IRS may have paid $57 million in error for Trump tax break, report finds - CNBC

The break — a qualified business income deduction — was created by the tax law signed by President Donald Trump in 2017.

The IRS allowed business owners to claim $57 million in "potentially erroneous" deductions on 12,980 tax returns filed last year, according to a report publicly released Tuesday by the Treasury Inspector General for Tax Administration.

The analysis also highlights the high frequency of error relative to tax returns claiming a pass-through deduction, according to Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center.

For example, when the IRS selected 68 tax-year 2018 returns for additional examination, the agency ultimately denied a pass-through deduction to 85% of them, worth about $4.8 million, according to the report.

But the 12,980 returns identified in the watchdog analysis represent just 0.14% of the 9.4 million that claimed a QBI deduction, Hylton said in a response accompanying the report?