The General Accounting Office has released a 57-page report on The Earned Income Tax Credit.  Here is part of the Conclusion:

The EITC program lifts millions of low-income taxpayers and their families out of poverty. However, its high rates of noncompliance — overclaims for the credit — could potentially undermine the credibility of the program because billions of dollars are annually paid out that should not have been.  IRS’s three tests — qualifying child certification, filing status, and income misreporting — are major initiatives to reduce overclaims by addressing the leading errors taxpayers make.  Given the importance of the EITC to many low-income households and concerns about high overclaims, these tests are being closely watched by numerous stakeholders.

Although IRS has generally implemented each of the tests smoothly, it did not fully document some key management decisions and other significant events….The evaluations that IRS is conducting of each test are likely to yield some useful information and results that will help IRS officials and other stakeholders judge whether and how to proceed with further implementation of the new approaches to reducing EITC overclaims.  Nevertheless, the lack of detail and documentation in the evaluation plans impeded officials’ ability to manage the evaluations as well as external stakeholders’ ability to review and understand the evaluations’ strengths and limitations.