Skip to comments.IRS audited 69% of filers claiming child adoption tax credit
Posted on 05/23/2013 8:08:54 AM PDT by SeekAndFind
Mary Katharine linked this yesterday in her post on Rep. Stephen Lynch’s unmistakable anger over the corruption at the IRS, but it’s worth a long look on its own, too. National Review’s David French, an adoptive father himself (as am I), researched a few other IRS priorities over the past few years other than targeting conservatives for extra scrutiny and harassment. The agency took very clear aim at people claiming the adoption tax credit, auditing a jaw-dropping 69% of all such filers:
As we get word that the IRS has harassed a number of pro-life groups, including at least one alleged demand that a pro-life group not picket Planned Parenthood, check out this statistic: In 2012, the IRS requested additional information from 90 percent of returns claiming the adoption tax credit and went on to actually audit 69 percent. More details from the Taxpayer Advocate Service:
During the 2012 filing season, 90 percent of returns claiming the refundable adoption credit were subject to additional review to determine if an examination was necessary. The most common reasons were income and a lack of documentation.
■ Sixty-nine percent of all adoption credit claims during the 2012 filing season were selected for audit.
■ Of the completed adoption tax credit audits, over 55 percent ended with no change in the tax owed or refund due in fiscal year 2012. The median refund amount involved in these audits is over $15,000 and the median adjusted gross income (AGI) of the taxpayers involved is about 64,000. The average adoption credit correspondence audit currently takes 126 days, causing a lengthy delay for taxpayers waiting for refunds.
Did a special risk exist in the claiming of this tax credit? Are adoptive families that much more dishonest than the average filers, in the experience of the IRS? As it turns out …. no. Even with the massive amount of scrutiny applied to these filings — delaying final acceptance of the returns for more than four months, on average — only 1.5% of the claims were disallowed.
That allowed the IRS to drag back about $11 million in credits, out of $668.1 million claimed in the year, for a success rate of 1.5% after an audit rate of 69%. Bear in mind, please, that the federal government brought in $1.375 trillion in income-tax revenue in 2012, which means that the agency audited 69% of filers on credits amount to what turned out to be 0.0486% of total IRS revenue that year. I’m not even sure we can calculate what percentage of overall revenue was restored in this effort (~0.0008%). We can, however, calculate that it cost taxpayers over $2 million in interest when legitimate claims were finally paid after long delays. How much did all of the auditing activity cost the IRS? I’m sure the final figure is in the millions.
Now, what could possibly be the rationale for a 69% audit rate on credits amounting to 0.0486% of tax revenue? It’s not that adoptive families are predominately wealthy; TAS notes that 45% of these families were at 200% of the poverty level or below, and had already endured an expensive, lengthy process to complete their adoptions. Either the IRS is terribly incompetent at prioritization, or the organization has a bias against adoption.
Either way, French is correct in his conclusion:
As an adoptive family, its sometimes difficult to describe the immense challenges in gathering paperwork, opening your lives to social workers for home studies, then expensive travel to sometimes-corrupt foreign locales to then launch a new life with a child you love immensely but who is also experiencing his or her own culture shock and adjustment. All of this places a great strain on family finances and emotions. To then face an audit on the other side? All so the IRS can collect a whopping 1 percent additional revenue? Its beyond the pale. If the IRS is concerned about fraud, it can audit random samples, not the vast majority of adoptive families claiming the credit.
The IRS is a broken institution. Yet despite its moral and legal corruption, it still wields immense power. As Congress investigates wrongdoing, its past time to consider fundamental tax reform. In other words, starve the beast. It has proven it cant be trusted with power.
As it has proven in its targeting of conservative political speech and its arrogance in Congressional hearings, too.
Forget the war on women... what about this slogan — WAR ON CHILDREN...
Adoption avoids abortion.
Investigations must commence.
That’s really nice of them. After we spend months of bureaucratic paper work processing, psychological testing, thumb-printing and FBI background checks, lots of money...they audit us for claiming a legal credit. Phuk em.
Yes this Home Office Deductions, and Earn Income Tax Credit with all these unique new "Households" i.e. kids living with their Aunt and Uncle as the main source of support, because their parents are "whatever is wrong with them", are all flags.
What I was told was the 16,000 agents Are not for Obamacare They were for EITC alone and other like parts of the code that are time and energy suckers and by adding that many people obviously someone felt these programs are being abused...
We were one of the ones “audited”, and it didn’t go beyond the “mail more documentation” in phase.
Nearly everyone that year was audited, but it wasn’t terribly onerous. It did, of course, delay the badly needed replenishing of funds. One consequence of the tax credits is the overnight massive increase in agency and attorney fees.
Things do get more complicated if (for whatever reason) you do not have an SSN for adoptee. You have to go and get an ATIN (Adoptive Taxpayer Identification Number).
No, you’re right, it’s been years ago for us. But it was 10 digits and yes once for the FBI and once for the local sheriff. I’ll never forget dealing with Immigration, what a cluster. I can’t imagine what ICE is like now, with their dictatorial powers.
RE: Things do get more complicated if (for whatever reason) you do not have an SSN for adoptee
How does an adoptee from a foreign country acquire an SSN? You’d have to apply for the child right? How long does it take to get one?
We adopted in 2002 and 2006 and claimd the credit both times.
2002 no issues...2006 was a nightmare.
RE: 2002 no issues...2006 was a nightmare.
Bush was President both times. What changed in 2006?
A person who couldn’t type.
The IRS added an additional 1 to an income line item taking it from 1100 to 11,100 and decreased the amount of the credit we could file for and that caused us to owe...a lot.
We finally got it fixed but it took time (into 2008 BTW) and to be frank, the IRS was quite nasty about it, even when proved it was their fault.
My friend, you are experiencing what it is like to deal with GOVERNMENT... wait till Obamacare kicks in next year and the IRS looks at your tax forms to determine whether you have healthcare or not...
That’s what you get for getting Uncle Sam involved in all aspects of our lives...
Why did no one ask about this in the hearings?
With 80% plus of adoptive families being conservative, is this a screwy attempt to harass conservatives?
Or to diminish abortion alternatives?
Schulman the Stupid became IRS Commissioner?
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If I'm reading this correctly, 45% of the audits resulted in additional tax being owed. If so, then it seems to me that this is a high return audit area for an IRS agent looking for a bonus -- similar to the high return resulting from audits of taxpayers who claim a home office deduction or a large deduction for unreimbursed employment expenses.
wrongdoing = committing crimes
Let’s eliminate the use of the chicken$hit word “wrongdoing” when describing liberals and government.
Ditto for “misstatement”. It’s lying.
Both words should be ripped from contemporary lexicon.
Thank you for your post. We, too, were audited because of the adoption credit. The most frustrating part of the process - besides the fact that it took nearly a year and that we had so many requests for additional information that we were starting to wonder if the IRS was going to ask us to send them our child next - was the number of conflicting responses we received via phone and mail and the number of locations we had to submit paperwork to. None of the individuals we spoke to seemed to know anything about what we’d been told by others. We received letters from different offices that contradicted each other. Sometimes we received contradictory letters from the same office. Even after the audit was finished and we had received our refund, we received a letter asking for additional information; evidently accurate lines of communication within the agency is a challenge.
Until reading your post, we assumed our experience was very unusual. How troubling to learn otherwise - especially now that the citizens of our great Nation must face the dysfunction of this agency as it oversees the implementation of Obamacare.
Adoption is the sane, moral, and decent alternative to abortion, which is the demoncrats’ holy sacrament.