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IRS Stopping $1.6 Billion in Mistaken Homebuyer Tax Credits Doesn’t Impress Everyone

Posted on by Caleb Newquist

The Service gets an 'A' for effort but also 'D' for "do more with less."

The U.S. Internal Revenue Service rejected $1.6 billion in erroneous claims for the first-time homebuyer tax credit, according to a report by the Treasury Inspector General for Tax Administration. The refundable tax credit, worth as much as $8,000, was available to first-time homebuyers who made purchases in 2008, 2009 and 2010. As of July 30, 2011, the IRS processed 4.3 million claims for the credit totaling almost $30.4 billion, according to the inspector general’s report. The report was issued today as a follow-up to a 2009 audit by the inspector general that said the IRS didn’t do enough to prevent fraudulent claims for the credit. More than two years later, the IRS is still falling short, the report said. “Examination resources could have been used more effectively,” according to the report. The inspector general said the IRS didn’t implement filters to detect potential fraud related to the credit until after the agency had processed more than 1.1 million claims. Of those claims, the IRS went back and found that 250,159 were “questionable.” The watchdog said the IRS audited 69,953 of the claims — fewer than a third — because it decided it didn’t have the resources to review all of the questionable claims.

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After Coasting Through Tax Season, Some IRS Revenue Officers May Have to Start Doing Actual Work

While we’re typically not ones to speculate on the difficulty of any particular job (e.g. CEO of a Big 4 firm) the Treasury Inspector General for Tax Administration (“TIGTA”) probably has the easiest job on Earth.

As far as we can tell, the TIGTA is responsible for criticizing the IRS on, well, pretty much everything that the Service does wrong and then the IRS agrees that they suck and promises to do better.


And if you’re going by the TIGTA website we’re more or less correct:

“TIGTA promotes the economy, efficiency, and effectiveness in the administration of the internal revenue laws. It is also committed to the prevention and detection of fraud, waste, and abuse within the IRS and related entities.”

We’re assuming that Doug Shulman probably agree with our assessment but that guy doesn’t even like pizza, so who cares what he thinks?

Anyhoo, the latest Monday Morning QBing from the TIGTA is that some of the Service’s senior revenue officers are basically sitting around with nothing to do. Web CPA reports:

Senior revenue officers at the Internal Revenue Service who are supposed to handle more complicated tax cases oftentimes don’t receive any work assignments, according to a new government report…

The relative lack of work for the senior revenue officers to do occurred because there is no systemic means for IRS managers to identify the most complex cases, and the criteria for identifying complex cases are subjective and inconsistently interpreted.

So you’re a senior revenue officer with 5-6 years (?) on the job. You’ve got this gig pretty much figured out. Not only do you know the ropes, you make the fucking ropes. Your manager has suits from DC so far up their ass about collecting every dime available that they can’t see straight, so they just want you busy do anything.

You, being a reasonably lazy (and realistic) person, aren’t going to kill yourself. If you’ve got the choice of picking up a 1040 that’s hundreds of pages long versus a 1040EZ that has fewer pages that a Tony Alamo pamphlet, you’re going to pick up the 1040EZ.

Well now J. Russell George is slapping those managers around with a report deeming this unacceptable which may mean that your slacking days are over:

“I am troubled that IRS managers are not providing employees with work assignments that they are ready and able to do at a time when it is incumbent on the IRS to be as efficient and effective as possible,” said TIGTA Inspector General J. Russell George in a statement.

JRG is recommending that the IRS improve it’s methods of identifying more complex cases (that the IRS naturally agreed with). We think a tax return thickness analysis is a decent place to start.

IRS Revenue Officers Don’t Have Enough to Do [Web CPA]