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TIGTA — Billions of Dollars in Potentially Erroneous Education Credits Continue to Be Claimed for Ineligible Students and Institutions

May 5, 2015 Comments off

Billions of Dollars in Potentially Erroneous Education Credits Continue to Be Claimed for Ineligible Students and Institutions
Source: Treasury Inspector General for Tax Administration

An estimated 3.6 million taxpayers received more than $5.6 billion in potentially erroneous education credits on their 2012 tax returns, according to a report released today by the Treasury Inspector General for Tax Administration (TIGTA).

The Taxpayer Relief Act of 1997 created two permanent education tax credits, the Hope Credit and Lifetime Learning Credit. The American Recovery and Reinvestment Act of 2009 temporarily replaced the Hope Credit with a refundable tax credit known as the American Opportunity Tax Credit (AOTC). The AOTC was initially set to expire at the end of Calendar Year 2010 but has since been extended through Calendar Year 2017. These credits help taxpayers offset the costs of higher education.

Prior TIGTA audits have reported that taxpayers have claimed billions of dollars of erroneous education credits. TIGTA has made a number of recommendations to the IRS to help reduce the number of erroneous claims. This audit was initiated to assess the IRS’s efforts to improve the detection and prevention of questionable education credit claims.

“The IRS still does not have effective processes to identify erroneous claims for education credits,” said J. Russell George, Treasury Inspector General for Tax Administration. “Although the IRS has taken steps to address some of our recommendations, many of the deficiencies TIGTA previously identified still exist. As a result, taxpayers continue to receive billions of dollars in potentially erroneous education credits.”

IRS — Victims of Identity Theft Continue To Experience Delays And Errors In Receiving Refunds

April 10, 2015 Comments off

Victims of Identity Theft Continue To Experience Delays And Errors In Receiving Refunds
Source: Treasury Inspector General for Tax Administration

Victims of identity theft continue to experience delays and errors in receiving refunds, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

This audit follows up on a 2013 TIGTA report which concluded that the Internal Revenue Service (IRS) was not providing quality customer service to identity theft victims. The objective was to determine whether the IRS is improving its assistance to victims of identity theft.

On average, the IRS took 278 days to resolve the tax accounts of identity theft victims due a refund, according to TIGTA’s review of a statistically valid sample of 100 identity theft tax accounts resolved in the Accounts Management function in Fiscal Year (FY) 2013. That is an improvement over the average 312 days it took the IRS to resolve tax accounts of identity theft victims due a refund in FY 2012.

TIGTA Testimony: “Tax Schemes and Scams During the 2015 Filing Season” (Senate Finance Committee)

March 12, 2015 Comments off

Testimony: “Tax Schemes and Scams During the 2015 Filing Season” (PDF)
Source: Treasury Inspector General for Tax Administration (before the U.S. Senate Finance Committee)

Tax scams are nothing new. For at least the last decade, the IRS has provided the public with information about what it sees as the “Dirty Dozen” tax scams on its website. These scams range from offshore tax avoidance to fake charities and inflated refund claims. Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter. However, many of these scams peak during the filing season as people prepare their returns or utilize the services of paid preparers.

The 2015 filing season has unfortunately brought more of the same. However, there are two tax scams in particular that are among the most pernicious and dangerous. They have proven to be surprisingly effective and fast ways to steal taxpayers’ money, and in this fast-paced electronic environment, the money can be gone before the victims ever realize they have been scammed.

The phone impersonation scam has proven to be so large that it is one of my agency’s top priorities, and it has also landed at the top of the IRS’s “Dirty Dozen” tax scams this year.

The lottery winnings scam we are seeing this filing season is a continuation of an older scam. It starts with an e-mail or telephone call stating that you have won the lottery and in order to collect the winnings, you need to send money to prepay the tax to the IRS.

TIGTA – Additional Consideration of Prior Conduct and Performance Issues Is Needed When Hiring Former Employees

February 6, 2015 Comments off

Additional Consideration of Prior Conduct and Performance Issues Is Needed When Hiring Former Employees (PDF)
Source: Treasury Inspector General for Tax Administration
From press release:

The Internal Revenue Service (IRS) rehired hundreds of former employees with prior substantiated conduct or performance issues, according to a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

Most rehired employees do not have performance or conduct issues associated with prior IRS employment. However, TIGTA identified hundreds of former employees with prior substantiated conduct or performance issues ranging from tax issues, unauthorized access to taxpayer information, leave abuse, falsification of official forms, unacceptable performance, misuse of IRS property, and off-duty misconduct.

