Treasury
Inspector General for Tax Administration
Office of Audit
INADEQUATE MANAGEMENT INFORMATION HAS ADVERSELY
AFFECTED THE ACCEPTANCE AGENT PROGRAM
Issued on June 19, 2009
Highlights
Highlights of
Report Number: 2009-40-087 to the
Internal Revenue Service Commissioner for the Wage and Investment Division.
IMPACT ON TAXPAYERS
The purpose of the Individual Taxpayer Identification Number
(ITIN) is to provide alien individuals, whether or not they reside in the
The primary means the IRS has to regulate Agents
are the application screening process and the monitoring program. The volume of ITINs is growing, increasing
the risk of fraudulent tax returns using ITINs.
Inadequate screening and monitoring increase the risk to both the
taxpaying public and the Federal Government for potential losses associated
with unscrupulous Agents.
WHY TIGTA DID THE AUDIT
This audit was part of the Treasury Inspector General for Tax Administration’s
Fiscal Year 2008 Annual Audit Plan. An
Acceptance Agent is a person (an individual or an entity) who is authorized to
assist alien individuals and other foreign persons (who are ineligible to
receive Social Security Numbers) in obtaining an ITIN from the IRS. A Certifying Acceptance Agent is authorized
to certify whether the documented proof is adequate. The overall objective of this review was to
determine whether the IRS’ screening and
monitoring of Acceptance Agents is effective.
WHAT
TIGTA FOUND
Management information is insufficient to
effectively oversee the Acceptance Agent Program. The ITIN Program’s management information
system only allows queries to individual records and does not generate ad hoc
reports or provide regular or periodic reports that can be used to oversee the
Acceptance Agent Program. As a result,
the ITIN Program Office is unable to monitor Agents or their activity and/or
measure their compliance with rules and regulations.
The application screening process also does not
always ensure the integrity of the individuals applying for participation in
the Acceptance Agent Program. In addition,
compliance checks are manual. The IRS
does not use a system for Agents such as its Automated e-file Application Processing System, which automates the process
of checking and monitoring tax compliance and ensures that applicants are
current with their tax return filings and tax payments.
In addition, monitoring visits to Agents are not
being conducted. The ITIN Program Office
believes it should not be responsible for compliance work and it has contacted
the IRS Examination function to see if it can conduct compliance reviews of
Agents.
WHAT TIGTA RECOMMENDED
TIGTA recommended
that the Commissioner, Wage and Investment Division, and the Deputy
Commissioner for Operations Support, ensure that the management information system
is modified to generate periodic and regular reports, followed by the
development of procedures and internal controls to monitor the Acceptance Agent
Program. Resources should be sufficient
to make certain all validations are completed and checks passed before an
application is accepted. Compliance
checks should be automated. In addition,
sufficient staffing should be provided to review the documents that support the
Application for IRS Individual Taxpayer Identification Number (Form W‑7)
submitted by Certifying Acceptance Agents.
In their response to the report, IRS officials agreed with all of our recommendations. The IRS plans to modify the management information system to generate periodic and regular reports, including ad hoc reports. Once the management information system has been modified, the ITIN Program Office plans to develop procedures and internal controls to effectively monitor the Acceptance Agent Program. Further, the IRS plans to train 10 additional assistors to process ITIN applications. This will ensure that resources are sufficient and available as backup to the current resources. In addition, meetings are underway to determine the feasibility of automating compliance checks. Finally, the ITIN Program Office is working to develop a compliance review process.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2009reports/200940087fr.html.
Email Address: inquiries@tigta.treas.gov
Phone Number: 202-622-6500
Web Site:
http://www.tigta.gov