IRS paid out millions in improper fuel credits on tax returns

Federal tax officials may have paid more than $168 million in improper fuel tax credits because the IRS failed to catch questionable claims on Form 1040 returns, according to a government watchdog.

The Treasury Inspector General for Tax Administration said its auditors reviewed a sample database consisting of more than 1.2 million tax returns for the three years ending in 2013.

"Approximately $168 million (24 percent) of the $694 million in fuel tax credit claims for the three years were questionable based on the fact that the individuals reported no farming or other business income to support their claims," TIGTA said in a report made public Thursday.

The questionable claims weren't caught in many cases, IRS officials told TIGTA's auditors, because the federal tax agency's computers weren't properly programmed.