An investigation by Fox News has revealed that the federal government has been paying millions of dollars in fraudulent federal tax records to some of the country’s wealthiest residents.
The latest news comes just weeks after the Trump administration slapped a record-setting $9 billion in new taxes on businesses, many of which are based in the United States.
The government is paying out millions of taxpayer dollars to more than 400 companies in the U.S. and Canada that allegedly don’t pay taxes, and have been under investigation since last summer.
A new tax investigation into a massive tax fraud scheme led to an unprecedented tax relief package for more than 50 million Americans.
But in this latest twist in the story, it appears the government is also paying millions in penalties to taxpayers in the middle class.
The IRS has agreed to pay $7 million to a family of four in New Jersey for the improper use of its tax information.
The federal government also is paying $1.6 million to the wife of a California real estate developer who filed a false tax return to get a $4.9 million tax break.
The investigation into the phony tax shelters came in response to a $8 billion audit of the government by the bipartisan House Oversight and Government Reform Committee, which revealed the federal tax agency has paid more than $3 billion in improper taxes to more that half a million American families over the past 10 years.
The watchdog panel recommended the IRS investigate the tax shelters and take other steps to make sure the tax system works properly.
“I think it’s fair to say that there’s a lot of bad actors out there,” Rep. Elijah Cummings, the ranking Democrat on the committee, said on CNN.
“But I think it also has to be fair to ask ourselves, does this tax shelter, does that taxpayer get a tax break, does it make a difference to people who actually live in the country?”
The IRS says it is working to resolve the cases.
But the watchdog panel said in a letter to IRS Commissioner John Koskinen, the agency was violating the law by not investigating the tax frauds before the audit was completed.
It also said the IRS should investigate the $4 billion of improper tax deductions.
The new tax penalties have been paid to the top 5 percent of taxpayers who have not filed a return for the past decade, the top 1 percent, and the top 0.01 percent.
In addition to the $7.5 million paid to a New Jersey family of 4, the IRS has paid $1 million to an estate tax return filed by the wife who filed the false tax tax return, and $500,000 to the California real-estate developer who made false tax returns in the years leading up to the audits.
The family of the husband is also seeking a refund of the $500 a month he paid in taxes for the last two years.
But in a recent letter to the Oversight and Oversight Committee, Koskinel wrote that the tax refunds are all being paid to families that have already filed a tax return.
“The IRS does not have the resources to investigate the taxpayers who filed false tax refunds for a decade or more, and therefore the IRS does have the discretion to impose penalties on the taxpayers that are responsible for these fraudulent deductions,” Koskiner wrote.