IRS Out of Control with your Tax Dollars – Issued Billions in Erroneous Education Tax Credits
May 6, 2015 Article #296 Author: Peter S. Muffoletto, C.P.A.
The Internal Revenue Service has issued billions of dollars annually in erroneous education tax credits in each of several years under review by the Treasury Inspector General for Tax Administration (TGITA).
The TGITA found that an estimated 3.6 million taxpayers received in excess of $5.6 billion in erroneous claimed education credits on their tax returns.
Numerous TIGTA audits detected that taxpayers claim billions of dollars of erroneous education credits which were unwarranted yet the IRS has put little effort into filtering or stopping illegitimate claims paying them in the billions of dollars annually.
The TGITA has made numerous recommendations over a period of several years to assist the IRS to help reduce the number of erroneous claims, but the IRS seems unable to stop the problem.
According to the TGITA Inspector General "The IRS still does not have effective processes to identify erroneous claims for education credits”. The report goes onto state that “many of the deficiencies TIGTA previously identified still exist.
In addition to the $5.6 billion more than 1.6 million taxpayers received approximately $2.5 billion in education credits for students attending ineligible institutions.
The report also found that 419,827 taxpayers received more than $650 million for students who were used to claim the AOTC for more than four tax years. TIGTA also discovered that 427,345 taxpayers received approximately $662 million in AOTCs for students who attended school less than half-time.
Further analysis of the more than 3.6 million taxpayers TIGTA identified as claiming education credits were for ineligible students or ineligible institutions showed that 765,943 (or 21 percent) claimed both a student for which the IRS has no Form 1098-T and listed an ineligible institution on their Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits).
The IRS claims that “Due to limited audit resources and the need to allocate those resources in a manner that ensures balanced support for all provisions of the Tax Code, our process for selecting returns for review is designed to choose those with the highest potential for error and considers the potential net tax effect that could result from a review”. The IRS official went on to state that “For the limited number of returns that can be reviewed, we strive to ensure those with the most significant impact are selected”.
The statements made by this individual is government blather for
“I don’t know what I am doing, so we do something else!”
If the IRS wasn’t shoveling money out the door in the various social welfare programs it administers, and did their job correctly they wouldn’t need to audit those who are complying with the law.
While the above is not considered to be criminal actions, the reason that there is such an exponential rise in fraudulent tax filing is that the criminals have discovered that the IRS has become government giveaway program with little risk of getting caught!
Possibly our government employees who are all so busy in their own minds might figure
out one day they are busy not getting the job done while
the rest of us pay for all of their mismanagement !
Our emphasis at Muffoletto & Company is to provide you the proper guidance and understanding of the system so that you avoid taxes to the extent that the law allows.
Should you have questions relating to these matters, tax, financial, and accounting issues, give us a call at (818) 346-2160.