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IRS: Stopped $590M in EITC Claims in 2013

John A. Koskinen, Internal Revenue ServiceA pilot program, designed to tax preparers who abused the Earned Income Tax Credit, kept $590 million from being improperly paid out in 2013, according to John A. Koskinen, commissioner of the Internal Revenue Service. Koskinen made the observation recently in written testimony before the Senate Finance Committee.

Koskinen said the pilot started in 2012 with the identification "of a group of tax return preparers with a history of submitting incorrect or potentially fraudulent tax returns falsely claiming the EITC." The testimony was submitted as part of the committee's discussion of tax preparer regulation.

The IRS designed a series of steps to stop claims using letters, calls and visits to selected preparers. In that first year, the IRS said it stopped an estimated $198 million in unwarranted refunds. The program was expanded last year to include a wider group of preparers and a broader set of interventions and continued the program in 2014.

Koskinen also noted that the proposed 2015 fiscal year budget proposes to increase the fees imposed on preparers for returns designed to fraudulently drive down the amount of tax owed. Currently, the fee is the greater of $1,000 or 50 percent of the income the preparer derived from preparation of a return that improperly lowers taxes owing to an to an unreasonable position taken on the return.

There is a separate penalty issue is from the preparer's willful or reckless conduct. Current, that is the greater of $5,000 or 50 percent of the preparation income and that would rise to $5,000 or 75 percent the income.

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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