More than $6 billion in child tax credits was paid by the IRS to people who were not eligible to receive them last year, a government watchdog revealed on Tuesday. The once-championed way by President Obama to help low-income working families seems to now be facing a sea of functionality problems.

Taxpayers who committed fraud and families that either claimed the wrong amount or mistakenly applied for tax credit received payments from the Internal Revenue Service in 2013, according to an audit by J. Russell George, the Treasury inspector general for tax administration.

The IRS "continues to aggressively explore new ways to detect and stop potentially fraudulent claims while maximizing the use of limited compliance resources," it said in a statement.

About $57 billion was paid in child tax credits to more than 36 million families in 2013, according to the nonpartisan Joint Committee on Taxation, the Associated Press reported. This year, taxpayers have improperly claimed between $5.9 billion and $7.1 billion in child tax credits, the inspector general's report estimated, also showing a distinction between fraud and credits that were claimed by mistake.

In 2009, Obama's economic stimulus package had temporarily granted the expansion of credit to additional families that were not able to make enough money to pay out their federal income tax. Accorded until 2017, these families receive the $1,000-per-child credit in the form of a tax refund, according to the report which highlights payments to these families.

Although the IRS has claimed for years that risk of improper payments related to the child tax credit is quite low, the new report deems that assessment to be incorrect. "It is imperative that the IRS take action to identify and address all of its programs that are at high risk for improper payments," George said in a statement.

However the tax agency placed part of the blame on budget cuts, claiming that it hurts compliance efforts, according to Fox News. Earlier this year, it stated that fewer agents had been auditing tax returns than at any time since at least the 1980s.

"IRS funding limitations severely hamper our efforts on these and other compliance areas," the agency statement said. "Since 2010, the IRS budget has been reduced by $850 million and we have 13,000 fewer employees."

Meanwhile, efforts to expand the tax credits without improving oversight were criticized by Sen. Orrin Hatch of Utah.

"Working families deserve responsible tax relief, not a broken system that wastes hard-earned dollars due to bureaucratic incompetence," said Hatch, the top Republican on the Senate Finance Committee.

Last month, the tax agency also confirmed that IRS employees would still be eligible to get bonuses next year despite owing taxes and making "unintentional mistakes."