The Internal Revenue Service is permitting millions of dollars in potentially improper self-employed retirement plan deductions to be claimed, according to a new government report, which estimates that up to $71.4 million over five years could be saved with better controls.
Self-employed taxpayers are able to deduct contributions made to their Simplified Employee Pension, or SEP, plan, or another qualified retirement plan account, on line 28 of their individual tax returns under certain circumstances, according to the report, which was heavily redacted in its public release Thursday. The report also noted that the IRS could make better use of third-party data to detect potentially improper SEP deductions, and if it improved its controls, it could realize up to $29 million in revenue over five years.
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