IRS criticized for not scrutinizing auto buying deductions

IRS tax lawyers say a Treasury Inspector General for Tax Administration report is critical of the IRS’s handling of auto buying deductions. According to IRS attorneys, the report reveals the agency did not require proof from people claiming deductions for new vehicle purchases permitted under the 2009 Economic Stimulus Act.

These same IRS attorneys indicate the report also claims the IRS failed to identify and stop what could possibly be erroneous refunds for 4, 257 taxpayers who asserted $151.1 million dollars in deductions in excess of what the agency considers allowable. IRS tax attorneys privy to the report mention the Inspector General’s report also said, there 473 individuals who were erroneously given approximately $1 million dollars in deductions. Of the 473 identified, the report claims 439 were in prison, and 18 were underage, and 16 were deceased.

While the IRS predictably claims no amount of fraud is acceptable, it has attempted to mitigate the criticisms by reminding the public these incidents represent a very small percentage of the amount of information, deductions, credits, and refunds it oversees. IRS attorneys agree the agency is overwhelmed with out-dated technology and staffing issues which adversely impact its enforcement efforts.

While the IRS is still wading through the auto buying deductions, and seeking to address the items listed in the Inspector General’s report, IRS tax lawyers warn taxpayers should seize the opportunity and be proactive in correcting their reporting mistakes.

Taxpayers who erroneously sought auto buying deductions may be at risk for such claims and should to seek advice from a competent IRS attorney to get the answers needed to fix the problem before the agency catches the mistakes. Failure to do so may result in the IRS initiating collection activities to collect the back taxes owing through such means as wage garnishment, IRS levies and/or IRS liens.

Further, IRS attorneys advise that if a taxpayer does owe back taxes for an improperly asserted deduction, the sooner that back taxes may be paid, the sooner the taxpayer can reduce further penalties and interest.


Segal, Cohen & Landis
9100 Wilshire Blvd., Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

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