The IRS doled out more than $5 billion in potentially bogus college aid payments under an Obama stimulus tax credit in 2012, according to a new report Tuesday from the agency’s inspector general that said the administration still doesn’t have a good handle on how to root out erroneous claims.
More than 3.8 million students received more than $5.6 billion in questionable tax credits, the audit found — more than half of those never filed their tuition statement, while others were paid tax credits even though the schools they attended weren’t acceptable institutions.
Still other students claimed the credit for more than four years.
“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, who said he’s repeatedly warned the IRS about the problem but “many of the deficiencies TIGTA previously identified still exist.”
Many of the problems, however, lie with Congress, which needs to grant the IRS new powers to check students’ claims against other government databases, Mr. George said.
The tax break at issue is known as the American Opportunity Tax Credit, which was a creation of President Obama’s 2009 stimulus. It was slated to expire in 2010, but Mr. Obama and Congress have extended it through 2017.
The credits are designed to offset the costs of college.
IRS officials said part of the blame for the potential fraud lies with schools and the school year itself, saying that information on students’ attendance comes too late for the agency to be able to check it against returns.
Read more: washingtontimes.com