The IRS is detecting more cases of identity theft through its taxpayer protection program but case processing controls need to be strengthened to reduce the burden on taxpayers who are the victims, the Treasury Inspector General for Tax Administration has said.
It said that in 2012 the program identified 324,670 tax returns that involved identity theft, and that the IRS prevented the issuance of fraudulent tax returns totaling $2.2 billion.
However, tests of identity theft cases showed that the controls relating to program data, cases worked, and training were insufficient, TIGTA said.
The IRS agreed with recommendations to develop processes to ensure that required identity theft indicators are placed on taxpayer accounts and employees properly update the account management services system with actions they take when working identity theft cases.
The agency also agreed to develop timeliness measures and to have employees complete required training.
