Reports of suspected tax fraud sent to the IRS are often improperly reported and screened, the Treasury Inspector General for Tax Administration has said.
It said the agency’s accounts management function receives Form 3949-A referrals and determines where to send them to be screened – but a review last September showed that accounts management misrouted referrals or sent incomplete, or unrelated referrals to the various business units and offices.
During fiscal 2010 and 2012 the agency’s small business / self-employed division, and the wage and investment division received and screened 274,976 fraud referrals, resulting in examinations that produced $66.5 million in tax assessments.
However, the IRS’s ineffective routing and screening processes caused many of the referrals to not be selected for examination, said TIGTA in calling for improvements to the process and better communication with the account management function.
Further, the IG said the SB/SE and W&I division screeners improperly screened referrals, and neither division has a routine review process to evaluate screened referrals not selected for examination. IRS management agreed to implement specific guidelines or instructions for screeners to use when screening referrals.
