By Mark Kleis
Thursday, Jun 9th, 2011 @ 4:47 am
 
While fraud is certainly nothing new when it comes to the Internal Revenue Service, a government-run watch group says the IRS failed to do enough to stop millions of dollars of fraudulent claims from being issued - all filed on behalf of, or by prisoners, the deceased and unqualified underage applicants.

The Treasury Inspector General for the Tax Administration, the watchdog group evaluating the IRS, issued its report after finding flaws in the IRS' system intended to catch fraudulent claims before sending taxpayer money to the criminals. A Reuters report explains that the qualified motor vehicle deduction (QMV) program, which was created by the Obama administration as part of the Stimulus Act, intended to offer consumers the ability to write taxes off associated with the purchase of new cars weighing less than 8,500 lbs and valued up to $49,500 (in addition to other qualifications).

Instead, the deduction was abused by thousands of individuals with a total cost to taxpayers of over $152 million, with over $1 million of those losses filed by prisoners, deceased an underage applicants. The lion's share was filed by 4,257 people which should have automatically been flagged for being "excessive," according to IRS safeguards, but instead were not detected.

To add to the frustration of the watchdog group, the IRS apparently required no independent proof that applicants purchased the new vehicles, or how much they paid in the taxes they wrote off as part of the program.

As a result, $151.1 million in erroneous refunds were issued to those individuals, with another 473 prisoners laying claim to $955,483 in fraudulent claims, $36,490 for deceased applicants and 18 who filed that were under the age of 15, worth $31,139.

The IRS responded to the findings, defending its handling of the situation, "While no amount of fraud is acceptable, more than 4.3 million taxpayers claimed more than $7.2 billion in qualified motor vehicle deductions and only a small percentage involved questionable claims."

The IRS says that it will be reviewing the claims found by the watchdog group and taking necessary action to recoup the taxpayer money from the fraudulent filers.


References
1.'Prisoners, dead people...' view