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The Tax Offset Program Continues to Allow Millions of Dollars to Be Erroneously Refunded to Taxpayers

Report Information

Date Issued
Report Number
2025-400-002
Report Type
Audit
Joint Report
No
Agency Wide
Yes (agency-wide)
Questioned Costs
$0
Funds for Better Use
$23,157,344
View Report

Recommendations

The Chief Information Officer should ensure that the requested programming changes are implemented by January 2026.

The Chief, Taxpayer Services, and Chief, Tax Compliance Officer, should analyze the accounts we identified, noting trends in the functional areas reversing the freeze codes in error and issue alerts or reminders to them advising not to reverse freezes or issue manual refunds on accounts that have an outstanding debt on the ANMF.

The Chief, Taxpayer Services, and Chief, Tax Compliance Officer, should revisit the process developed in response to our prior report and correct the weaknesses that are continuing to allow refunds to be issued to taxpayers that have outstanding tax debt on their NMF account.

The Chief, Taxpayer Services, and Chief, Tax Compliance Officer, should review all NMF accounts with outstanding tax debt to ensure that all taxpayers have the required freeze code on the associated Master File account.

The Chief, Taxpayer Services, and Chief, Tax Compliance Officer, should send Letter 3064C to the taxpayers we identified with an erroneous offset to an LLC account, and whose refund statute has not yet expired.