APRIL 18, 2011
Weeks after a government audit revealed that the Internal Revenue Service doled out $33 million in fraudulent electric-car tax credits, a separate probe says the agency paid out over half a billion dollars to “homebuyers” who didn’t qualify.It’s simply the latest of many blunders for the perpetually troubled government agency that’s awarded prison inmates tens of millions of dollars in bogus tax refunds in the past decade. Last year alone, more than a quarter of a million prisoners filed tax returns with the IRS and nearly 50,000 claimed more than $130 million in refunds without bothering to report wage information, according to the Treasury Inspector General.Last month the Treasury IG, the IRS’s watchdog, found that the Obama Administration’s aggressive push to reward consumers who buy costly “advanced-technology” vehicles resulted in rampant corruption because claims were automatically granted without scrutiny. In many cases the lucrative tax credit—worth up to $7,500—was awarded to gas-guzzling sports utility vehicles and even a bicycle. Some people got multiple tax cuts for the same vehicle and dozens of prisoners received nearly $50,000 in alternative vehicle credits even though they were behind bars.This month’s audit du jour says the IRS has dished out more than $513 million in credits to unscrupulous filers who claimed first-time homebuyer exemptions of up to $8,000 as part of Obama’s disastrous stimulus plan. A chunk of the money—about $326 million—went to nearly 50,000 people who already owned a home, the Treasury IG found. Nearly $8 million in credits went to more than 1,000 prison inmates and about $98 million to 13,400 taxpayers who never even bought homes.Even some IRS employees who didn’t qualify for the first-time homebuyer refund received it. In its report, the Treasury IG makes a rather simple suggestion that’s perhaps too common sense for the IRS; require taxpayers to provide documentation to support eligibility for all refundable tax credits. Here’s another good recommendation from the agency’s watchdog; that the IRS deny refundable credits when supporting documentation is not provided.
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