TIGTA: IRS Must Improve Efforts to Ferret Out Erroneous EITC Claims

By:
Chris Gaetano
Published Date:
Oct 24, 2017
IRS

The Treasury Inspector General for Tax Administration took the IRS to task for failing to conduct appropriate compliance treatments on returns that made potentially erroneous EITC claims, as well as for lack of adequate followup efforts on preparers with consistent non-compliance.

The report acknowledged that the IRS has completed various compliance treatments to address 24,312 return preparers identified as filing high rates of tax returns with characteristics of an erroneous claim including the IRS issuing a letter to the preparer or visiting the preparer’s office. However TIGTA said that there were 3,547 other preparers who collectively filed 337,317 returns, 30 percent of which had one or more characteristics of a potentially erroneous EITC claim. These claims amounted to more than $1.1 billion. The IRS did not conduct compliance treatment for many of these preparers, and documentation did not explain why the IRS excluded them from treatment, according to TIGTA. 

TIGTA said the IRS could improve the treatment too, though. It analyzed 1,297 return preparers from the IRS Fiscal Year 2016 Return Preparer Compliance Workplan project who received an office visit. It found that, of those, 510 of them (39 percent) did not improve their compliance with EITC requirements the following year. 

TIGTA also noted that the IRS excluded an additional 1,686 noncompliant return preparers from the IRS scoring and selection process after these preparers had been included in a control group used to measure the effectiveness of compliance treatments. 

IRS agreed that it should take more action to address preparers with repeated compliance issues, and also agreed that it needs better documentation regarding the methodology and criteria used in the Refundable Credits Policy and Program Management function’s risk-based return preparer scoring and selection model.


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