Due to a lack of controls to prevent ineligible taxpayers from claiming the 8,000 first-time homebuyer tax credit, and credits for vehicles, the IRS paid out $111 million in erroneous refunds. The Treasury Inspector General for Tax Administration released these figures, among others, earlier today.
To put the errors in perspective, IRS processed more than $81 billion in claims for stimulus-related tax benefits in 2010, involving upwards of 90 million returns.
About 126,000 of those returns were flagged by TIGTA as including erroneous claims that weren’t caught by the IRS before they were processed. In some cases, the IRS put compliance controls in place during the tax-filing season to catch the errors.
The number of U.S. taxpayers filing returns electronically continued to increase, reaching 72% of all filers in 2010, the report said.
About 8 million people claimed more generous tax credits for college tuition in the stimulus law this year, for a total of $7.1 billion in benefits. Four million took advantage of a tax break for state sales and excise taxes on new-vehicle purchases, for an average tax deduction of $2,048.