The Department of Government Efficiency (DOGE) team has reportedly expressed interest in utilizing data from the Internal Revenue Service (IRS) to detect potential fraud in the Supplemental Nutrition Assistance Program (SNAP), previously known as food stamps. However, due to disclosure restrictions and structural differences between how the IRS and SNAP function, this approach may face significant limitations. Insights from the Urban Institute’s previous analysis on tax administration suggest that even if IRS data were accessible, it may not be as useful in verifying SNAP eligibility due to discrepancies in how the two systems operate. Here’s a breakdown of why using IRS data to investigate SNAP fraud is more complicated than it seems.
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Mismatch in Income Reporting and Timing
One of the primary hurdles in using IRS data for SNAP fraud detection lies in the timing mismatch between tax reporting and SNAP eligibility verification. SNAP benefits are based on monthly family income, which the program already verifies through an electronic system called The Work Number. This tool is updated regularly with payroll data from millions of employment records, allowing SNAP to assess a family’s income with high accuracy.
On the other hand, tax data is typically reported on an annual basis, with families filing their returns once per year. Since SNAP benefits are based on monthly income, and families generally recertify every six to twelve months, the timing of these two systems rarely aligns. Income fluctuations, especially for low-income, working-age adults, can be significant, with around 40% of such individuals experiencing at least a 25% variation in their income within a six-month period. Since the average SNAP benefit duration is about eight months in non-pandemic years, tax data might not capture the dynamic changes in a household’s monthly income, which could lead to an inaccurate assessment of eligibility.
Asset Information Gaps Between SNAP and IRS
Another limitation in using IRS data for SNAP fraud investigations is the lack of comprehensive asset information in tax records. While SNAP considers both income and assets when determining eligibility, tax data only provides insight into income derived from some assets, excluding non-income-earning ones. For example, SNAP can assess the value of vehicles owned by a family, but IRS data does not capture this kind of asset. This gap makes it difficult for tax data alone to accurately reflect a household’s full financial situation, leading to potential discrepancies in eligibility verification.
“Units” Misalignment: Household vs. Tax Unit Differences
A further challenge in matching IRS data with SNAP eligibility stems from the differing definitions of “units” in each system. SNAP defines an “assistance unit” as individuals who reside together in the same household and purchase and prepare food together. This unit can change on a monthly basis due to family dynamics, such as new members moving in or out of the household.
In contrast, IRS “tax units” are determined by legal relationships and residency, which are reported annually. A key example of this misalignment occurs when a household undergoes significant life changes, such as marriages or divorces, which happen throughout the year. If tax data were used to verify SNAP eligibility, these life changes could lead to misinterpretations. For instance, a single parent receiving SNAP benefits might marry before the end of the year, and if the new spouse has substantial income, the family might no longer qualify for benefits. However, tax data might inaccurately suggest the household was always ineligible for SNAP benefits, even before the marriage.
Child Custody and Residency Issues Complicate Data Matching
The complexities of child custody arrangements also pose a significant obstacle for utilizing tax data in SNAP fraud investigations. In some cases, noncustodial parents may claim children on their tax returns. If tax data were used without considering custody arrangements, there is a risk of incorrectly attributing eligibility to the wrong parent. This could lead to an overestimation of benefits for the noncustodial parent while underestimating what the custodial parent should receive. Additionally, in households with multiple families or unmarried couples, tax data may not accurately reflect the full scope of the assistance unit, further complicating eligibility determination.
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The Role of State Control Over SNAP Data
One additional complication is that SNAP data is managed and controlled by individual states, not the federal government. In order to access this data, special agreements would need to be negotiated with each state, a process that has proven difficult in the past. Furthermore, states may lack the resources to implement these agreements effectively and in a timely manner, especially given recent budget constraints. These administrative challenges could hinder the feasibility of using IRS data to investigate potential fraud in SNAP.
Potential Solutions and Policy Changes
While integrating IRS data into SNAP eligibility verification is fraught with difficulties, there are potential solutions. For instance, policymakers could consider requiring monthly income reporting for tax purposes, aligning tax data with the regular verification periods used by SNAP. However, this would represent a significant shift in current IRS practices and would likely introduce new administrative challenges for both the IRS and taxpayers.
Another possibility would be to harmonize the eligibility definitions for “units” across income support programs, creating consistency between SNAP and tax data. However, this change would make SNAP less responsive to changes in a family’s economic situation, as eligibility periods would no longer align with the dynamic nature of income fluctuations.
Conclusion: IRS Data is Not a Silver Bullet for SNAP Fraud Detection
While IRS data certainly contains relevant information, its potential usefulness for detecting SNAP fraud is limited by the differences in how taxes and SNAP benefits are structured and administered. The timing, asset reporting, household composition, and state control over SNAP data all present significant barriers to using IRS data effectively for this purpose. If policymakers seek to integrate IRS data into the SNAP system, substantial changes to both tax reporting practices and SNAP eligibility definitions would be necessary. However, these changes would come with their own set of challenges, suggesting that IRS data alone is not the ultimate solution for verifying SNAP claims.