Why It’s So Hard to Build Things in America

It is becoming clear that the Internal Revenue Service (IRS) is being bogged down with Employee Retention Credit (ERC) claims. What is worse, nearly all of these claims are bogus - and they are interfering with normal collection operations. 

The ERC is one of many programs enacted or expanded during the COVID-19 pandemic and was intended to help employers keep workers on their payroll. But years later, despite record lows in unemployment and a robust economic recovery, businesses are still submitting approximately 17,000 ERC claims per week. According to the National Taxpayer Advocate, the IRS’s internal watchdog, as many as 90 percent of these claims are fraudulent. 

In a statement, AV vice president of public finance Andrew Moylan noted that “what started as valuable tax relief to pandemic-impacted businesses has morphed into a feeding frenzy for fraud.” 

A solution to the ERC fraud problem continues to linger in Congress in the form of the Tax Relief for American Workers and Families Act. Despite overwhelming approval from the House earlier this year, the Senate has shown little interest in taking up the measure. Moylan suggests that this new report from the IRS should light a fire under Senators. “Perhaps the astounding levels of fraud reported by the IRS can finally spur the Senate to action.”   

Read AV’s full statement on the IRS report>

Read a story about the IRS’s ERC report in Politico> 

Read Andrew’s Wall Street Journal op-ed on the ERC from earlier this year> 

With support from Arnold Ventures, the Abdul Latif Jameel Poverty Action Lab (J-PAL North America) at the Massachusetts Institute of Technology is launching a new initiative to pair researchers with criminal justice organizations and create new evidence about what works. As part of this initiative, J-PAL North America will act as a “matchmaker” between qualified criminal justice researchers and governments, nonprofits, and foundations that want to put the effectiveness of their promising criminal justice programs to the test. 

Read our Q&A with Vincent Quan, co-executive director of J-PAL North America, on how applying the JPAL model to the criminal justice space can build the evidence base on which interventions work > 

Criminal Justice

• In an op-ed for the Alburquerque Journal, former State Treasurer James Lewis discusses how reforms to the city’s police department, including investment in solving crimes and more robust oversight processes, are beginning to reduce crime and rebuild community trust.   
   
• A group of ten former jail and corrections officers in Kentucky have written a letter to the Louisville Courier-Journal making the case that the recently passed “Safer Kentucky Act” will worsen conditions in the state’s already over-crowded and understaffed prisons and jails and do little improve public safety.  

• The U.S. Education Department needs to implement the Financial Value Transparency framework in a timely manner, says a letter submitted by The Institute for Higher Education Policy, along with AV and 14 other partner organizations. 
   
• A new issue brief by The Foundation for Research on Equal Opportunity, an AV grantee, outlines how the Secretary of Education can use quality assurance authority to hold colleges accountable for student outcomes.  
   
• Nearly half of all online graduate programs fail to boost student earnings, according to a new report by Third Way.  

• The 550-mile SunZia power line, is one of America’s most important clean energy projects. It almost didn’t happen, reports Heatmap News. 

• The Wall Street Journal covers new research from Zarek Brot-Goldberg, Zack Cooper, Stuart V. Craig, Lev R. Klarnet, Ithai Lurie, and Corbin Miller finds that after local hospitals raise prices, companies lay off workers. 
   
• Inflation rebates, established as part of the Inflation Reduction Act, mean some Medicare enrollees will pay less for 64 drugs available through Medicare Part B because drugmakers raised prices faster than the rate of inflation according to an announcement from the Dept. of Health and Human Services and the Centers for Medicare & Medicaid Services. 

• The Supreme Court ruled 7-2 in favor of the government in Moore v. United States. For more on what this means for tax policy, see Richard Rubin’s piece in The Wall Street Journal, Alan Cole’s write-up for the Tax Foundation or our AV statement here. 
   
• The Committee for a Responsible Federal Budget breaks down the ways Presidents Biden and Trump each contributed to the national debt during their term. 
   
• Bernie Becker writes in Politico’s Weekly Tax about the IRS’ announcement that the agency will maintain its moratorium on processing new Employee Retention Credit claims, highlighting that the majority of claims in the backlog show significant markers of fraud. Read AV Vice President of Public Finance Andrew Moylan’s full statement on this new analysis here. 
   
• Matt Darling and Milan Signh released a report for the Niskanen Center outlining ways that improvements in artificial intelligence increase the risk of unemployment insurance fraud.