Sometimes when a taxpayer does not file a tax return, the IRS will estimate the amount owed and prepare a Substitute for Return (SFR). More specifically, IRS computers prepare the SFRs based on information the IRS receives from third parties, such as Forms W-2 and 1099. The IRS would then issue a letter to the taxpayer regarding the proposed deficiency with penalties added for late filing and late payment. Taxpayers could respond with information about deductions, credits, or errors and discuss the proposed deficiency with an IRS employee.
The Treasury Inspector General for Tax Administration (TIGTA) recently audited the Sustaining Infrastructure Program of the Internal Revenue Service (IRS) and found that, since 2013, the percentage of information technology hardware the IRS is using that is beyond its useful life has increased from 40% to its current rate of 64%. Aged hardware is more likely to fail, negatively impacting employee productivity, information security, and customer service.
Ordinarily, the taxpayer has the burden of proving a tax return is accurate. But when the IRS has to produce documents, its record-keeping practices are lacking. The Treasury Inspector General for Tax Administration (TIGTA) released a report on July 13, 2017, that found that the IRS' electronic record retention policies do not comply with certain Federal requirements that records remain retrievable and usable for the time period needed. For example, e-mail messages are not automatically archived for all IRS employees, and the manual methods used to counteract this gap are inadequate when computer hard drives are destroyed or damaged as media storage policies and tools change.
The Treasury Inspector General for Tax Administration (TIGTA) has released its semi-annual report to Congress for the period October 1, 2016 through March 31, 2017. The reports summarizes data about the agency's notable audits, investigations, inspections, and evaluations to provide oversight to the IRS.
On April 25, 2017, eight suspects were arrested in Miami, Florida, by agents of the Treasury Inspector General for Tax Administration (TIGTA) and the Social Security Administration Office of the Inspector General (SSAOIG) for conspiracy to commit wire fraud. The indictments against these individuals include charges for involvement in schemes to impersonate IRS agents in order to obtain money from victims by falsely representing that the victims owed back taxes or other fees. The suspects allegedly defrauded over 7,000 victims out of almost $8.8 million.
The Treasury Inspector General for Tax Administration (TIGTA) is recommending that the IRS expand the criteria used to refer potential criminal cases for investigation for certain employers that fail to remit payroll taxes to the IRS. TIGTA found that tax noncompliance in employment tax matters is growing, and as of December 2015 the IRS is owed nearly $46 billion in unpaid employment taxes, interest, and penalties.
On January 31, 2017, the Treasury Inspector General for Tax Administration (TIGTA) released its final report on the results of the 2016 tax filing season. As of early May 2016, the IRS had received 139.6 million individual tax returns, over 88% of which were filed electronically. Almost $277 billion was issued related to 101 million refunds. However, TIGTA identified several areas in which claims and credits were inadequately substantiated.
The Treasury Inspector General for Tax Administration (TIGTA) recently issued a report on the IRS' strategy for addressing income produced through virtual currencies, such as bitcoin, litecoin, and dogecoin. Use of virtual currency has grown in recent years, due in part to service benefits such as faster turnaround and lower transaction fees, and in part due to the relative anonymity of the parties involved in such transactions.
The Treasury Inspector General for Tax Administration (TIGTA) recently released a report that found nearly $9 billion in backup withholding tax was not withheld for 2013 information returns with missing or incorrect taxpayer identification numbers. The IRS should have received nearly $5 billion in backup withholding for payments to these unidentified payees, but payers withheld only $1 million.
Taxpayers and tax professionals across the U.S. are being targeted by yet another scam. The Internal Revenue Service and its Security Summit partners recently issued a warning regarding fake e-mails purporting to contain an IRS tax bill related to the Affordable Care Act. The scam has already been reported to the Treasury Inspector General for Tax Administration for investigation.