BILLIONS OF DOLLARS IN EDUCATION CREDITS APPEAR TO BE ERRONE

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Treasury Inspector General for Tax Administration Report Number: 2011-41-083 to the Internal Revenue Service Commissioner for the Wage and Investment Division.
From http://www.treasury.gov/tigta/auditrepo ... ights.html

WHAT TIGTA FOUND

As of May 28, 2010, TIGTA identified 2.1 million taxpayers receiving $3.2 billion in education credits that appear to be erroneous, and at least 1.1 million (52 percent) had tax returns prepared by a paid tax return preparer. Specifically:

· 1.7 million taxpayers received $2.6 billion in education credits that appear to be erroneous based on IRS records.

· 370,924 individuals were claimed as students but were not eligible for education credits because they did not attend the required amount of time and/or were postgraduate students. This resulted in an estimated $550 million in erroneous education credits.

· 63,713 taxpayers erroneously received $88.4 million in education credits for students claimed as a dependent or spouse on another taxpayer’s tax return.

· 250 prisoners erroneously received $255,879 in education credits.

In addition, TIGTA identified that a valid Social Security Number is required for Federal student aid but not for education credits. Our review identified 84,754 students who did not have a valid Social Security Number but were claimed by taxpayers who received $103 million in education credits.

Full report at http://www.treasury.gov/tigta/auditrepo ... 1083fr.pdf

[The Observer]

I'm shocked, I tell ya, shocked that a tax code provision that doesn't require independent verification means that we are going to discover erroneous returns.