Federal tax officials may have paid more than $168 million in improper fuel tax credits because the IRS failed to catch questionable claims on Form 1040 returns, according to a government watchdog.
The Treasury Inspector General for Tax Administration said its auditors reviewed a sample database consisting of more than 1.2 million tax returns for the three years ending in 2013.
“Approximately $168 million (24 percent) of the $694 million in fuel tax credit claims for the three years were questionable based on the fact that the individuals reported no farming or other business income to support their claims,” TIGTA said in a report made public Thursday.
The questionable claims weren’t caught in many cases, IRS officials told TIGTA’s auditors, because the federal tax agency’s computers weren’t properly programmed.
“IRS officials agreed that the programming criteria permitted some questionable claims to avoid the initial review, and they indicated that programming and processes have been changed to prevent similar exceptions during the 2015 filing season,” the TIGTA report said.
The auditors also said they found in the database sample that nearly 2,000 fuel tax credits were approved by the IRS for returns filed by individuals who were in prison for the entire year. Those credits were worth about $2 million.
The auditors also found fuel tax credits were approved by the IRS on tax returns for 135 people identified as deceased by the Social Security Administration.
The IRS processed more than 132 million tax returns through May 2014. The federal tax agency issued $275 billion in refunds, which averaged $2,689 each, according to IRS data.
Go here for the complete TIGTA report.
Mark Tapscott is executive editor of the Washington Examiner.
