PDF - Department of the Treasury

More documents

Recommendations

Info

information with the State prisons, and one Member of Congress subsequently asked TIGTA to draft a legislative proposal to revise I.R.C. § 6103 (2004) to allow for this. Both TIGTA and the IRS testified at a Congressional hearing 12 on prisoner refund fraud. IRS officials described several initiatives to enhance the detection of false refund returns that included: • continuing coordination to acquire accurate prisoner information to maximize the effectiveness of IRS automated systems; • conducting training sessions with IRS personnel by discussing expectations of the fraud program and how schemes are perpetrated, and sharing best practices with prisons; • increasing efforts in working with State prisons to include routine liaison contacts to identify emerging activities involving refund fraud; and, • assuring that all FDCs have procedures to coordinate fraud prevention efforts with prisons. TIGTA discussed the results of its review with IRS officials during fieldwork, and they advised of their ongoing efforts to combat prisoner-related refund fraud. Accordingly, TIGTA made no recommendations; however, it plans to continue assessing the IRS’ efforts on this important tax administration issue. Report Reference No. 2005-10-164 In March 2004, at the IRS’ request, TIGTA became involved with a potential fraud scheme. Fraudulent tax returns, using fictitious information on Schedule C (Profit or Loss From Business), were arriving in such large volumes that the IRS could not stop erroneous refunds from being issued. The individuals claimed the EITC, which increased the amount of the refunds they claimed. One IRS office stopped refunds on tens of thousands of potentially fraudulent returns and referred the scheme to its Criminal Investigation (CI) function. The CI function only accepts cases for which it can determine the perpetrator of the fraud and make an arrest. Therefore, it accepted only a small portion of these returns. There were approximately 70,000 tax returns with claims for refunds totaling more than $100 million that were not accepted for criminal prosecution. While the 70,000 cases were eventually resolved, TIGTA is concerned that no formal agreement exists between IRS functions to resolve fraud cases. To avoid costly and time-consuming delays, an overall compliance strategy between IRS functions would have placed the IRS in a better position to handle large volumes of fraudulent Schedule C refund returns. TIGTA recommended that the IRS develop an overall compliance strategy for Schedules C with fraudulent refunds, especially when large volumes of returns are involved. The IRS should also identify potential computerized methods to temporarily stop refunds for cases meeting the characteristics of this or other large Schedule C refund schemes. IRS management agreed with the recommendations and is taking corrective action. Report Reference No. 2005-30-140 (Limited Official Use) 12 See page 35. 16 April 1, 2005 to September 30, 2005
Processing Returns and Implementing Tax Law Changes The IRS provides tax benefits to taxpayers identified on the IRS Master File 13 as being in a Combat Zone. However, TIGTA identified a processing issue that affects the accuracy of the Combat Zone indicators and the overall effectiveness and efficiency of the Combat Zone program. TIGTA results indicated that over 58 percent of the 520,000 taxpayers with an active Combat Zone indicator are incorrect (i.e., the taxpayers are no longer serving in a Combat Zone). An incorrect active Combat Zone status allows taxpayers to receive special tax treatment to which they are no longer entitled to receive, such as filing late, not being audited, or having collection action suspended. 13 The Master File refers to the IRS Individual Master File database that maintains transactions or records of individual tax accounts. To further help ensure that Combat Zone indicators are correct, TIGTA recommended that the IRS continue to work on perfecting the information used to update the Master File, develop a quality review program to ensure that the accounts being analyzed for inaccurate indicators by the new computer program are processed correctly, and conduct an account review on an annual basis. IRS management agreed with the recommendations and initiated corrective action. Report Reference No. 2005-40-077 More improvements can be made to enhance the clarity and usefulness of math error notices and reduce unnecessary notices issued to individual and business taxpayers. Many taxpayers who calculated their own estimated tax penalties received an unnecessary and confusing math error notice telling them they miscalculated the total balance they owed on their tax returns. As illustrated on the following page, instructions on TY 2004 U.S. Individual Income Tax Returns (Form 1040), Line 74 (Amount You Owe) tell taxpayers to, “Subtract Line 70 (Total Payments) from Line 62 (Total Tax).” Taxpayers who followed these instructions and also entered an estimated tax penalty on the next line (Line 75) received a math error notice stating: “We changed the refund amount on Line 72a or the amount you owe on Line 74 of your Form 1040 because the amount entered on your tax return was computed incorrectly.” April 1, 2005 to September 30, 2005 17
Page 4 and 5: "Taxes are what we pay for civilize
Page 6 and 7: Investigations Opened and Closed ..
Page 8 and 9: aise revenue through taxes. The wid
Page 10 and 11: . TIGTA’s Organizational Structur
Page 12 and 13: "…Natural rights, so called, are
Page 14 and 15: help guide current and future moder
Page 16 and 17: Budget (OMB) and Clinger-Cohen Act
Page 18 and 19: IRS management agreed to consider a
Page 20 and 21: toll-free service is the method pre
Page 24 and 25: “Amount You Owe” Section of For
Page 26 and 27: Human Capital The IRS first impleme
Page 28 and 29: "…Our Constitution is in actual o
Page 30 and 31: TIGTA INVESTIGATIVE PERFORMANCE MOD
Page 32 and 33: employee stole tax refunds by routi
Page 34 and 35: The following cases are examples of
Page 36 and 37: The following cases are examples of
Page 38 and 39: Individuals Arrested for Perjury In
Page 40 and 41: Congressional Testimony I nspector
Page 42 and 43: "Taxation is, in fact, the most dif
Page 44 and 45: Audit Statistical Reports Reports W
Page 46 and 47: Reports With Additional Quantifiabl
Page 48 and 49: Investigations Statistical Reports
Page 50 and 51: "…It was as true . . . as taxes i
Page 52 and 53: Reference Number Issued 2001-30-052
Page 60 and 61: "When there is an income tax, the j
Page 62 and 63: May 2005 The Innocent Spouse Centra
Page 64 and 65: 2005-40-137 2005-10-138 2005-30-140
Page 66 and 67: 2005-20-143 The Computer Security I
Page 68 and 69: Reference to Statutory Coverage Fil
Page 70 and 71: Reference to Statutory Coverage Dis
Page 72 and 73:
"There is nothing sinister in so ar
Page 74 and 75:
"The hardest thing in the world to
Page 76 and 77:
Report of Employee Misconduct for t
Page 78:
Summary of Substantiated I.R.C. §
show all

PDF - Department of the Treasury

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?