New scrutiny of Internal Revenue Service auditing procedures reveals the agency requested additional information from 90 percent of returns claiming the adoption tax credit and audited 69 percent of them in 2012.
But of the completed adoption tax credit audits, more than 55 percent ended with no change in the tax owed or refund due, reports the Taxpayer Advocate Service, which studied the agency's auditing patterns.
In addition, the study found, the average adoption credit correspondence audit currently takes 126 days, which triggers a lengthy delay in refunds being made.
The alarming findings come as the IRS is under investigation by Congress after admitting it targeted conservative groups seeking tax-exempt status for audits.
The most common reasons for the agency's additional scrutiny of adoption tax credit claims were income and a lack of documentation, the service says.
National Review Online
reports that despite Congress' intent to help low- and middle-income families with the credit, the IRS created income-based rules that were responsible for more than a third of all additional reviews.
Of the $668.1 million in adoption credit claims in 2011 that were audited, the IRS only disallowed $11 million. But the agency had to pay out $2.1 million in interest to taxpayers claiming the credit because their refunds were kept past the 45-day period allowed by law.
The National Review cited the audits as not only a waste time but abuse of power.
"So Congress implemented a tax credit to facilitate adoption – a process that is so extraordinarily expensive that it is out of reach for many middle-class families — and the IRS responded by implementing an audit campaign that delayed much-needed tax refunds to the very families that needed them the most. Oh, and the return on its investment in this harassment? Slightly more than 1 percent."
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