Processes Exist to Assist Taxpayers With Misdirected Refunds, but Additional Controls Could Further Help to Prevent Them

The Commissioner, Wage and Investment Division, should contact the five software vendors TIGTA identified and request they modify their programs so direct deposit fields do not appear or cannot be altered when a taxpayer requests a paper refund check when using their software package to prepare their return and print out and mail it to the IRS.

The Commissioner, Wage and Investment Division, should develop a process to annually review and work with approved software vendors whose packages do not include steps to ensure that direct deposit fields do not appear or cannot be altered to request these modifications.

The Commissioner, Wage and Investment Division, should create a closing code to be entered onto a tax account when a refund inquiry is closed that denotes the cause of the refund being misdirected, i.e., IRS error, taxpayer error, or bank error. The addition of this code would enable the IRS to monitor compliance with Section 1407 of the Taxpayer First Act.