Treasury Inspector General for Tax Administration
April 16, 2009
Contact: Robert Sperling
The Treasury Inspector General for Tax Administration, (TIGTA) today publicly released its review of whether the Internal Revenue Service (IRS) has proper controls in place to detect and deter improper use of Individual Taxpayer Identification Numbers (ITINs).
ITINs are available to individuals who are required to have a taxpayer identification number for tax purposes but do not have, and are not eligible to obtain, a Social Security number. The ITIN program was intended to address concerns by the IRS and the Department of the Treasury that without a unique number taxpayers could not be identified effectively.
The report is a follow-up to TIGTA's January 2004 report, "The IRS's Individual Taxpayer Identification Number Creates Significant Challenges for Tax Administration" (Reference Number 2004-30-023).
"TIGTA found that the IRS's primary focus is on ensuring that individuals can obtain an ITIN and pay taxes rather than ensuring that individuals fully comply with ITIN requirements," commented J. Russell George, the Treasury Inspector General for Tax Administration. "As a result, individuals are being assigned multiple ITINs, ITINs are being improperly used for employment and billions of dollars in tax credits are being provided to ITIN filers without verification of eligibility."
TIGTA made a total of five recommendations in the report. Among them, TIGTA recommended that the IRS develop a process to identify individuals who are improperly using ITINs for work purposes and develop outreach efforts with the SSA to address the improper use. In addition, TIGTA recommended that the IRS limit the automatic population feature for ITIN tax returns and consider additional actions to advise employees and employers in the instances that ITINs are being improperly used for employment. TIGTA also suggested that the IRS and the Treasury Department consider proposing legislation to Congress that would clarify whether or not refundable tax credits such as the ACTC may be paid to filers without an SSN and, if these credits may not be paid, to provide IRS math error authority to disallow associated claims for the credits.
In its response, the IRS officials agreed to continue to work with software companies to limit the auto-populate feature and also agreed to work with the Department of the Treasury Office of Tax Policy to consider legislation to limit claims for the ACTC to taxpayers with an SSN. The IRS disagreed with the other recommendations.
TIGTA does not believe that management provided adequate justification for the disagreed recommendations.
To see the full report, including the scope, methodology and the IRS's response to a draft of the report: https://www.treasury.gov/tigta/auditreports/2009reports/200940057fr.html
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