Tax Administration:

Increased Fraud and Poor Taxpayer Access to IRS Cloud 1993 Filing Season

GGD-94-65: Published: Dec 22, 1993. Publicly Released: Dec 22, 1993.

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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) performance during the 1993 tax filing season, focusing on the: (1) processing of tax returns, including the growth in fraudulent electronic returns; (2) accuracy and accessibility of IRS toll-free telephone assistance; and (3) availability of tax materials to taxpayers.

GAO found that: (1) taxpayers filed fewer tax returns in 1993 than IRS expected; (2) alternative tax return filing methods continue to grow in popularity; (3) as of August 1993, IRS identified about 54,000 fraudulent refund claims; (4) electronic filing fraud continues to be the most critical problem for IRS because it does not have enough time to stop fraudulent refunds before they are issued; (5) IRS is planning a change with respect to refund anticipation loans (RAL) and its procedures for first-time electronic filers; (6) IRS procedures for detecting electronic filing fraud could be further improved; (7) IRS has identified an increase in fraud on paper returns; (8) IRS has corrected some problems in its returns processing procedures; (9) the accuracy of IRS toll-free telephone assistance remains high, but accessibility continues to decline; and (10) IRS has been effective in distributing tax materials to taxpayers.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS said that it would be monitoring results from the 1995 filing season relative to both parts of GAO's recommendation.

    Recommendation: The Commissioner of Internal Revenue should require Criminal Investigation to: (1) analyze the fraud cases IRS identified from information provided by RAL banks to see if those cases involve unique features that should be included in IRS computer screening criteria; and (2) determine which RAL banks were used for fraudulent refunds to see if special attention should be given to banks that do not use the Fraud Service Bureau.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS expanded its Electronic Filing System, as of January 1996, to allow the filing of Form 9465 electronically.

    Recommendation: The Commissioner of Internal Revenue should allow electronic filers to transmit Form 9465 as part of their electronic submission if IRS decides to continue using that form for requesting installment agreements.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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