The Treasury Inspector General for Tax Administration (TIGTA) reported last week that in 2011, the IRS paid out $3.6 billion in fraudulent refunds on tax returns filed by identity thieves. Even that amount was an improvement over the previous year when the total fraud was $5.2 billion. However, on Tuesday, TIGTA released a new report that found that though the IRS is making some progress against fraud, it is not using all available tools to prevent erroneous refunds and improper tax credits.
In 2007, the Small Business and Work Opportunity Tax Act amended the IRS code to increase the agency's ability to penalize taxpayers who claim excessive tax credits or refunds. A recent audit, however, found that the IRS has not properly implemented the law, and is following up in only a fraction of the cases where action may be warranted [emphasis added]:
TIGTA found that the IRS incorrectly interpreted the erroneous refund penalty law, which significantly limited the types of erroneous tax refund or credit claims to which the penalty would apply. The IRS assessed only 84 erroneous refund penalties totaling $1.9 million between May 2007 and May 2012...
[I]n the year after the IRS revised its interpretation of the law (June 3, 2012, through May 25, 2013), there were 709,123 individual tax credits disallowed by Campus Operations for which the IRS could have potentially assessed erroneous refund penalties totaling more than $1.5 billion.
The inspector general found no legitimate reason for the IRS's neglect of the law:
“I am troubled that even though the IRS has revised its interpretation of this law, it has still failed to establish processes to assess penalties on the majority of disallowed tax credit claims,” said J. Russell George, Treasury Inspector General for Tax Administration. “Taxpayers who seek refunds or credit claims that have no reasonable basis in law must be penalized, for they create unnecessary burden on both the IRS and the American people by straining resources and impeding tax administration.”
In response to the findings, IRS management "raised concerns about the costs and benefits of establishing processes and procedures... to assess erroneous refund penalties," but did not support these concerns with documentation or analysis.
As the October 1 implementation of parts of Obamacare nears, House Republicans continue to pass legislation aimed at highlighting the health care law's flaws and weaknesses. On Thursday, the House passed a bill to reform an Obamacare verification process that would better stop fraudulent claims to health insurance subsidies. Politico reports:
The state of Alabama received bonus payments from Medicaid for 2009 and 2010 that were a stunning 13 times higher than the state was eligible for. So says the inspector general (IG) for Health and Human Services in a report released on Wednesday.
The U.S. Department of Agriculture (USDA) released a report on Thursday regarding illegal trafficking in the Supplemental Nutrition Assistance Program (SNAP), more commonly known as food stamps. The report showed that the rate of trafficking rose from 1 percent of total benefits in the last study period of 2006-2008 to 1.3 percent in the current study period of 2009-2011, an increase of 30 percent. The report noted the trafficking rate remains well below a rate of almost 4 percent that existed for much of the 1990s. The rate plunged to 1 percent by the 2002-2005 study period and remained there until the current report:
Despite an admission by the Department of Transportation (DOT) that the Federal-aid Highway Programs under the American Recovery and Reinvestment Act (ARRA) are "susceptible to significant improper payments," the DOT Inspector General (IG) has terminated an audit initiated in April "due to other higher priority work demands."
Congressional hearings over the last two weeks have been filled with stories of misconduct due to incompetence and inexperience among certain IRS employees. Both Republicans and Democrats have leveled the accusations, and Internal Revenue officials testifying before Congress have admitted as much. At the same time, all parties have stressed that the vast majority of IRS employees are hard working, competent, and honest civil servants.
Here's a photo of an election judge checking in voters in Barack Obama's Chicago ward--wearing an Obama baseball cap:
"This photo, taken by a voter this morning at the Ward 4, Precinct 37 polling place (1212 South Plymouth Court, Chicago), shows an election judge checking in voters while wearing an Obama hat," a source writes. "Chicago's 4th ward is home to President Barack Obama."
Urban Outfitters, a retail store that appeals to a young (teens and 20s) demographic, is encouraging voters to "Vote Early, Vote Often." A reader, Allyson Rowen Taylor, sends along this picture from the storefront of the Urban Outfitters at the corner of Laurel Canyon and Ventura Blvd. in Studio City, California:
The Florida chapter of the AFL-CIO appears to be encouraging folks to break the law. In a message on the homepage of their website, the union writes, "There is a mantra that we --at the Florida AFL-CIO-- like to live by, 'Vote Early, Vote Often'."