IRS does poor job of handling homeowner tax credit programs

An audit showed the IRS was unable to verify key requirements for eligibility. Many people who claimed tax credits for installing energy-saving equipment and materials in their houses showed no evidence of owning a home.
By Kenneth R. Harney
May 29, 2011

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.
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"Because IRS Form 5695, which is used by homeowners to claim energy credits, does not require documentation of purchases, property addresses or whether the property even qualifies as the taxpayer's residence, the government primarily relies on the veracity of the taxpayer in processing the credits, and sometimes discovers irregularities or fraud only when it later audits an individual's return."