IRS Pays Out $3.2 Billion By Mistake
And That Number Is Expected To Climb
By Dell Hill
Internal Revenue Service - better known as “The Tax Man” - is not an
agency of federal government that’s affected by political ideology. It
has a job to do, as dictated by tax code legislation and it really
doesn’t matter if a Democrat or Republican is in the White House or
which party controls the House and Senate. So this report from Accounting Today should inspire indignation from both sides of the political aisle.
Internal Revenue Service may have paid $3.2 billion in erroneous
American Opportunity Tax Credits during the first five months of 2010 to
2.1 million taxpayers, according to a new government report.
by the Treasury Inspector General for Tax Administration, found that
1.7 million taxpayers erroneously received an estimated $2.6 billion in
education credits even though the IRS had no supporting documentation
that they had attended an accredited institution of higher learning.
the IRS initially did not agree with the amount of erroneous claims
identified by TIGTA, it subsequently informed TIGTA that it has found a
high percentage of the claims with no supporting documentation to indeed
management noted that they expect the percentage of erroneous tax
credits to further grow and have increased the number of tax returns
they plan to review with this condition in fiscal year 2012.
estimated 52 percent of the returns with potentially erroneous
education credits were prepared by paid tax preparers, who should have
been aware of the eligibility requirements, said the report.
problem stems from a refundable tax credit known as the American
Opportunity Tax Credit, which was created under the American Recovery
and Reinvestment Act of 2009 as a way to help taxpayers offset the cost
of higher education. The credit has been extended to both 2011 and 2012
Ways and Means Oversight Subcommittee Chairman Charles Boustany, R-La.,
said Thursday he was dismayed and concerned by the lack of progress by
the IRS to prevent the erroneous payments of education tax credits.
“The IRS is failing to protect taxpayer dollars and must take stronger
steps to ensure education credits should go to those who deserve them,”
he said in a statement. “In this case, taxpayers potentially lost $3.2
billion dollars. Enough is enough. It's time for the IRS to start
taking proactive measures to stop erroneous payments on the front end.”
also found that 370,924 taxpayers received an estimated $550 million in
education credits for which they were not eligible because they did not
attend college for the required amount of time or were post-graduate
addition, 84,754 students who did not have a valid Social Security
Number were claimed by taxpayers who received $103 million in education
credits. Each of these students had an Individual Taxpayer
Identification Number, however.
report also found that 63,713 taxpayers erroneously received an
estimated $88.4 million in education credits for students claimed as
dependents or spouses on another taxpayer’s tax return, and 250
prisoners erroneously received $255,879 in education credits.”
Read the entire Accounting Today report by clicking right here.
Error after error after error. And it’s expected that many more such errors will be uncovered over time.
of time; isn’t it about time that something really serious is done
about the tax code structure in this country? We’re obviously losing
many billions to tax loopholes and errors such as those reported today.
I know we have a lot on our plate, but this is one area that needs to
be addressed very, very soon.