WASHINGTON - The Internal Revenue Service (IRS) timely processed the majority of

individual tax returns during the 2011 filing season according to a report publicly

released today by the Treasury Inspector General for Tax Administration (TIGTA).

This finding is part of TIGTA's review of the IRS's performance during the 2011 Filing

Season. The IRS received 130.7 million individual income tax returns and issued

approximately 98.2 million refunds totaling $277.1 billion.

The IRS also increased the number of erroneous refunds it detected and stopped. As of

April 30, 2011, the IRS identified 775,723 tax returns with $4.6 billion claimed in

fraudulent refunds and prevented the issuance of $4.4 billion (96 percent) of those

fraudulent refunds. This represents a 171 percent increase in the number of fraudulent

returns identified during the same period in 2010. The IRS also selected 199,854 tax

returns filed by prisoners for fraud screening, which represents a 256 percent increase

compared to last year.

However, the IRS was unable to identify 140,596 taxpayers who erroneously claimed

$140.2 million in tax credits due to processing errors. TIGTA identified several

problematic credits which include: the First-Time Homebuyer Credit; the Adoption

Credit; the Nonbusiness Energy Property Credit; and the Plug-in Electric and Alternative

Motor Vehicle Credit.

"Overall, the IRS's performance during the 2011 filing season has been successful. The

IRS continues to face challenges relating to First-Time Homebuyer Credit repayments,

verification of the Adoption Credit, and several energy-efficiency tax credits," said J.

Russell George, Treasury Inspector General for Tax Administration. "I am pleased,

however, that the IRS plans to seek math-error authority for several credits that we have

found to be problematic," Mr. George added.

TIGTA made 14 recommendations to the IRS. The most significant recommendations

were that the IRS:

• Ensure that taxpayers TIGTA has identified as erroneously claiming the credits

  and deductions are entitled to claim them;

• Initiate a recovery program for erroneously paid claims;
• Revise the programming for First-Time Homebuyer Credit repayments; and
• Seek math-error authority for certain credits detailed in the report.

The IRS disagreed with only two recommendations involving the First-Time Homebuyer

Credit.