The Internal Revenue Service (IRS) awarded 4,257 individuals who claimed more than $151 million in undeserved tax deductions for 2009 stimulus package program designed to boost automobile sales, according to an audit report by the Treasury inspector general for tax administration on Wednesday (06/08).

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Out of 473 cases, the tax agency erroneously allowed 439 prisoners who were in jail the entire year, 16 dead people and 18 children under the age of 15 to claim just over $1 million in deductions.

So, who could this happened? You may ask. The tax stimulus allowed taxpayers—up to a certain income level—to deduct some taxes from buying a car, light truck, motorcycle or motor home between February 2009 and January 2010. But, deduction expired Dec. 31, 2009, and hasn’t been extended

As you may knew already that the IRS doesn’t require individuals to supply independent documents proving that they bought a car that qualified for the tax deduction. When auditors looked at a sample of 150 tax returns of individuals who applied for the deduction, they only found 65 of those people had actually purchased a qualified vehicle that year.

Even when the IRS does flag suspicious accounts, it doesn’t always take the proper steps to decide whether the person deserves the deduction, the report concluded. The IRS agreed to review all of the cases flagged by the report. (via: Nasdaq/Dow Jones Newswires)