TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
MANAGEMENT ADVISORY REPORT: DUPLICATE INCOME TAX REFUND CHECKS ERRONEOUSLY MAILED TO TAXPAYERS BY THE FINANCIAL MANAGEMENT SERVICE
Reference No. 2000-30-101
On June 16, 2000, a taxpayer contacted the office of the Treasury Inspector General for Tax Administration (TIGTA) in the Ogden Internal Revenue Service (IRS) Center to discuss two refund checks she had received in the mail one day earlier. The first check was made out to her, was dated approximately 3 months earlier, and was for the same amount as the income tax refund check she had received in March 2000. The second check was in the same envelope and was made out to another taxpayer living in the same city as this taxpayer.
The issuance of checks such as these could have significant impact on taxpayers attempting to cash them. In addition, depending on the volume of these checks, this situation could also have a potentially significant impact on the IRS, since it would likely receive telephone calls and letters regarding them. Therefore, the objective of our review was to determine what caused the checks to be issued, and how many taxpayers were (or could be) involved.
The Financial Management Service (FMS) sent voided duplicate refund checks to an unknown number of taxpayers. Without close inspection, the checks appeared to be legitimate, negotiable checks. We found no evidence to indicate that the IRS had caused these checks to be issued by posting duplicate data to taxpayers’ accounts.
Taxpayers receiving these checks may cash, or try to cash, them. In addition, these taxpayers may contact the IRS to obtain an explanation for the checks or to find out what to do with the checks. The IRS needs to address this issue with its customer service employees and with the FMS.
Irregular (Voided) Income Tax Refund Checks Were Erroneously Mailed to Taxpayers by the Financial Management Service
The FMS should have shredded the two checks we reviewed. Instead, the checks were manually placed in the same envelope and mailed to one of the taxpayers. Based on very limited information, we estimate that on the day these two checks were generated, there could have been as many as 7,400 irregular income tax refund checks that should have been voided and shredded. Neither we nor personnel from the FMS have been able to determine whether the erroneously issued checks were confined to just one day. We were advised that FMS personnel are continuing to research this issue to try to determine the number of checks erroneously issued and the control breakdown that allowed this to happen.
We suggest the Assistant Commissioner (Customer Service) consider preparing customer service employees for calls from taxpayers relating to these checks, working with the FMS to determine the exact number of checks issued erroneously, and if warranted, educating taxpayers about the duplicate checks.
Because this problem could potentially occur again, we are referring this issue to the Treasury Inspector General for any action he deems necessary.