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TIGTA — Billions of Dollars in Potentially Erroneous Education Credits Continue to Be Claimed for Ineligible Students and Institutions

May 5, 2015 Comments off

Billions of Dollars in Potentially Erroneous Education Credits Continue to Be Claimed for Ineligible Students and Institutions
Source: Treasury Inspector General for Tax Administration

An estimated 3.6 million taxpayers received more than $5.6 billion in potentially erroneous education credits on their 2012 tax returns, according to a report released today by the Treasury Inspector General for Tax Administration (TIGTA).

The Taxpayer Relief Act of 1997 created two permanent education tax credits, the Hope Credit and Lifetime Learning Credit. The American Recovery and Reinvestment Act of 2009 temporarily replaced the Hope Credit with a refundable tax credit known as the American Opportunity Tax Credit (AOTC). The AOTC was initially set to expire at the end of Calendar Year 2010 but has since been extended through Calendar Year 2017. These credits help taxpayers offset the costs of higher education.

Prior TIGTA audits have reported that taxpayers have claimed billions of dollars of erroneous education credits. TIGTA has made a number of recommendations to the IRS to help reduce the number of erroneous claims. This audit was initiated to assess the IRS’s efforts to improve the detection and prevention of questionable education credit claims.

“The IRS still does not have effective processes to identify erroneous claims for education credits,” said J. Russell George, Treasury Inspector General for Tax Administration. “Although the IRS has taken steps to address some of our recommendations, many of the deficiencies TIGTA previously identified still exist. As a result, taxpayers continue to receive billions of dollars in potentially erroneous education credits.”

IRS — Victims of Identity Theft Continue To Experience Delays And Errors In Receiving Refunds

April 10, 2015 Comments off

Victims of Identity Theft Continue To Experience Delays And Errors In Receiving Refunds
Source: Treasury Inspector General for Tax Administration

Victims of identity theft continue to experience delays and errors in receiving refunds, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

This audit follows up on a 2013 TIGTA report which concluded that the Internal Revenue Service (IRS) was not providing quality customer service to identity theft victims. The objective was to determine whether the IRS is improving its assistance to victims of identity theft.

On average, the IRS took 278 days to resolve the tax accounts of identity theft victims due a refund, according to TIGTA’s review of a statistically valid sample of 100 identity theft tax accounts resolved in the Accounts Management function in Fiscal Year (FY) 2013. That is an improvement over the average 312 days it took the IRS to resolve tax accounts of identity theft victims due a refund in FY 2012.

IRS Releases FY 2014 Data Book

March 26, 2015 Comments off

IRS Releases FY 2014 Data Book
Source: Internal Revenue Service

The Internal Revenue Service today released the 2014 IRS Data Book, a snapshot of agency activities for the fiscal year.

The report describes activities conducted by the IRS from Oct. 1, 2013, to Sept. 30, 2014, and includes information about returns filed, taxes collected, enforcement, taxpayer assistance, and the IRS budget and workforce among others. The 2014 Data Book contains charts that show trends, such as the decline in the number of audits and the decline in telephone and in-person tax assistance and increases in the use of online resources and volunteer tax assistance.

During fiscal year 2014, the IRS collected almost $3.1 trillion in federal revenue and processed almost 240 million returns. About 65 percent of all returns were filed electronically. Of the 147 million individual income tax returns filed, 84 percent were e-filed. Over 116 million individual income tax return filers received a tax refund, which totaled over $330 billion. The IRS examined less than 1 percent of all tax returns filed. About 3 percent of all individual tax returns examined resulted in additional refunds.

The IRS provided taxpayer assistance through 437 million visits to IRS.gov and assisted over 69 million taxpayers through its toll-free telephone helpline or at walk-in sites.

IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a 2011 Federal Income Tax Return

March 20, 2015 Comments off

IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a 2011 Federal Income Tax Return
Source: Internal Revenue Service

Federal income tax refunds totaling $1 billion may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2011, the Internal Revenue Service announced today. To collect the money, these taxpayers must file a 2011 tax return with the IRS no later than Wednesday, April 15, 2015.

“Time is running out for people who didn’t file a 2011 federal income tax return to claim their refund,” said IRS Commissioner John Koskinen. “People could be missing out on a substantial refund, especially students or part-time workers. Some people may not have filed because they didn’t make much money, but they may still be entitled to a refund.”

The IRS estimates half of the potential refunds for 2011 are more than $698.

Are the Federal Reserve’s Stress Test Results Predictable?

March 13, 2015 Comments off

Are the Federal Reserve’s Stress Test Results Predictable? (PDF)
Source: U.S. Department of the Treasury, Office of Financial Research

Regulatory stress tests have become a key tool for setting bank capital levels. Publicly disclosed results for four rounds of stress tests suggest that as the stress testing process has evolved, its outcomes have become more predictable and therefore arguably less informative. In particular, projected stress losses in the 2013 and 2014 stress tests are nearly perfectly correlated for bank holding companies that participated in both rounds. We also compare projected losses across different scenarios used in the 2014 stress test and find surprisingly high correlations for outcomes grouped by bank or by loan category, which suggests an opportunity to get more information out of the stress tests through greater diversity in the scenarios used. We discuss potential implications of these patterns for the further development and application of stress testing.

TIGTA Testimony: “Tax Schemes and Scams During the 2015 Filing Season” (Senate Finance Committee)

March 12, 2015 Comments off

Testimony: “Tax Schemes and Scams During the 2015 Filing Season” (PDF)
Source: Treasury Inspector General for Tax Administration (before the U.S. Senate Finance Committee)

Tax scams are nothing new. For at least the last decade, the IRS has provided the public with information about what it sees as the “Dirty Dozen” tax scams on its website. These scams range from offshore tax avoidance to fake charities and inflated refund claims. Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter. However, many of these scams peak during the filing season as people prepare their returns or utilize the services of paid preparers.

The 2015 filing season has unfortunately brought more of the same. However, there are two tax scams in particular that are among the most pernicious and dangerous. They have proven to be surprisingly effective and fast ways to steal taxpayers’ money, and in this fast-paced electronic environment, the money can be gone before the victims ever realize they have been scammed.

The phone impersonation scam has proven to be so large that it is one of my agency’s top priorities, and it has also landed at the top of the IRS’s “Dirty Dozen” tax scams this year.

The lottery winnings scam we are seeing this filing season is a continuation of an older scam. It starts with an e-mail or telephone call stating that you have won the lottery and in order to collect the winnings, you need to send money to prepay the tax to the IRS.

Systemic Importance Indicators for 33 U.S. Bank Holding Companies: An Overview of Recent Data

March 4, 2015 Comments off

Systemic Importance Indicators for 33 U.S. Bank Holding Companies: An Overview of Recent Data (PDF)
Source: Office of Financial Research, U.S. Department of the Treasury

This brief analyzes new data about the nation’s most systemically important bank holding companies — financial institutions whose failure could pose the greatest threat to the international financial system.

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