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GAO: How to stop false dependent claims.

To stop the 6.1 million erroneous dependent exemptions claimed each year, the GAO recommended several alternatives to the IRS. Among these were (1) to increase the number of returns subject to computer matching and (2) to replace the support test for dependent status (Internal Revenue Code section 152(a)) with a simpler residency test.

Computer matching can identify many dependents who do not meet the gross income test or other statutory requirements or who are claimed on more than one return.

The GAO said about 73% of wrongful dependency exemptions result from a failure to meet the support test, which conditions dependency status on receipt of over 50% of the dependent's support from the taxpayer. The GAO said this test is too burdensome and should be replaced with a simpler residency test, under which a dependency exemption would be allowed if the dependent met all of the statutory tests and also lived with the taxpayer for more than six months of the year.
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Title Annotation:General Accounting Office
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jun 1, 1993
Previous Article:Don't cut back on TCMP audits - beef them up instead! Says GAO.
Next Article:IRS can revoke exemption without prior hearing.

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