Available Data Are Not Being Used to Proactively Identify Potentially Erroneous Rehabilitation Credit Claims

The Commissioners, Large Business and International and Small Business/Self-Employed Divisions should Verify whether the four taxpayers and ******1********** weidentified that claimed the Rehabilitation Credit without final certification of completed work orPart 2 approval from the NPS are entitled to claim the credit.

The Commissioners, Large Business and International and Small Business/Self-Employed Divisions, should develop processes and procedures to use NPS data to identify potentially erroneous claims both during tax return processing and during post-processing compliance efforts.

The Commissioners, Large Business and International and Small Business/Self-Employed Divisions should revise electronic filing programming to identify and reject electronically filed Forms 1065, Forms 1120, or Forms 1120S tax returns with a Rehabilitation Credit claim in which the required NPS project number or EIN of a pass-through entity was not provided on Form 3468.

The Commissioners, Large Business and International and Small Business/Self-Employed Divisions should revise electronic filing programming to identify and reject any electronically filed tax return with a Rehabilitation Credit claim that includes an invalid NPS project number or pass-through entity EIN on the Form 3468.

The Commissioners, Large Business and International and Small Business/Self-Employed Divisions should verify whether the 39 taxpayers and 10 pass-through entities that claimed rehabilitation expenditures or credits without providing the required NPS project number or pass-through entity EIN are entitled to claim the expenditures or credits. This should include incorporating this issue into the open examinations for the 32 taxable entities.