IRS Targeted Adoptive Parents For Audits

“[T]he IRS has harassed a number of pro-life groups, including at least one alleged demand that a pro-life group not picket Planned Parenthood,” writes David French for National Review. But even as the IRS was defending pro-abortion groups, they were targeting families who adopted children for audits.

“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,” writes French.

More 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.

For all the resources spent on audits, the IRS didn’t get much bang for their buck:

Despite Congress’ express intent to target the credit to low and middle income families, the IRS created income-based rules that were responsible for over one-third of all additional reviews in FY2012.

■ Of the $668.1 million in adoption credit claims in tax year (TY) 2011 as a result of adoption credit audits, the IRS only disallowed $11 million — or one and one-half percent — in adoption credit claims. However, the IRS has also had to pay out $2.1 million in interest in TY 2011 to taxpayers whose refunds were held past the 45-day period allowed by law.

One wonders how much the IRS spent on personnel and expenses to find that $11 million in disallowed credits. A figure more than $11 million, I suspect.

French has more, including details about what an excruciating process this was for the audited families, but the real story here (as it has been throughout this IRS controversy) is the double standard that has been applied.

Pro-abortion groups got most-favored status, but families taking unwanted children into their homes were targeted for audits.

Wow.