Treasury Inspector General for Tax Administration
June 25, 2009
Contact: Robert Sperling
The Internal Revenue Service (IRS) lacks the information and resources to adequately oversee its Acceptance Agent Program, which processes applications by foreign nationals for Individual Taxpayer Identification Numbers (ITINs), according to a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
Acceptance Agents assist individuals seeking an ITIN by reviewing the necessary documents and forwarding the completed Form W-7, Application for IRS Individual Taxpayer Identification Number, and supporting documents to the IRS. Most Acceptance Agents are also Certifying Acceptance Agents, meaning they can certify to the IRS that an individual's documentation in support of the ITIN is adequate. The IRS does not review the vast majority of documents submitted by Acceptance Agents.
TIGTA found that the IRS does not adequately screen candidates for Acceptance Agent designations, nor does it monitor the ITIN applications processed by Acceptance Agents.
"Without proper oversight, there is an increased risk that fraudulent tax returns are being filed using ITINs," commented J. Russell George, the Treasury Inspector General for Tax Administration. "The IRS must improve its information management processes to effectively oversee this program."
According to TIGTA's report, the IRS's computer system does not allow it to readily determine the number of current Acceptance Agents or the number of Forms W-7 submitted by each. As a result, the ITIN Program Office is unable to monitor Acceptance Agents or their activity and/or measure their compliance with rules and regulations.
In addition, the application screening process also does not always ensure that applicants are qualified to participate in the Acceptance Agent Program. The IRS told TIGTA that it has been focusing on processing ITIN applications rather than ensuring that Acceptance Agents who are facilitating thousands of ITIN applications on behalf of taxpayers are qualified to do so.
TIGTA recommended that the IRS: develop a means to obtain regular reports on Acceptance Agents; develop procedures and controls over Acceptance Agents; ensure that resources are sufficient to make certain all validations are completed and compliance checks passed before an application is accepted; and provide sufficient staff to review documents that support Forms W-7 submitted by Certifying Acceptance Agents. The IRS agreed with TIGTA's recommendations and is training additional employees to process ITIN applications.
To view the report, including its scope, methodology, and the full IRS response, go to: https://www.treasury.gov/tigta/auditreports/2009reports/200940087fr.pdf.
Created by Congress in 1998, TIGTA's mission is to provide independent oversight of the IRS and protect its ability to timely and efficiently collect Federal taxes.
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