Improvements Are Necessary to Ensure That Individual Amended Returns With Claims for Refunds and Abatements of Taxes Are Properly Reviewed

The Director, Examination, Small Business/Self-Employed Division, should establish controls to ensure that the PSP function's area desk guides are consistent in their instructions and requirements for the processing of claims.

The Director, Examination, Small Business/Self-Employed Division, should revise procedures to ensure that the justification for PSP claims coordinators surveying a claim is documented and evaluate the benefits of requiring them to identify and document whether any LUQ items existed on the return.

The Director, Examination, Small Business/Self-Employed Division, should establish a process for group managers to document their decisions to survey claims, which would include documenting the results of their risk analyses.

The Director, Examination, Small Business/Self-Employed Division, should issue guidance to field examiners and group managers that stresses the importance of obtaining adequate documentation to support the validity of claims as well as their responsibility to review and document LUQ items considered during audits.

The Director, Examination, Small Business/Self-Employed Division, should ensure that the lead sheets designed to document the field examiners' consideration and investigation of LUQ items effectively address the concerns noted in this report.