IRS RESPONSE TO RECOMMENDATION: In 2019, the IRS established a working group with SSA focused on opportunities to mitigate fraud through information sharing, analytics, and risk management. One sub-group focuses specifically on wage reporting and efficient sharing of information to combat fraud.

Also, as part of the Taxpayer First Act, requirements or thresholds for businesses to electronically file information returns such as the Form W-2 were lowered. Currently, companies filing more than 250 Forms W-2 are required to electronically file. In 2021, the threshold drops to 100 Forms W-2. By 2022, businesses that file more than 10 Forms W-2 will be required to electronically file. This change will result in a sharp decrease in the number of paper Forms W-2 that must be transcribed by the SSA before transmission to the IRS.

CORRECTIVE ACTION: N/A

TAS RESPONSE: Both the IRS’s efforts to work with the SSA and the provision in the Taxpayer First Act that authorizes the  IRS to require more employers to file W-2s electronically will undoubtedly result in more information getting to the IRS sooner, thereby resulting in returns being verified faster.  TAS will continue to work with the IRS   to identify ways in which the IRS can obtain more information earlier in the filing season.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: Every year the IRS examines different fraud scenarios and their impact on taxpayers, revenue protected, false detections, and IRS workload to set refund fraud projections, including a projected False Positive Rate (FPR).

The IRS continues to explore ways to improve the FPR. As TAS notes, the FPR dropped by 10 percent in one year and the speed of resolution increased. To the extent we are able to improve models and more effectively separate out true and false positives, we will explore scenarios resulting in further decreases in FPR. As more information returns are e-filed, resolution times are expected to continue to decrease. The IRS continues to strive to minimize the burden of these detections while protecting taxpayers and government revenue from the risks posed by third-party data breaches and highly sophisticated cybercriminals.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS looks forward to continuing to work with the IRS on identifying  the  appropriate  balance  between protecting revenue and reducing burden on taxpayers who file legitimate returns by lowering both the FPR and the Operational FPR, particularly in circumstances where processing times cannot be reduced.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: The IRS continually evaluates changes in the tax system and makes improvements to our refund fraud detection methods, including refining our filters. We continue to improve the filters using a variety of methodologies, algorithms, data sets, and techniques to help stay ahead of fraudsters. We evaluate and monitor the performance of each filter on a weekly basis and adjust filters that are not performing as expected. We apply lessons learned from confirmed cases and consider emerging trends. We will continue to rebuild and refresh our filters and models each year to better detect emerging schemes, taking into account historical patterns. We continually explore ways to improve the false positive rate while ensuring protection to legitimate taxpayers’ accounts.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS will continue to work with the IRS to identify the appropriate balance between revenue protection, FPRs, and processing times.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED:  Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: The IRS is hiring additional staff in the Return Integrity Verification Operation (RIVO). In addition, we continually explore ways to enhance processes to improve the taxpayer experience, such as automating manual processes to reduce process times. Automation is contingent on Information Technology resources.

CORRECTIVE ACTION: N/A

TAS RESPONSE: The additional hiring in RIVO, depending on the level, will help reduce processing times and will address RIVO’s limited resources. TAS will continue to advocate that the IRS adopt automated processes where possible while reducing processing times for its manual work and thus reducing processing times across the board.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: The IRS has implemented changes to provide taxpayers in the Pre-Refund Wage Verification Hold Program (PRWVH) a status letter every 60 days.

CORRECTIVE ACTION: N/A

TAS RESPONSE: Ensuring that taxpayers receive a status letter every 60 days will appropriately observe the taxpayers’ right to be informed, ensuring that taxpayers are  aware  of  the  status  of  their  return  and  what  steps  they  can take to resolve the issue causing the delay.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: We have revised Letter 4464C to instruct taxpayers to review their returns, verify they are accurate, and submit an amended return if necessary.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS is working with the IRS to include necessary revisions to Letter 4464C. These revisions recommend taxpayers review their returns and all income information statements to ensure all income and withholding matches the information reported on the return and what to do if there is a discrepancy. This will assist in hastening the receipt of their refunds.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: The IRS agrees that keeping taxpayers informed of their case status is important; however, with our systemic Questionable Return Program (QRP) process, we are unable to provide specific contact information regarding the site/employee at this time. Although not issuing the Letter 86C, RIVO will collaborate with other functions to encourage a timely issuance of their initial contact letter after receipt of the referral. RIVO has also implemented an interim letter process for QRP referrals to the Automated Questionable Credit.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS will continue to work with RIVO to identify opportunities where the taxpayer can be better informed as    to the status of his or her return, including its assignment to another IRS workstream for further review and analysis.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A