The Treasury Inspector General for Tax Administration (TIGTA) is urging the Internal Revenue Service (IRS) to improve its taxpayer authentication process after a programming error and ineffective monitoring of potentially fraudulent returns resulted in the erroneous release of more than $46 million in refunds in 2014.
The error overrides the IRS's two-week processing delay on some refund tax returns that are identified as potentially fraudulent, the TIGTA said in a release.
Despite the fraudulent payouts, the TIGTA gave credit to the IRS ‘s Return Integrity and Compliance Services, which reportedly prevented more than $15 billion in refunds for over 2 million tax returns for confirmed identity theft or fraud during the same time period.
“While the IRS has made important strides in its programs that prevent the issuance of fraudulent refunds, our auditors found that it is not always ensuring that tax examiners timely complete their verification work before releasing refunds,” J. Russell George, Treasury Inspector General for Tax Administration said in the release.
In order to improve the authentication errors, the TIGTA made recommended that the IRS correct the programming error that allows the two week processing delay to override and identify why refund holds placed on some accounts were not delaying processing of the tax returns and address the causes, the release said.
The IRS agreed with all of the recommendations and is taking corrective action to address the concerns according to the release.