Representative Diane Black (R-TN), recently introduced H.R. 4372, legislation to combat education tax fraud that has already cost taxpayers billions of dollars.
“I can think of no better time to introduce a bill that fights tax fraud and saves taxpayer dollars than on the heels of tax day,” said Black. “Families and small business owners across the country are upset that the government is taking their hard-earned tax dollars and wasting them on bad programs and big government.  My legislation would add common-sense reporting requirements for those who apply for education tax credits created by the failed stimulus bill, saving taxpayers millions, if not billions of dollars.”
As part of the 2009 stimulus, the American Opportunity Tax Credit was created to help offset the costs of higher education.
However, the authors of the stimulus failed to include reporting requirements to ensure recipients of the tax credit are in fact students.
A 2011 report from the Treasury Inspector General for Tax Administration estimated 2.1 million taxpayers wrongly received $3.2 billion in education tax credits.
The same report estimated that thousands of prisoners also received education tax credits.
Black’s legislation would require those who claim education tax credits to provide a valid Social Security number for each eligible student and a valid school identification number of the institution the student is attending.
“Our tax system is fraught with waste and fraud,” said Black. “It is important that we not only go after individual cases of abuse like the education tax credit, but work toward the ultimate goal of completely overhauling our nation’s tax code.
“House Republicans are developing solutions to lower the rates, broaden the base and close the numerous loopholes that have made our tax code so complex and restrictive,” she continued. “ The American people deserve a flatter, simpler system that will spur growth and get our economy moving again.”