Reports
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On February 28, 2024, we alerted the ERC Team Lead of our concern and recommended that the IRS review the 997 tax returns we identified and consider them for post-refund compliance review to recover potentially erroneous ERC paid.
On February 28, 2024, we alerted the ERC Team Lead of our concern and recommended that the IRS review the 139,993 and 44,930 Tax Years 2020 and 2021 returns and consider them for post-refund compliance to recover any potentially erroneous ERC paid.
The Commissioner, Small Business/Self-Employed Division, should ensure that the 923 entities we identified receive a disallowance letter to prevent erroneous ERC claims from being paid.
The Commissioner, Small Business/Self-Employed Division, should ensure that any subsequent analysis to identify businesses for recapture letters uses accurate wage data and takes into consideration lessons learned from the Tax Year 2020 recapture letters.
For plans applying for SFA after initiation of the full participant death audit (as agreed to with recommendation 2024-01-01), continue to implement the new death audit procedures prior to approving the applications. Implementing this recommendation could put an estimated $125 million of taxpayer dollars to better use.
For plans paid SFA prior to implementation of the Corporation’s full death audit procedure, continue to implement the new death audit procedures, and rectify with the plans the value attributed to deceased participants to include repayment to Treasury. The estimate from this recommendation results in approximately $250 million in questioned costs, including the $140 million identified in the sampled plans.
On June 6, 2023, we notified the Director, Customer Account Services, Wage and Investment Division, of our concerns regarding the overpayments being erroneously held. We recommended that the IRS identify a process to review and release the overpayments that are being erroneously held. We also recommended that the IRS request programming changes, if needed, to ensure that all accounts with overpayments are identified and release the overpayments where warranted.
The Commissioner, Wage and Investment Division, should perform an analysis of Tax Year 2019 tax accounts with abated Failure to File penalties due to Notice 2022-36, to identify additional tax accounts for which overpayments are being held from issuance and take the actions needed to systemically release the overpayments where warranted.
On May 5, 2023, we notified IRS management of our concerns with the use of nonlocking bins in the Austin Tax Processing Center. We recommended that the IRS coordinate with the contractor or subcontractor and implement the use of lockable bins for classified waste.
Update Multiemployer Special Financial Assistance Division’s and Negotiations and Restructuring Actuarial Department’s procedures to include steps to ensure deceased participants, from all participant categories, be excluded from SFA calculations.
On March 14, 2022, we notified the Director, Submission Processing, Wage and Investment Division, of our concerns regarding the accuracy of COVID Tax Tip 2022-29 regarding Internal Revenue Code §§ 6428B(f) and 6428B(h). Specifically, the guidance states incorrectly that taxpayers can claim the RRC for a shared dependent even if the IRS has already made an advance payment for the dependent. We recommended that the IRS revise the Tax Tip and related Frequently Asked Questions, etc., to state that taxpayers who share qualifying dependents are required to reduce the amount of the RRC claimed by the advance payment issued to either parent on behalf of the dependent.
The Commissioner, Wage and Investment Division, should review the 274,865 individuals identified where the IRS issued an RRC to potentially ineligible dependents and nonresidents and take the actions needed to recover payments that are determined to be erroneous.
Continue to periodically issue information on the availability of the RRC and how to claim it through Frequently Asked Questions on IRS.gov, communications with tax return preparers, annual unclaimed refund announcements, etc. until the statutory period for taxpayers to file a Tax Year 2020 and 2021 tax return to claim the RRC has expired.
Send a letter to the nearly 3 million individuals we identified where the tax return data show the individual is potentially eligible for the RRC encouraging the individuals to amend their Tax Year 2021 return and claim the credit if eligible. The letter should clearly state the eligibility requirements for claiming the RRC in simple terms and direct the individuals to additional resources if needed to assist them in determining whether they are eligible.
On February 17, 2022, we notified the Director, Submission Processing, Wage and Investment Division, of our concern with three business rules and recommended that IRS management update the business rule programming to identify and evaluate returns for both refundable and nonrefundable CDCC claims.
Ensure that programming is updated for Processing Year 2023 to identify taxpayers who reported an obviously invalid care provider TIN on Form 2441.
Develop a tool or programming for Error Resolution to ensure that tax returns claiming prior year expenses are systemically identified to determine if the maximum CDCC had been claimed in the prior year, before processing the return and potentially releasing erroneous refunds.
Work with the Department of the Treasury, Office of Tax Policy, to advance legislation to treat a tax return as filed only when it is accepted. This would remove the legal risks associated with rejecting tax returns with conditions that indicate the taxpayer is ineligible for refundable credits claimed on the return.
If legislation is enacted, develop programming to reject e-filed returns meeting certain conditions, such as those noted in this report.
The Commissioner, Wage and Investment Division, should ensure that the compliance filter criteria for identifying individuals claiming self-only EITC who are not eligible for work is updated to include the *************************.
The Commissioner, Wage and Investment Division, should establish processes to compare subsequent legislative changes with compliance filterprogramming to identify and make necessary changes, as needed.
The Commissioner, Wage and Investment Division, should review the 774,559 returns with self-only EITC from potentially ineligible ******** and take actions needed to recover credits that are determined to be erroneous.
The Commissioner, Wage and Investment Division, should complete examinations for all 61 tax returns we identified to ensure taxpayers receive the correct CDCC amounts.
The Commissioner, Wage and Investment Division, and the Commissioner, Small Business/Self-Employed Division, should consider expanding the use of soft notices to address potentially erroneous PTC claims. These notices should provide individuals with information specific to the eligibility or reporting requirements related to the potential error the IRS identified and suggest the filing of an amended return, if an error has occurred.
The Commissioner, Wage and Investment Division, should notify the 317,418 taxpayers we identified, who potentially received less PTC than they were entitled or repaid more APTC than required, that they may qualify for additional PTC or overpaid APTC and encourage them to file an amended Tax Year 2021 return, if applicable.
The Commissioner, Wage and Investment Division, should notify the 317,418 taxpayers we identified, who potentially received less PTC than they were entitled or repaid more APTC than required, that they may qualify for additional PTC or overpaid APTC and encourage them to file an amended Tax Year 2021 return, if applicable.
The Commissioner, Wage and Investment Division, should develop processes, such as the use of courtesy letters to notify individuals of their potential eligibility, to proactively assist taxpayers who, based on available tax return and Exchange data, potentially claimed less PTC than entitled or paid more APTC than required.
The Commissioner, Wage and Investment Division, should develop processes, such as the use of courtesy letters to notify individuals of their potential eligibility, to proactively assist taxpayers who, based on available tax return and Exchange data, potentially claimed less PTC than entitled or paid more APTC than required.
On October 26, 2022, we notified the Director, Submission Processing, of our concerns regarding taxpayers who are potentially eligible for additional PTC based on their unemployment status during Tax Year 2021. We recommended that the Director, Submission Processing, notify these taxpayers that they may qualify for additional PTC or be able to reduce the amount of excess APTC they must repay and encourage them to file an amended Tax Year 2021 return, if they qualify.
On October 25, 2022, we notified the Director, Submission Processing, of our concerns with the draft Tax Year 2022 Form 8962 instructions. We recommended that the IRS revise the instructions to inform taxpayers that they have an option to set a domestic violence indicator on their tax return.