Tax credits for alternative-fuel vehicles went to prisoners, IRS employees

Introduction

The IRS allowed $33 million in erroneous tax credits for alternative-fuel motor vehicles last year. A review by the Treasury inspector general found that over a six-month period in 2010, the IRS repeatedly missed erroneous tax credits for the vehicles, some of which were even claimed by IRS employees and prisoners.

A provision in the stimulus law gave tax credits to individuals who purchased plug-in electric and alternative-fuel motor vehicles. The inspector general identified 12,920 individuals who wrongly claimed over $33 million in vehicle credits. Of those incorrect claims, almost 2,000 people also reduced the amount of their minimum tax due by an additional $5.3 million.

The review found instances where tax-filers claimed the same vehicle for multiple credits or an excessive number of vehicles for personal use. It also found improper claims for the vehicle credits made by prisoners and IRS employees. The information on IRS employees is being investigated further.

“IRS is unable to track and account for plug-in electric and alternative vehicle credits claimed by individuals on paper-filed tax returns,” the report said. Paper-filed tax returns did not have any process to screen information on electric vehicle credits, though the IRS did screen credits for tax returns filed electronically.

FAST FACT: The inspector general found that 29 prisoners received $49,926 in vehicle tax credits despite being incarcerated all of 2009.

Following are other new watchdog reports released by the Government Accountability Office (GAO), various federal Offices of Inspector General (OIG), and other government entities.

NATIONAL SECURITY

• A review of U.S.-Chinese policy issues cites China’s frustrations with U.S. arms sale to Taiwan, Obama’s meeting with the Dalai Lama, and U.S. military exercises with South Korea as potential areas of conflict between the two nations. The list of grievances from the United States includes China’s currency policy, its reluctance to condemn North Korea’s provocations, and ongoing suppression of political dissent. (Congressional Research Service)

MISC.

• The Department of Defense and Department of Veterans Affairs are slowly putting health records in electronic form, but keep running into IT barriers. Neither department has defined specific plans, goals, or timeframes to addressing problems in the record systems. (GAO)
• The child support enforcement program collected $26 billion in child support for 17 million children in 2009, but as a result of the recession, it was the first year that child support collections declined. Child support payment declined by 1.8 percent nationwide. (GAO)