Great Moments in Bureaucratic Competence: IRS Often Doles Out Home Energy Tax Credit To People Without Said Home

Makes ya feel good, doesn't it?

Can the Internal Revenue Service handle tax credit programs that pump out billions of dollars to homeowners and buyers? A new federal investigation on home energy tax credits suggests the answer may be: Not quite yet.

The Treasury Department's inspector general for tax administration audited the residential tax credit program, created by Congress to encourage homeowners to install energy-saving equipment and materials in their houses, and found some disturbing oversights.

One part of the program offers 30% credits — with no dollar limit — for solar energy systems, geothermal heat pumps, wind turbines and fuel cells installed before Dec. 31, 2016. A second part of the program — for energy-efficiency home improvements — offered credits up to $1,500 for qualifying exterior windows and doors, insulation and roofing materials.

Both credits have been popular. More than 6.8 million taxpayers received credits during tax year 2009, totaling $5.8 billion through December 2010. But substantial numbers of the filings had problems that went undetected by the IRS, according to the inspector general's investigation. In a review of 5 million returns, auditors found that more than 302,000 taxpayers, who received a total of $234 million in credits from the IRS, showed no evidence of owning a home — the minimum requirement for eligibility.

A review of a smaller sample of returns, supplemented with local real estate property deed information, found that 30% "had no record of owning a home."

I propose we punish the IRS with a one-year, unpaid hiatus.

h/t: Ben Cunningham.

Cross-posted.