Improvements Are Needed to Ensure That Members of the Military Receive Tax Benefits to Which They Are Entitled

The Commissioner, Small Business/Self-Employed Division, should ensure that processes are developed and implemented to resolve unpostable DOD records.

The Commissioner, Small Business/Self-Employed Division, should review the 10,827 unpostable DOD records TIGTA identified and ensure that actions are taken to resolve the unpostable condition to set or update the Combat Zone Indicator on the individual's tax account. For those individuals who the IRS determines are currently serving in a combat zone, the IRS should immediately cease any collection activities being taken and abate all penalties and interest that were assessed incorrectly because the IRS did not work the mismatched DOD records timely.

The Chief Information Officer should update the systemic program to prioritize the assignment of aged Combat Zone Indicators for which the entry date into a combat zone is more than two years old and there is no exit date to ensure that the oldest aged Combat Zone Indicators are placed in the Account Management Services system for assignment first.

The Commissioner, Small Business/Self-Employed Division, should develop processes and procedures to ensure that Combat Zone Indicators are updated accurately based on individuals' responses to Letter 2761C.

The Commissioner, Wage and Investment Division, should send notification letters to the 292 veterans for whom we identified a more current address on a prior year tax return or information return.