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Some Legal Requirements to Deactivate Individual Taxpayer Identification Numbers Have Not Been Met

Report Information

Date Issued
Report Number
2018-40-011
Report Type
Audit
Joint Report
Yes
Participating OIG
Treasury Inspector General for Tax Administration
Agency Wide
Yes (agency-wide)
Questioned Costs
$0
Funds for Better Use
$3,294,227
View Report

Recommendations

The Commissioner, Wage and Investment Division, should review and update existing policies to ensure that tax returns filed with inactive ITINs are accurately processed by employees in the IRS's Error Resolution System.

The Commissioner, Wage and Investment Division, should review the 9,818 tax returns for which the IRS did not identify inactive ITINs due to tax examiner error and ensure that taxpayers only receive the tax benefits to which they are entitled.

The Commissioner, Wage and Investment Division, should reinstate computer programming to reject e-filed tax returns filed with inactive ITINs.
Recommendation rejected by IRS

The Commissioner, Wage and Investment Division, should correct computer programming to ensure that the status field of all active ITIN accounts on the IRS Master File are updated when the ITIN is deactivated, including those in which the name of the individual who obtained the ITIN does not match the name on the tax account.

The Commissioner, Wage and Investment Division, should ensure that the IRS Master File accounts associated with the remaining 2,808 ITINs with an active IRS Master File Account are updated to reflect the inactive status of the ITIN.