Apparently Treasury inspectors are estimating that tax filers erroneously (criminally) filed returns claiming educational credits and received $3.2 billion (yes billion with a “B”) in credits for 2009 and 2010.
It appears that in many of these cases, IRS didn’t have a (required) Form 1098-T from the college that the individual attended. Educational institutions are required to send out copies of this form to students and to the Service. IRS will seek to recover credits claimed by filers who didn’t get 1098-T forms. Graduate students and part-timers also erroneously took the credit. The inspectors also discovered that more than half of the tax returns with improper education credits were done by paid preparers (were any CPA’s, I doubt it). I have had to do amended returns in the past originally done by some of these paid preparers, along with a letter signed by my client trying to keep them out of difficulty (jail?).