Actions Can Be Taken to Increase Detection of Frivolous Redemption Claims

The Commissioner, Wage and Investment Division, should ensure that the annual evaluation of the error identification processes criteria used to identify potentially frivolous redemption claims on original and amended tax returns includes the identification and assessment of all original and amended tax returns, regardless of dollar tolerance, that have excessive withholding. 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 continue to explore opportunities to develop systemic processes to identify amended returns that claim excessive withholding for additional review before refunds are paid.