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ERIC Number: ED544782
Record Type: Non-Journal
Publication Date: 2011-Sep-16
Pages: 49
Abstractor: ERIC
Reference Count: N/A
Recovery Act: Billions of Dollars in Education Credits Appear to Be Erroneous. Treasury Inspector General for Tax Administration. Reference Number: 2011-41-083
US Department of the Treasury
Education credits are available to help offset the costs of higher education for taxpayers, their spouses, and dependents who qualify as eligible students. The American Recovery and Reinvestment Act of 2009 (Recovery Act) amended the Hope Scholarship Tax Credit (Hope Credit) to provide for a refundable tax credit known as the American Opportunity Tax Credit (AOTC). The AOTC allows taxpayers to receive a credit for higher education expenses up to $4,000 for Tax Years (TY) 2009 and 2010. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 further extended the AOTC to apply to TYs 2011 and 2012. This report presents the results of the Treasury Inspector General for Tax Administration's (TIGTA) review to assess the effectiveness of Internal Revenue Service (IRS) processes to identify erroneous AOTC claims from January 1 through May 28, 2010. This review is included in the Fiscal Year 2011 Annual Audit Plan and addresses the major management challenge of Erroneous and Improper Credits and Payments. Results reveal that the IRS does not have effective processes to identify taxpayers who claim erroneous education credits. These ineffective processes have resulted in losses of revenue. Eleven recommendations are presented along with management's responses. Among TIGTA's recommendations are the revision of the current tax form to claim education credits, coordination with the Department of Education to assess using its data files in tax return processing, revision of compliance programs to identify taxpayers who erroneously claim the credit, and coordination with the Department of the Treasury to determine whether legislation is needed to clarify whether or not the credit may be claimed for students without a valid Social Security Number. Appended are: (1) Detailed Objective, Scope, and Methodology; (2) Major Contributors to This Report; (3) Report Distribution List; (4) Outcome Measures; (5) Tax Year 2010 Education Credits (American Opportunity and Lifetime Learning Credits) (Form 8863); and (6) Management's Response to the Draft Report.
US Deparment of the Treasury. 1500 Pennsylvania Avenue NW, Washington, DC 20220. Tel: 202-622-2000; Fax: 202-622-6415; Web site:
Publication Type: Reports - Evaluative; Information Analyses
Education Level: Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Department of the Treasury
Identifiers - Laws, Policies, & Programs: American Recovery and Reinvestment Act 2009