TIGTA — Report: Law Enforcement Assistance Program Requests Are Not Always Processed Timely and Accurately

February 5, 2015 Comments off

Report: Law Enforcement Assistance Program Requests Are Not Always Processed Timely and Accurately
Source: Treasury Inspector General for Tax Administration

An audit report released today identifies several problems with a new program allowing the Internal Revenue Service (IRS) to share tax information of identity theft victims with State and local law enforcement agencies.

The IRS’s Law Enforcement Assistance Program (LEAP) began as a pilot program in Florida in 2012 and was expanded in 2013 to help law enforcement officers across the country obtain tax return data vital to their efforts in investigating and prosecuting cases of identity theft.

The Treasury Inspector General for Tax Administration (TIGTA) reviewed whether requests for tax return data under the LEAP are processed timely, accurately, and securely.

Law enforcement officers use Form 8821-A, IRS Disclosure Authorization for Victims of Identity Theft, to obtain consent from the identity theft victim to request tax return information from the IRS. TIGTA reviewed a statistically valid sample of 194 of the 2,481 Forms 8821-A processed between January 3, 2013 and September 27, 2013. Of these, 39 requests had been rejected and another four did not have the date that the information was mailed to the law enforcement officer. Of the remaining 151 requests, 88 requests (58 percent) were not processed within the required 10 business days.

In addition, the IRS did not always maintain documentation of tax return information provided to the law enforcement officers. TIGTA also found that requests for tax return information were not always accurately worked. For the 39 requests that the IRS rejected, eight (21 percent) should not have been rejected. Most requests were erroneously rejected because the assistors incorrectly concluded that a tax return associated with the victim of the identity theft was not filed.

The IRS’s quality reviews usually check to ensure that all actions and required research are performed. However, because management had not established requirements for assistors to use a computer research command code, the quality reviews did not check to ensure that this research was completed.

In addition, 11 (7 percent) of the 155 requests for which the IRS provided the law enforcement officer with tax return information were invalid or incomplete and should not have been processed due to the risk of unauthorized disclosure.

TIGTA — The Internal Revenue Service Does Not Adequately Manage I.T. Security Risk-Based Decisions

December 26, 2014 Comments off

The Internal Revenue Service Does Not Adequately Manage I.T. Security Risk-Based Decisions
Source: Treasury Inspector General for Tax Administration

The Internal Revenue Service (IRS) does not adequately document its risk-based decisions involving Information Technology security, according to a report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).

Risk-based decisions are made when the IRS wants to make an exception to its own policies and requirements based on suitable justification and a thorough assessment of evident and potential risks. For decisions related to the security of information systems, exceptions are allowed if meeting the requirement is 1) not technically or operationally possible or 2) not cost effective.

When risk-based decisions are not made within the established guidelines, the organization may be accepting too much risk related to security of its systems and data. Consequently, taxpayer data may not be secured and may be vulnerable to unauthorized disclosure, which can lead to identity theft. Furthermore, accepted weaknesses may result in security breaches, which can cause network disruptions and prevent the IRS from performing vital taxpayer services, such as processing tax returns, issuing refunds, and answering taxpayer inquiries.

The IRS Could Improve its Inventory Controls Over Wireless Devices, TIGTA Finds

December 23, 2014 Comments off

The IRS Could Improve its Inventory Controls Over Wireless Devices, TIGTA Finds
Source: Treasury Inspector General for Tax Administration

At the Internal Revenue Service (IRS), more than 94 percent of the employees who had BlackBerry® smartphones, cellular phones, or wireless aircard devices were appropriately assigned them; however, the IRS’s system of records designed to document wireless device inventory was not consistently updated as changes occurred, which resulted in almost 57 percent of inventory records being inaccurate.

That is among the findings of a report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).

“In Fiscal Year 2013, the IRS spent more than $13.7 million on wireless telecommunication devices and maintained an inventory of more than 49,000 devices that it reported as being in use,” said J. Russell George, Treasury Inspector General for Tax Administration. “Effective controls over the assignment of and inventory accounting for these devices is important to ensure proper stewardship of Government funds.”

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