Wednesday, June 15, 2011

IRS Unable To Verify Individuals Claiming A Qualified Motor Vehicle (QMV) Deduction Qualified

IRS is unable to verify whether individuals claiming a Qualified Motor Vehicle (QMV) deduction were entitled to the deduction when their tax returns were processed, the Treasury Inspector General for Tax Administration (TIGTA) said in a new audit. (Audit Report No. 2011-41-037) According to the audit, individuals did not have to provide any third-party documentation to support that they actually purchased a QMV and, if a qualified vehicle was purchased, the amount paid in sales and excise taxes. A QMV deduction is an additional deduction for state sales and excise taxes on the purchase of automobiles and light trucks after Feb. 16, 2009, and before Jan. 1, 2010. The QMV deduction expired Dec. 31, 2009. A review of a statistically valid sample of 150 individuals who were allowed a QMV deduction of less than the amount IRS considers excessive found that some individuals may have erroneously been allowed QMV deductions for vehicles that were not purchased. TIGTA found that IRS failed to identify 4,257 individuals who claimed a total of more than $151.1 million in excessive QMV deductions. The audit also identified 473 individuals who erroneously received about $1.02 million in QMV deductions because the agency did not have processes to identify that the individuals were in prison, deceased, or underage. “It is imperative that the IRS address the weaknesses identified in this report,” said J. Russell George, the Treasury inspector general. The audit is available at

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