A computer programming error and weak tax return monitoring led to the erroneous release of over $46 million in 2014 tax refunds before they could be verified, the Treasury Inspector General for Tax Administration has said in calling on the agency to tighten up.
According to the agency, the Integrity and Verification Operations function prevented more than $15 billion in refunds for over 2 million tax returns for confirmed identity theft or fraud during 2014.
TIGTA said that a programming error also resulted in over $27 million of refunds being erroneously issued for 13,043 2013-tax returns.
That error has been overriding a two-week processing delay on some refund tax returns that the IRS identifies as potentially fraudulent, according to TIGTA.
It said those are returns that the IRS Examination function also identified as claiming a questionable tax credit, and that the portion of the refund that the Examination function does not review is erroneously issued before the IRS can complete its verification of income and withholding.
The agency agreed with recommendations to correct the programming that is erroneously overriding the two-week delay, develop a periodic reconciliation process to prevent the release of potentially fraudulent returns, and place holds on certain cases that don’t automatically expire, among others.