TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
MANAGEMENT ADVISORY REPORT: THE INTERNAL REVENUE SERVICE SHOULD IMPROVE CONTROLS OVER PHOTOCOPY USER FEES AT THE FRESNO SERVICE CENTER
Reference No. 2000-40-036
A photocopy user fee is the fee that is paid to the Internal Revenue Service (IRS) for providing a taxpayer with a copy of their tax return. Taxpayers prepay the fee of $23 for each tax return photocopy requested when submitting a Request for Copy or Transcript of Tax Form (Form 4506). The fee is refunded to the taxpayer if the IRS later determines that it cannot provide a photocopy of the requested tax return.
This review was conducted at the Fresno Service Center (FSC) in part because of concerns that photocopy user fee payments could result in fraudulent refunds. We evaluated controls over photocopy user fee refunds and determined whether material fraud had occurred. This included evaluating whether photocopy user fee refunds had been properly recorded and accounted for, whether refunds were adequately supported and properly approved, and whether cancelled refund checks were properly resolved. We also evaluated various inventory controls, and determined whether appropriate actions had been taken to timely provide taxpayers with photocopies of tax returns.
While we found that the FSC did properly record and account for photocopy user fee refunds after the refunds had been issued, and we did not find indications of IRS employees embezzling those refunds, we did find that controls over these user fees needed to be improved to help prevent the opportunity for improper activity. In addition to these control weaknesses, we also determined that taxpayers did not always receive timely and complete responses to their requests for tax return photocopies. Specifically, we found the following.
Managementís Response: During this review, we issued a memorandum to IRS management addressing each of the conditions included in this report. FSC IRS management agreed with all of the findings we identified in our review. Managementís complete response is included as Appendix IV in this report.