Wednesday, May 6, 2015
The Treasury Inspector General for Tax Administration yesterday released Billions of Dollars in Potentially Erroneous Education Credits Continue to Be Claimed for Ineligible Students and Institutions (2015-40-027):
The IRS still does not have effective processes to identify erroneous claims for education credits. 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. Based on our analysis of education credits claimed and received on Tax Year 2012 tax returns, TIGTA estimates that more than 3.6 million taxpayers (claiming more than 3.8 million students) received more than $5.6 billion in potentially erroneous education credits ($2.5 billion in refundable credits and $3.1 billion in nonrefundable credits). Specifically, TIGTA estimates:
- More than 2 million taxpayers received more than $3.2 billion in education credits for students with no Form 1098-T, Tuition Statement.
- More than 1.6 million taxpayers received approximately $2.5 billion in education credits for students attending ineligible institutions.
- 419,827 taxpayers received more than $650 million for students who were used to claim the AOTC for more than four tax years.
427,345 taxpayers received approximately $662 million in AOTCs for students who attended school less than half-time.
Further analysis of the more than 3.6 million taxpayers TIGTA identified as claiming education credits for ineligible students or ineligible institutions showed that 765,943 (21 percent) claimed both a student for which the IRS has no Form 1098-T and listed an ineligible institution on their Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits).