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Tax Administration: Accuracy of Taxpayer Identification Numbers on Information Returns Can Be Improved

GGD-88-110 Published: Sep 06, 1988. Publicly Released: Sep 06, 1988.
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Highlights

In response to a congressional request, GAO assessed the Internal Revenue Service's (IRS) administration of its Taxpayer Identification Number (TIN) Penalty Program, specifically how IRS: (1) enforced withholding requirements when financial institutions, or payers, submitted returns with missing or incorrect TIN; (2) provided accurate and timely information to payers; and (3) reduced missing and incorrect TIN on information returns.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service To ensure better compliance with information return reporting requirements and a more effective and accurate TIN Penalty Program, the Commissioner of Internal Revenue should establish and implement procedures to determine whether payers are complying with withholding requirements on interest and dividend information returns and to enforce that requirement, including the assessment of any penalty where appropriate.
Closed – Implemented
GAO was told that IRS auditors are now required, when auditing a payer, to determine, among other things, compliance with withholding requirements.
Internal Revenue Service If IRS, after assessing its test results, decides to use the Key Index File on interest and dividend information returns with missing TIN, the Commissioner of Internal Revenue should consider expanding that use to returns with incorrect TIN until the automated TIN correction system is implemented. To best use its limited staff, IRS should focus on returns that have the highest potential to yield additional taxes.
Closed – Implemented
According to IRS, the Key Index File is now used annually to research missing and incorrect TINs on those returns considered to have the highest potential yield.

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Topics

Tax Policy and Administration
Banking lawComputer matchingFinancial institutionsFines (penalties)Income taxesLaw enforcementSocial security numberTax administrationTax lawTax returns