Harvey victims audited after IRS questioning amended 2016 tax returns

HOUSTON, Texas -- Are homeowners who filed for Hurricane Harvey related damage claims being targeted by the IRS?

Some homeowners, who suffered significant damages and their tax experts, certainly believe that appears to be the case.

"Leave the Harvey folks alone," said Lawrence Dean, a Meyerland homeowner who flooded three times, including during Harvey. Dean and his family chose to build from scratch.

Larry Schwartz decided to repair his flooded home because he just got a little bit of water inside.

Both men followed a specific IRS rule that allowed Harvey flood victims to amend their 2016 return for damages instead of 2017. Tax experts say this is called a carryback, and they noticed homeowners who did so seem to be getting audited.

"They allowed them to file amended returns for 2016 to get their money back sooner so they can fix their homes," said Susan Sample, a tax attorney with the firm of Munsch and Hardt. "The IRS had publications, 'Hey, we're here to help you, walk you through these disasters, get your money back quick.'

"I'm kind of upset," said Schwartz, who filed his amended return via TurboTax and is currently going through the audit process. "I've been a taxpayer for 40 plus years and this is the first time we've been audited."

Sample, who is also the mayor of West University Place, says at least one IRS auditor has told her there's a system in place to audit Harvey damage claims.

"She said, 'We were auditing all of the Harvey claims. We have a program on it. We've taken training on it, and people all over the country are auditing these casualty losses.'"

When ABC13 Eyewitness News asked the IRS about it the audit allegations a month ago, a spokesman said there was no such system.

On Thursday, that spokesperson no longer worked at the IRS. We asked the current staff to look into the issue again. As of Thursday, they told us that nationwide, audits are down.

But Harvey victims aren't buying it.

"The right hand doesn't know what the left hand is doing. The right hand is saying 'No, we're definitely not doing that,' but the left hand was doing that," said Dean, who finished up his nine-month audit process a few months ago.

So what should you do?

If you have already amended your tax returns, there is not much you can do. However, if you have been thinking of amending your previous returns and have not done so, consult a tax professional before moving forward.