Millions of Dollars in Potentially Erroneous Excess Social Security Tax Credit Claims Are Not Addressed

The Commissioner, Wage and Investment Division, should update systemic processes to ensure that the IRS does not unnecessarily select tax returns for manual review that report "agent for" in the employer name line, report Social Security tax withholding below the maximum withholding amount for each taxpayer, and/or are below the dollar tolerance used to select paper tax returns for manual review.

The Commissioner, Small Business/Self-Employed Division, in conjunction with the Commissioner, Wage and Investment Division, should establish a process to send and measure the success associated with soft notices that alert individuals to potential errors on their tax return related to Excess Social Security Tax Credit claims.

The Commissioner, Small Business/Self-Employed Division, in conjunction with the Commissioner, Wage and Investment Division, should evaluate current resources expended on the issuance of soft notices to ensure that notices are sent to those taxpayers with the highest tax assessment potential to maximize the use of limited resources.