IRS doled out $620 million to ineligible filers

Agency paid home-buyer tax credit to taxpayers as young as 4

How could this be, you ask?

The IRS does not make people claiming the homebuyer tax credit prove they bought a house

Are we just pretending to have a government now?

One comment

  1. I think that’s a bit harsh. Firstly, that $620 million represents just 0.07% of the total funds disbursed under the program.

    Second, the IRS doesn’t make a taxpayer “prove” anything except how much money was withheld. That’s why you have to attach to your tax return your Forms W-2 and any other forms that report income tax withheld. Everything else is on a “voluntary compliance” basis, although some amounts are reported to IRS by 3rd parties. Still, you don’t have to prove medical expenses, mileage driven for business, charitable contributions, business use of your home, partnership income, etc…. unless you get audited, of course.

    Sure, the IRS could have eliminated some of these fraudulent claims by designing a matching program to ensure that anyone who deducted mortgage interest expense in recent years got extra scrutiny. But as a programmer, you have some idea what would be involved in that. They’re still (after several years of work) trying to perfect a matching program to ensure everyone reports their K-1 income!

    I wonder how that $620 million compares with taxes reduced by people fudging their business miles? In the scheme of the estimated $300+ billion dollar “tax gap” (what get paid compared to what should have been paid), this is a drop in the bucket.

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