The IRS is failed to purse millions in potentially improper deduction claims for qualified retirement savings contributions, an audit by the Treasury Inspector General for Tax Administration has found.

The federal government since 2002 has allowed for a "savers credit" for certain low- to middle-income workers who contribute to a qualified retirement plan. Approximately $1.1 billion in saver's credits were claimed in 2011.

The objective of the TIGTA's audit was to assess how well IRS "controls" over saver credit claims are working. In processing claims, the IRS generally looks at age limits, income levels and credit limits. For tax-year 2011, the audit found $53 million in false or overstated claims.

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