The results for the EITC are not pretty. The Internal Revenue Services estimates that 21 to 25 percent of EITC payments were issued incorrectly during the fiscal year 2012, totaling from $11.6 to $13.6 billion in too much money being paid out to taxpayers. As a result, the Office of Management and Budget has labeled the EITC a “high-error” government program. Projections by the government show that the rate of error is expected to remain stubbornly high.
…[T]he IRS estimates that 21 percent of those who are eligible do not claim the credit at all. And so the EITC cuts both ways: both too much being handed out to taxpayers and too little.