The Knucklehead of the Day award

Today's winner is the Internal Revenue Service. They get the award for the following.

The Internal Revenue Service gave away $318 million in improper refunds this year because a computer program that screens tax returns for fraud was not working, according to a report released yesterday.

The program, in use since 1996, searches for signs of fraud in every tax return claiming a refund. In 2005, it stopped $412 million in fraudulent returns.

The IRS had contracted with Computer Sciences Corp. to update the program, but the contractor could not produce a working program by the deadline. The old program could not be put back into operation in time for the spring 2006 tax-filing deadline.

The IRS is trying to get the program up and running in time for the 2007 deadline.

The estimate released yesterday by the Treasury inspector general for tax administration is slightly higher than the IRS's own calculation. The tax agency thought it had paid out $200 million to $300 million in improper refunds.

The inspector general plans a study to look more closely at the amount of money the government lost, along with IRS procedures for detecting fraudulent refunds.

In this study, the inspectors found that the IRS spent more than $20 million on the failed computer project, which should have delivered a new version of the fraud-detection program early this year.

More bureaucratic bungling for an agency that is known for it. The IRS has won previous knucklehead awards, here and here. Plus I wrote about them again just yesterday. Also here is another post about how prisoners scam the IRS. This latest news isn't surprising considering in light of the IRS history of pissing away money.

For wasting millions in taxpayer money they are supposed to help manage, the Internal Revenue Service is today's Knucklehead of the day.

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