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Tax Administration: IRS Could Do More to Verify Taxpayer Identities

GGD-95-148 Published: Aug 30, 1995. Publicly Released: Aug 30, 1995.
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Highlights

GAO reviewed the Internal Revenue Service's (IRS) procedures for processing and posting tax returns with missing or incorrect social security numbers (SSN), focusing on: (1) the growth in IRS individual master file (IMF) accounts with missing or incorrect SSN; (2) IRS procedures for verifying the identities of tax return filers; and (3) the potential effect of these procedures on IRS plans to modernize the tax system and on the income-matching program.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service To improve the processing of returns with missing or incorrect SSN and help clean up accounts currently posted on the IMF invalid segment, the Commissioner of Internal Revenue should finalize the CP54B notice in time for use during the 1996 tax filing season.
Closed – Implemented
IRS revised the CP54B notice for use during the 1996 filing season.
Internal Revenue Service To improve the processing of returns with missing or incorrect SSN and help clean up accounts currently posted on the IMF invalid segment, the Commissioner of Internal Revenue should apply the revised documentation requirements to taxpayers who filed tax returns that were posted to the IMF invalid segment before 1995 and whose accounts now have a permanent refund release code.
Closed – Implemented
In the several years since the report was issued, IRS has taken various steps directed at better ensuring that income tax returns include correct SSNs for taxpayers, their spouses, and their dependents. Those actions include the denial of claimed refunds or credits, such as the Earned Income Credit, if a required SSN is missing or incorrect. Among other things, IRS' actions resolved the problem addressed by the recommendation.

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Topics

Personal income taxesSocial security numberTax administration systemsTax evasionTax refundsTax returnsTaxpayersSocial security numbersAccountsTax system