IRS faulted for weak enforcement on energy tax credit

The Internal Revenue Service continues to have trouble weeding out fraudulent use of tax credits designed to encourage homeowners to purchase modern energy-saving doors and windows, according to a report released Wednesday by the Treasury Inspector General for Tax Administration.

Reviews of a sampling of 2009 tax returns claiming the residential energy credits found some 30 percent were from individuals who do not own a home. TIGTA auditors uncovered 262 prisoners who claimed the credit as well as 100 individuals under age 18 (26 of whom were only 14 and one of whom was 3). They identified 171 individuals whose claims exceeded the maximum allowable amount of $1,500.

The issue is politically sensitive because the tax credits were expanded under the Recovery Act, which requires "a high level of scrutiny, and taxpayer dollars spent on economic recovery must be subject to unprecedented levels of transparency and accountability," said the report, dated April 19. More than 6.8 million individuals claimed more than $5.8 billion in residential energy credits in 2009.

"I am troubled by the IRS' continued failure to develop appropriate verification methods for distributing Recovery Act funds," said J. Russell George, the Treasury Inspector General for Tax Administration.

Homeowners who install energy-efficient products are not required to provide third-party documentation of their purchase, but the IRS does have data available on taxpayers' ages and on whether they are incarcerated.

In response to a draft of the report, IRS agreed for the most part to implement TIGTA's recommendations to revise the form used to file for the credit to demand more verifiable detail on eligibility, examine the returns of 362 individuals who may be incarcerated or too young to own a home, and revise processes to identify and review returns from such individuals.

"This report is about the need to modernize IRS systems, and it's not about energy investments, which help to reduce wasted energy," said Philip Henderson, senior financial policy specialist at the Natural Resources Defense Council. "If the IRS can't even determine that a prisoner is not a homeowner, they will have problems enforcing every area of the Tax Code."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

    Download
  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

    Download
  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

    Download
  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

    Download
  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security

    Download

When you download a report, your information may be shared with the underwriters of that document.