TV Investigation Wins Peabody Award for IRS Fraud Investigation, Sparks Agency Reforms

You would never have even heard of a recent scheme that let fraudsters make off with $4.2 billion per year in taxpayer dollars, if it were not for intrepid investigative journalism by WTHR-TV in Indianapolis. For these efforts that taxpayers in particular can appreciate, WTHR recently won the highest award in journalism, the Peabody Award.

The 6-month long investigative series that earned the award exposed the IRS for ignoring a “loophole” that allowed people here unlawfully to insert on tax forms the names of children that may not have even lived in the U.S., snagging unwarranted taxpayer cash.

The series has struck a chord with citizens across the nation, and even inspired many IRS employees aware of the abuse to contact WTHR and share their experiences. One whistleblower confided:

"I just saw your report and there's something I need to tell you. I see this stuff every day and there isn't anything I can do about it."

The controversy also made its way to Capitol Hill, and led to a debate in the spring of last year as to why nothing had been done about this disturbing mishandling of taxpayer dollars.

In May of 2012, following WTHR’s investigative report, the House of Representatives debated the issue, with the majority of Republicans arguing in favor of closing the loophole, and the majority of Democrats opposing doing so.

Citing WTHR’s findings, Rep. Paul Ryan (R-WI), espoused outrage during the floor debate on a reconciliation package, H.R. 5652, which included closing the loophole:

“This is where our taxpayer money is going, to the [additional] child tax credit. One investigation in Indiana said illegal immigrants in Indiana are getting $29,608 for 20 children they claimed for the tax credit who live in Mexico and have never visited the United States before!"

Unsurprisingly, after the House managed to pass the bill along strict party lines, H.R. 5652 died in the Democrat-controlled Senate, leaving taxpayers on the hook to continue doling out billions.

Still, after WTHR’s scathing investigation into the fraud and abuse under the agency’s purview, the IRS announced new reforms to how the child tax credit is allotted in October of 2012.

“The IRS also announced heightened review of documentation related to child tax credits by requiring more information to be sure residency requirements for these credits are met. This is probably in response to concerns about nonresidents successfully claiming these credits.”

When it comes to addressing fraud that victimizes taxpayers, the phrase ‘better late than never’ comes to mind, and WTHR deserves a warm round of applause for affecting change in an instance where officials openly neglected their duty to ensure the law is properly enforced.