Actions Are Needed to Better Identify and Address Individuals Who File Tax Returns Using Frivolous Arguments

The Commissioner, Wage and Investment Division, should ensure that the annual evaluation of the Frivolous Return Program (FRP) filter criteria includes the identification and assessment of all original and amended tax returns, regardless of dollar tolerance, that meet the filter criteria. The annual assessment should include analysis to ensure that individuals, including promoters, are not using knowledge of IRS dollar tolerances to successfully submit frivolous returns.

The Commissioner, Wage and Investment Division, should ensure that appropriate actions are taken on the 1,938 IRS-confirmed frivolous returns that TIGTA identified to secure a valid return from the taxpayer and assess the frivolous return penalty where applicable.

The Commissioner, Wage and Investment Division, should correct the computer programming errors that resulted in the Credit Reference Number for some refundable tax credits dropping from the tax return record when adjustments resulting from an amended return post to the Individual Master File.

The Commissioner, Wage and Investment Division, should ensure that all IRS employees who are responsible for identifying tax returns claiming potentially frivolous arguments complete frivolous return training annually.