however, the season was an improvement over 1995, when many refunds were delayed amid high rejection rates for electronic returns. Millions accessed the IRS's Web page, downloading over 118,000 forms and IRS publications. The total number of returns through April 12 decreased 3.3% to 76.3 million compared to 1995.

IRS Statistics of Income Division data on 1994 returns indicated the social security number matching procedure led to a 3% decline in dependent exemption claims and the $250 charitable substantiation requirement may have caused a 2.2% decline in contributions. The matching may have been partially responsible for an unintended 12.7% decline in electronic filing, as 1.9 million fewer dependent exemptions were claimed. While taxable interest income dropped to $107 billion, alternative minimum tax and capital gains tax liabilities increased. Earned income tax credit claims grew to almost $20 billion, due to increased eligibility thresholds.

It is taking more time to complete income tax forms. The Internal Revenue Service estimates that it takes an extra hour and ten minutes to fill out the standard form 1040 in 1991, an extra 20 minutes for Schedule A, 31 more minutes for Schedule C, 15 extra minutes for Schedule D and six more minutes for Schedule E. The total time for the standard 1040 form alone in 1991 is ten hours and 43 minutes. About half of the 100 million individual taxpayers in the country now use professional help.

The Congressional Research Service in 1999 released statistics regarding the number of people who filed tax returns for income earned in 1996. Categories included those who filed taxable returns, nontaxable returns, single persons, married persons filing jointly and married persons filing separately. Over 120.3 mil returns were filed for 1996 income. Over 90.9 mil returns were taxable.

Statistics on 1993 tax returns show median family income to be $37,000, but 62% reported adjusted gross income (AGI) of less than $30,000. These less-affluent taxpayers made up 73 million out of 115 million returns filed, paying 12% of the total collected, or $924 per taxpayer on average. Although 15 million of these taxpayers filed for the earned income tax credit, only 7 million, or 29%, were able to claim itemized deductions, such as for charitable contributions or mortgage interest.

The IRS's TeleFile program led to significantly improved electronic filing numbers in 1996. TeleFile returns through Feb 9, 1996, were three times higher than 1995. Overall electronic returns were 400,000 higher, totalling 6.2 million of the 17.5 million returns filed in 1996 through Feb 9. Moreover, the electronic filing rejection rate decreased from 30% to 15%. The expanded TeleFile program's 1996 goal is 3 million returns, while the overall electronic returns goal is 16.1 million.