THE SMIDGEN REPORT: IRS Issued $5.6 Billion In Bogus Education Tax CreditsPosted: May 5, 2015
WASHINGTON (AP) — The IRS issued $5.6 billion in potentially bogus education tax credits in a single year — more than a quarter of all education credits claimed by taxpayers, a government watchdog said Tuesday.
“The IRS still does not have effective processes to identify erroneous claims for education credits. As a result, taxpayers continue to receive billions of dollars in potentially erroneous education credits.”
— J. Russell George, Treasury inspector general for tax administration.
A new report by the agency’s inspector general says the credits were issued to more than 3.6 million taxpayers in 2012. Most of the credits went to students even though the IRS never received a tuition statement from the school.
Some students attended schools that weren’t eligible for federal funding while others didn’t take enough classes to qualify for the tax break.
“The IRS still does not have effective processes to identify erroneous claims for education credits,” said J. Russell George, Treasury inspector general for tax administration.
George said the IRS has taken some steps to better police the credits, but has not addressed all the deficiencies that George’s office identified in a 2011 report. In that report, the inspector general said the IRS issued $3.2 billion in potentially bogus education tax credits in 2010.
“As a result, taxpayers continue to receive billions of dollars in potentially erroneous education credits,” George said.
The IRS said stepped up enforcement was largely responsible for a steep drop in credits issued in 2012. The amount of education credits issued dropped from $23.6 billion in 2011 to $19.1 billion in 2012.
The IRS said Congress could help by simplifying the education tax credits and by giving the IRS more tools to validate student eligibility. Congress could also help by restoring budget cuts, the agency said….(read more)
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