Thousands of auto buyers may have improperly claimed more than $70 million in tax credits for purchases of new plug-in electric vehicles using ineligible cars and trucks, a U.S. Treasury Department watchdog said Thursday.
The questionable claims were found in 16,510 individual tax returns during a five-year period through the 2018 processing year, according to an audit by the Treasury Inspector General for Tax Administration. That compares with more than $1.4 billion paid in credits to almost 240,000 taxpayers over the same period that were reviewed as part of the audit.
Details about how taxpayers improperly claimed the credits were mostly redacted, though the audit found that the Internal Revenue Service lacks an effective process to prevent improper claims under the program, which awards as much as $7,500 for electric-car buyers.
“Although the IRS has taken steps to address some of TIGTA’s previous recommendations to improve the identification and prevention of erroneous credit claims, many of the deficiencies previously identified still exist,” according to the audit.
The Treasury watchdog made four recommendations to the IRS, which agreed with the findings. The IRS plans to start a program to recover erroneous credits, among other steps, according to a summary of the audit.