Office of Audit



Final Report issued on December 19, 2018

Highlights of Reference Number:  2019-40-013 to the Commissioner of Internal Revenue.


The filing season, defined as the period from January 1 through mid-April, is critical for the IRS because it is during this time that most individuals file their income tax returns and contact the IRS if they have questions about specific laws or filing procedures.  As of May 4, 2018, the IRS received 140.9 million tax returns (with 89.2 percent electronically filed) and issued more than 101.3 million refunds totaling almost $282 billion.


The objective of the review was to evaluate whether the IRS timely and accurately processed individual paper and electronically filed tax returns during the 2018 Filing Season.


The IRS began accepting and processing individual tax returns on January 29, 2018.  However, on February 9, 2018, subsequent to the start of the filing season, Congress enacted the Bipartisan Budget Act of 2018 that retroactively extended a number of individual tax provisions for Tax Year 2017 and modified disaster relief provisions.

As of May 3, 2018, the IRS processed 4.9 million tax returns that reported nearly $27 billion in Premium Tax Credits either received in advance or claimed at the time of filing.  A total of $3.7 billion received in Advance Premium Tax Credits was in excess of the amount of Premium Tax Credits that taxpayers were entitled to, with a total of $1 billion not required to be repaid.

Although the IRS informs taxpayers of the requirement to provide the educational institution Employer Identification Number (EIN), the IRS has yet to implement processes to identify and disallow American Opportunity Tax Credit claims at the time tax returns are filed for which the required EIN is not provided.  TIGTA identified 234,053 tax returns that were filed without an educational institution EIN for which the taxpayers received approximately $209 million in the refundable American Opportunity Tax Credit.

The IRS developed processes to implement the key tax provisions included in the Disaster Relief Act and the Tax Cuts and Jobs Act.  However, not all taxpayers received the benefit intended from the disaster relief provision.  TIGTA identified 1,128 tax returns claiming the Earned Income Tax Credit using Tax Year 2016 earned income that the IRS incorrectly adjusted based on the taxpayers’ Tax Year 2017 earned income.  The IRS agreed that these tax returns were worked incorrectly.

TIGTA analyzed approximately 3.8 million confirmed identity theft victim tax accounts and found that 37,555 (1 percent) were Individual Taxpayer Identification Number (ITIN) accounts.  The IRS currently does not issue Identity Protection Personal Identification Numbers (IP PINs) to ITIN account holders; therefore, the 37,555 tax accounts will not receive the same identity theft protection measures as Social Security Number holders.


TIGTA recommended that the IRS ensure that the review of the 1,128 accounts that did not receive the correct amount of the Earned Income Tax Credit is completed.  Also, the IRS should revise processes for issuing an IP PIN so that an IP PIN is automatically issued to ITIN holders who are confirmed victims of identity theft and who are not working under someone else’s Social Security Number and expand the IP PIN opt-in program to include ITIN holders who are not automatically issued an IP PIN.

The IRS agreed with two recommendations and partially agreed with one recommendation to automatically assign IP PINs to ITIN holders who are confirmed victims of identity theft.  IRS management does not believe automatic assignment of IP PINs is prudent at this time.  However, it will modify the IP PIN opt-in program to allow eligible ITIN holders to participate.


To view the report, including the scope, methodology, and full IRS response, go to:


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